Buying a home in Metro Vancouver in 2023 was not for the faint of heart and industry experts are signalling that 2024 may be same.
The year ended with Vancouver’s market in balanced conditions despite high borrowing costs, according to the Real Estate Board of Greater Vancouver (REBGV). The board’s director of economics and data analytics Andrew Lis said that home seekers can expect low supply and prices to increase in the year ahead.
“Looking down the barrel of 2024 and 2025 we’re probably still going to be supply constrained from the perspective of there not being a lot of new product entering the market,” he said.
The REBGV expects modest price growth in 2024 but was not able to give a specific number or percentage point.
“The reason really comes down to that fact that the patterns and trends that we saw in 2023, are still very much the same kind of issues that we face in 2024, which is not enough inventory for the buyer pool out there,” Lis said.
Real estate franchisor Royal LePage is predicting that the median price of a single-family home in the region will increase by 2.5 per cent to $1,778,785, while the median price of a condominium is forecast to increase four per cent to $795,808, according to a Dec. 14 press release.
Home prices across all property types in 2023 increased by approximately five per cent to $1,168,700 when compared to the end of 2022, according to the REBGV. Residential sales in the region reached 26,249 in 2023, a 10.3 per cent decrease compared to 2022.
Buyers and sellers in the region are starting off the year with a “wait and see approach,” said Andrew Carros, COO and managing broker at Engel & Völkers Vancouver.
“A lot of people are just waiting for what’s going to happen with the federal rates in order to make decisions on their own personal borrowing, selling, upgrading or downgrading,” he said.
“What we saw in 2023, which I think we’re going to see in 2024, is still a very apprehensive and stalled market. And that seems to be across the board in Canada right now.”
Lis said that if rates come down “significantly” or by roughly two full percentage points, then this would be the “tipping point” where buyers would re-enter the market.
“There’s a lot of economists out there who think that we will see some rate improvement on mortgage rates in 2024.… It’s starting to look like the picture for rate cuts is becoming a bit clearer and it does appear at present that there probably will be a few in 2024,” said Lis, who added that with rate cuts come lower borrowing costs and increases in sales.
Local developer Jason Turcotte said that once rates start to come down, it will provide “consumer confidence that the worst is behind us.”
Going forward he predicts that sales will be stronger for condominiums and pre-sale projects.
“People will see the opportunity to buy particularly in presale, knowing that in two or three years the market will have recovered, and interest rates will be lower,” said Turcotte, president of Darwin Properties.
As developers continue to build, they will face high costs from municipal fees, levies and taxes, construction costs and other costs associated with an inflationary environment, he said, spurring the need for more innovation in the way the region builds housing.
“Everybody wants to continue to look for ways to innovate construction itself and we haven’t found a good way of doing it. There are some groups looking at prefabricated structures. We haven’t solved that riddle yet, in a way that is that is even remotely close to scalable,” he said.
“I think that there will soon be a real demand for a more automated style of construction. And I am the first to admit, I have no idea what that looks like but we’re going to have to figure out how to bring technology into our buildings.”
Turcotte also said another important factor in 2024 will be new housing legislations and policies that have been introduced in the last year. These range from transit-oriented housing bills, rezoning single-family lots and creating standardized housing designs.
“It’s been a lot and in some ways that it’s a bit of a problem in and of itself. I’s hard to imagine trying to assess which parts of this are working or not working, just because there’s been so much all at once,” he said.
