Metro Vancouver Buyers Still Showing Trepidation

Even with interest rate cuts, Metro Vancouver is seeing supply levels reach pre-pandemic highs and sluggish home-sales activity.

By Brett Surbey | 4 minute read

Metro Vancouver is seeing supply levels reach pre-pandemic highs and slugging home sales activity despite the recent interest rate cut.

With Summer in full swing, usually the housing market in Vancouver follows, with home sales rising to match the warmer weather outdoors. So far, the market is looking quite different.

While the first rate cut in June was not enough to get buyers in Vancouver’s market off the sidelines, it will be interesting to see whether the July rate cut has more of an impact. 

According to the Greater Vancouver Realtors (GVR) monthly housing report on the Metro Vancouver area, residential sales fell under the 10-year seasonal average of 3,166 — that’s nearly a 24% drop. 

Compared to June of last year, residential sales plummeted 19.1%: down to 2,418 sales this year compared to 2,988 last June. This lack of buyer competition has led to supply levels not seen since 2019, with total properties listed on MLS clocking in at 14,182. This is 42% higher than last year and 20.3% higher than the 10-year seasonal average. 

“The June data continued a trend we’ve been watching where buyers appear hesitant to transact in volumes we consider typical for this time of year, while sellers remain keen to bring their properties to market,” Andrew Lis, Director of Economics at GVR, says in the report. “This trend is providing buyers [with] more selection to choose from and driving all market segments toward [a] balanced condition.”

The sales-to-active-listings ratio for the area stands at 17.6% among all property types (attached, detached and apartments) suggesting a strong market for buyers. But benchmark home prices aren’t dropping yet.

The MLS Home Price composite benchmark for residential properties sits at $1,207,100 — only up 0.3% since last June and 0.4 since May of this year. Lis views this flatlining of Metro Van’s benchmark price as a result of buyer hesitation and abundant inventory.

“June’s lower-than-normal transaction volumes suggest many buyers remain hesitant, which has allowed inventory to accumulate and has kept a lid on upward price pressure across market segments,” he states. 

Lis adds that, “the transaction-level data do show that well-priced properties are still selling quickly, suggesting astute buyers are able to spot value and act when opportunities arise.”

Still, detached homes are climbing in value year-over-year, with the benchmark price at $2,061,000, up 3.7% from June of last year.

More cuts needed to get buyers moving  

RBC economist Robert Hogue sees these stagnating price trends and limited sales activity as part of an affordability problem.

”The first Bank of Canada interest rate cut in four years brought some energy to Canada’s housing market in June but it came well short [of] electrifying activity,” wrote Hogue, after the first cut. “Price trends are largely stagnant in Ontario and British Columbia. Buyers in some of these markets are the most severely challenged by the affordability crisis,” he states in the RBC Monthly Housing report.

Hogue believes multiple rate cuts are needed to “stimulate homebuyer demand” and to “make a meaningful dent in ownership costs,” especially in expensive locations like British Columbia. 

A similar report from TD Economics, written by Rishi Sondhi, shows similar findings. Sondhi expects Canada’s housing market to “gain traction in the second half of 2024.” with B.C. and Ontario rebounding from a low sales cycle. 

“In Ontario and B.C., average home price growth should benefit from the strongest sales gains in the country moving forward, with pent-up demand driving a recovery in activity from low levels in these two markets,” Sondhi writes.