December is the perfect time to reflect upon the year behind as we prepare for the year ahead. If you have been following the real estate market in Vancouver and the surrounding areas, you’re aware that 2017 was another wild year. Let’s look at the numbers behind the city’s current housing market.
RESALE MARKET OVERVIEW
In general, every market and product type saw prices continue to rise throughout 2017. The total resale market saw a 14-per-cent price escalation and approximately 33 per cent sales-to-listings ratio. These numbers indicate a strong seller’s market, placing upward pressure on housing prices. Currently, the benchmark price for all housing types is $1,042,300 in Greater Vancouver and $751,400 in the Fraser Valley.
The housing market has started to see signs of a slowdown, particularly in higher-priced segments, as prices rise to new heights. However, the impending mortgage stress test policy taking effect on Jan. 1, 2018 is already affecting the market, accelerating activity in entry-level segments for townhomes and apartments, ensuring 2017 finishes strong.
The detached market saw significant price increases in 2015 and 2016. After the foreign buyers’ tax was implemented in the fall of 2016, we witnessed a slight pause in the market as people adjusted to the new policy. However, 2017 started off with strong demand and the first six months saw rapid price escalation.
In Greater Vancouver, we have started to see prices shift slightly downwards for single-family homes in areas such as Richmond, Burnaby and Vancouver, which had previously seen the largest increases. The benchmark price for detached homes in Greater Vancouver is now more than $1.6 million and seeing sales activity levels that indicate a balanced market. The Fraser Valley saw prices rise almost 12 per cent, with single-family benchmark prices reaching more than $1 million in areas such as Langley, Cloverdale and Surrey. We are now seeing the rate of increase slowdown as the year comes to an end.
Fueled by unattainable prices in the single-family market, purchasers continue to turn to townhomes as an alternative. Greater Vancouver and the Fraser Valley saw price escalation with townhomes being purchased quickly, particularly for entry-level price points. We have started to see a slowdown on luxury townhomes, particularly on the westside of Vancouver. The townhome benchmark price in Greater Vancouver is now $802,400 and $502,800 in the Fraser Valley.
The condo market continues to experience high demand. As prices for single-family and townhomes inch higher, these market segments are increasingly becoming out-of-reach for many families, resulting in greater demand for apartments. This has led to a sales-to-listings ratio of 105 per cent in the Fraser Valley and 64 per cent in Greater Vancouver, with a seller’s market being anything above 20 per cent. In fact, the Fraser Valley saw several areas hit a price increase of nearly 40 per cent in just one year – quite uncommon for these neighbourhoods. High demand has resulted in low inventory levels. And with demand not being met, prices have continued to escalate. Apartment benchmark price is currently at $369,400 in the Fraser Valley and $642,000 in Greater Vancouver.
NEW CONSTRUCTION – PRESALE
To date, approximately 16,000 homes have been released in 2017, with an additional 800 expected to come by the end of the year. Of these homes, almost 80 per cent have already been absorbed, an extremely high sold rate.
Burnaby released the largest number of pre-sale homes at more than 3,700 and saw rapid price escalation, as did Surrey Central/North Delta, which had some of the largest increases in the Valley for apartments.
The new concrete construction market has also had a record year, bringing 25 per cent more inventory to the market compared to 2016.
Looking ahead, we believe the mortgage stress test could cause buyers to take pause in the first few months of 2018 before normalizing in the spring. We expect entry-level segments to be extremely active throughout 2018 due to affordability issues. Market fundamentals indicate another strong year, but the largest determining factor will be government intervention at both municipal and provincial levels.