Vancouver House Market Trends in October 2022

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The benchmark home price in Metro Vancouver in October 2022 was $1,148,900, signifying a monthly decrease of 0.6% and an annual increase of 2.2%. Greater Vancouver and Greater Toronto are Canada’s most costly real estate markets. Over the last three years, the benchmark price of Vancouver homes has climbed by $250k; this amount is similar to the average price of an apartment house in Winnipeg.

The average selling price of detached homes, attached homes, and flats in Greater Vancouver decreased by 3.5%, 9.5%, and 2.5%, respectively, from September to October 2022. All property types continued to see decreases in benchmark prices compared to the prior month. The benchmark price for detached homes in Vancouver for October 2022 increased by 1.6% annually to $1,892,100. This is 0.7% less than last month’s benchmark price of $1,906,400 for September 2022.

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years. Over the last three years, it has increased by $446,000. This two-year rise exceeds Edmonton’s benchmark townhouse price and is similar to the average townhouse price in Calgary. In addition, the three-year increase for detached houses in Edmonton surpasses the criterion. In October 2022, the benchmark price for a townhouse in Vancouver will be $1,043,600, an increase of 7.1% year-over-year and a decrease of 0.5% month-over-month. This is the first time since November 2021 that the price has remained over $1 million. Apartment benchmark prices increased 5.1% yearly to $727,100 and were down 0.2% month-over-month.

At the end of October 2022, the Metro Vancouver housing market had 9,852 active listings, an increase of 23% compared to the same time last year and a reduction of 1.2% compared to the end of September 2022. This month’s total of 4,033 new listings is a year-over-year decrease of 0.4% and a decrease of 4.6% compared to September’s total of 4,229.

The 1,903 home sales this month are 46% lower than the same month last year. This gives Vancouver a sales-to-active-listings ratio of 19%. This indicates a move from a seller’s market to a balanced market, compared to the 57% sales-to-active-listings ratio seen in March 2022. As the COVID outbreak started in early 2020, the Bank of Canada (BoC) resolved to confront the projected economic downturn in an aggressive manner. In addition to reducing its policy rate to near zero, the Bank of Canada commenced a spending binge. The Bank of Canada’s assets were around $120 billion at the start of March 2020, and they peaked at $575 billion in March 2021. This $475 billion increase in the Bank of Canada’s assets was paid for with Canadian dollars that had never existed before.

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A portion of this newly generated capital was invested in the housing market. Despite the fact that home prices are not included in the official inflation rate, house price increases result in rent increases and, with a significant lag, are reflected in the official inflation rate. Inflation exceeded the Bank of Canada’s 2% target in March 2021, although it was thought transitory at the time, so the bank continued its loose monetary policy. In January 2022, the rate of inflation surpassed 5% for the first time in thirty years. The Bank of Canada started increasing its policy rate at its first meeting after Statistics Canada announced this number (in March 2022).

Inflation peaked in June at a little more than 8%. Since then, inflation has been dropping steadily. If this trend persists, the Bank of Canada may halt its rate hikes. The BoC will likely stop hiking rates when inflation reaches 5% in order to allow the higher interest rate effect to penetrate the economy and restore inflation to the BoC’s target of 2%. The headwind that is now hurting real estate values is the continuous rate hikes by the Bank of Canada. These rate rises would force mortgage rates in Vancouver to continue to climb, making homes in Vancouver even less affordable. Because mortgage rates have gone up, there is less activity in Vancouver’s housing market.

Due to the inelastic nature of the housing supply, the real estate market offers an attractive investment opportunity for funds generated between March 2020 and March 2021. Due to property rights constraints implemented by Canadian municipalities, insufficient dwellings may be constructed (zonings). These limitations have acted as a tremendous tailwind for housing prices in Canadian cities. Restrictions on property rights, such as constraints on the size and type of land utilization, reduce the number of units that are available. Disruptions in the supply chain for house-building materials create an additional tailwind for the Canadian real estate market, particularly for the BC real estate market. These disruptions have considerably slowed down the construction of homes.

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