Another year passes; another lies ahead

With the passing of another year, our research partners are actively tallying the final sales numbers to add to the annals. We look back on the year that was and look ahead to 2020, the first year of a new decade.

In 2019: For the first time in a decade, the total number of new multi-family sales in the Metro Vancouver market did not eclipse the 10,000 new-units-sold mark. At this time 10 years ago, the market had finally stabilized for the most part from the impact of the 2008 global recession.

Of course, hindsight is 20/20. Looking back to the post-Olympics days of 2010, we can see that while sales were stable, demand had yet to truly accelerate. Back then, 2,500 new multi-family homes sold was considered to be a “good” or “stable” market; 4,000 per quarter was almost unimaginable, although that 4,000-figure occurred numerous times (quarter after quarter and overall) in the last decade. Why is that? It can be attributed to two things: Accelerated demand and unmet demand.

The big surprise of 2019 was the magnitude of the drop in sales, and not in pricing, a drop that was due in part to government intervention at all levels, and not to a reduction in demand.

It is also worth noting that the average selling price of a new high-rise condominium in downtown Vancouver at the end of 2010 was $675-$725 per sq. ft. That is less than a high-rise condominium in Surrey today and not much more than what the land alone costs in downtown Vancouver today. So, while sales levels were off approximately one-third last year, prices did remain relatively stable, and demand is building heading into 2020.

Looking ahead to 2020, a leap year, I wonder what we will see. What new policies will be put in place or amended to help people attain homeownership? Will interest rates remain stable? Will we be back at the polls federally? Will politics at all levels continue to be more divisive? Will we have four more years of Trump? Will conflict in Hong Kong have more ex-patriates returning to Vancouver?

There are indicators that point to the return of 2,500 to 3,000 new sales per quarter on average through 2020. Thus, the stability being reported in the re-sale market is expected in the new multi-family market in 2020.

Now, from my perspective, prices overall in 2020 will likely be stable with the odd exception of acceleration. While sales results in 2019 mirror 2010, the underlying demand is much greater today and supply levels of new product – especially for condominiums priced between $300,000 and $500,000 and for new townhomes between $450,000 and $650,0000 – will remain an issue in 2020. Thus, the suburban market tide experienced this past year is projected to continue in 2020. Simply put, it is in those markets that costs actually enable developers to provide product the majority of demand can afford.

Areas that offer product that is desirable, accessible, and affordable include concrete offerings in New Westminster, Coquitlam or Surrey City Centre near Skytrain; wood-frame offerings in Burnaby, Port Moody, Coquitlam, Surrey, North Delta, Langley, Maple Ridge and Abbotsford; and townhomes throughout all suburban market areas.

Finally, some consider 2020 a year of new beginnings and renewals. In that spirit, I think when we will look back on the new multi-family market in Metro Vancouver in 2020, we will have stories of new beginnings – a meaningful start to another decade of accelerated growth.