Low housing supply, high demand and a call to action

Low supply, high demand and the ensuing unaffordability were the running theme in Metro Vancouver’s housing market, according to the first-quarter Fifth Dimension report released recently by Fifth Avenue Real Estate Marketing.

The report is accompanied by a call to action from Fifth Avenue President and CEO W. Scott Brown. “If it is determined to be in the public’s best interest to accelerate supply, let’s get on with it in an expedient and appropriate manner.”

Brown’s introduction to the report nips public concern of bias in the bud. After all, Fifth Avenue is a real estate sales and marketing machine. But as Brown points out, “Of course, we are mindful of our biases in favor of more supply. Just because we would like more product to sell doesn’t necessarily mean we do not have a supply issue in Metro Vancouver. Does it?”

The proof is in the pudding.

According to the first-quarter data, gathered by Fifth Avenue in collaboration with Urban Analytics, Metro Vancouver’s multi-family sales activity and inventory levels took a dip in the first quarter of 2017, thanks to fewer new project launches, rough weather and development approval delays. There were 3,884 new multi-family homes sold, down 11 per cent from last quarter and down 38 per cent from the record-high sales recorded in Q1 of 2016. In spite of lower activity relative to previous quarters, sales were still up 13 per cent compared to the eight-year average of Q1 sales. On the inventory side, there were 2,546 released and unsold new multi-family units in Metro Vancouver at the end of the first quarter – down 25 per cent year over year, and plummeting 59 per cent below the eight-year average of Q1 released inventory. There were only 31 units of completed inventory available to purchase at the end of the first quarter, marking a new all-time low.

Highrise condo sales down

Highrise homes sales were down 43 per cent from last quarter and fell 48 per cent year over year, at just 1,844. This is largely attributed to a lack of project launches in significant markets like Burnaby, New Westminster, North Vancouver and Surrey City Centre.

In spite of the lack of highrise launches, strong sales were seen in Downtown Vancouver projects, including Boffo’s The Smithe and Westbank’s Alberni. In Vancouver West, Pure West Property’s Contessa on Cambie and Polygon’s Eton projects sold a combined total of 188 units in the First Quarter. Other significant sales occurred at Wesgroup’s Avalon 2 (Vancouver East), Concord Pacific’s Concord Gardens South (Richmond) and Polygon’s Mantyla (Coquitlam). It is important to note that the lack of new highrise project launches resulted in an inventory of just 1,437 released and unsold units, down 71 per cent from the same quarter in 2015.

Lowrise condo sales up

The lowrise condo sector saw a boost in sales to the tune of 1,239 units, or 33 per cent compared to the eight-year Q1 average.

There were 459 released and unsold lowrise condo units at the end of the first quarter, which is down 34 per cent compared to inventory levels at this time last year. Notable sales activity occurred at recently launched projects – Wynsgroup’s Spark (Richmond), Fairborne Homes’ Kindred (North Vancouver), Polygon’s Juniper (North Vancouver) and Regency Development’s The Five Points (North Vancouver), Porte’s Domain & Dwell @ HQ (Surrey City Centre), Quadra Homes’ Yorkson Downs (Langley), RDG Management’s The Wex (Langley), and Infinity Properties’ The Belmont at Heritage (Langley).

Townhome sales hold steady

Townhome sales reached 801 units at the end of the first quarter – down 37 per cent year over year, but in line with the eight-year Q1 average. Notable sales activity occurred at Dawson & Sawyer’s Old School and Guildford the Great II (South Surrey and Central Surrey), Mosaic’s Kitchner (South Surrey) and Vesta Properties’ Lattice at Milner Heights (Langley).

Some final thoughts...

Concluding the report, Brown forecasts growing demand and waning supply of multi-family housing through 2017. “A growing population, an aging population re-thinking its housing needs, parental deposit assistance, and younger buyers with very different dreams and expectations with respect to housing, are key demand drivers," he says. "In contrast, constrained supply levels are likely to continue to result in price escalation and enhanced challenges with respect to affordability in the Metro Vancouver market.”