In August 2022, the median home price in Metro Vancouver was $1,180,500, a 2.2% month-over-month decrease and a 7.0% year-over-year increase. Greater Vancouver and Greater Toronto are Canada’s most costly real estate markets. Over the last three years, the average property price in Vancouver has risen by $289k; with this money, you could buy a home in Winnipeg. In August 2022, the average price of a house in Vancouver was $1,205,980, while detached, attached, and apartment prices in Greater Vancouver were $1,991,629, $1,223,492, and $7,490, respectively.
The prices of all types of real estate have continued to decrease month after month. In August 2022, the benchmark price for detached homes in Vancouver increased by 7.9% over the previous year to $1,954,100. This is a 2.3% decrease from the July 2022 benchmark price of $2,006,000 from the previous month. The price of detached homes in Vancouver has climbed by $420,000 over the last two years. During the last three years, they have climbed by $529,000 This two-year increase is more than the average house price in Edmonton, and this three-year increase is more than the average house price in Calgary.
The benchmark price for a Vancouver townhouse in August 2022 was $1,069,100, showing an annual increase of 13% and a monthly decrease of 2.5%. This is the first time since November 2021 that the price has remained over $1 million. Annually, apartment prices increased 8.7% to $740,100 but decreased 2% month-over-month.
At the end of August 2022, the Metro Vancouver real estate market had 9,662 active listings, up 7.3% from the same time last year but down 6.1% from July’s 10,284 listings. This month’s 3,328 new listings show a fall of 17.5% year-over-year and a decrease of 16% from July’s 3,960 new listings. This month’s sales of 1,870 homes are 41% lower than the same month last year. This gives Vancouver a sales-to-active-listings ratio of 19%. This means that the market has changed from a seller’s market to a buyer’s market, since the ratio is much lower than March 2022, when 57% of the active listings were sold.
The Bank of Canada (BoC) pledged to handle the projected economic slowdown when the COVID outbreak broke out in early 2020. In addition to cutting its policy rate to near zero, the Bank of Canada embarked on a massive spending binge. The Bank of Canada’s assets started March 2020 with around $120 billion and peaked at $575 billion in March 2021. The Bank of Canada’s assets went up by $475 billion because it made new Canadian dollars.
These newly obtained funds were partly invested in the real estate market. Despite the fact that home prices are not included in the official inflation rate, house price increases result in rent increases that are reflected with a significant lag in the official inflation rate. Now that inflation has hit 8% and the central bank’s credibility is in jeopardy, the Bank of Canada is boosting interest rates and erasing a chunk of the money it created via quantitative tightening (QT). The frequent rate hikes by the Bank of Canada are now acting as a drag on the prices of homes in Canada.
These rate rises would lead to more mortgage rate increases in Vancouver, making properties in Vancouver less affordable. As mortgage rates have risen, the Vancouver housing market has reached a standstill. Due to the inelastic nature of the housing supply, the real estate market offers a good investment opportunity for earnings between March 2020 and March 2021. Due to Canadian municipal constraints on property rights, insufficient dwellings may be constructed (zonings). These limitations have significantly increased housing costs in Canadian cities. Restrictions on property rights, including size and land use regulations, reduce the number of viable units. Disruptions in the supply chain for construction materials create an additional tailwind for the Canadian real estate market, particularly the British Columbia real estate market. These barriers have substantially slowed housing construction.