Vancouver Real Estate Update, September 2024: Where Housing Supply Stood

Written in September 2024. Some details have changed since, so check current numbers before you act on this.

Vancouver's housing supply was looking shaky in September 2024: new construction was slowing, buyers were holding back even as mortgage rates fell, and the homes we'll need in a few years weren't getting started. From declining mortgage rates to economic fluctuations, the market is on the verge of a major transformation. Here’s a detailed look at the current state of Vancouver’s housing market, what’s driving these changes, and what it means for you.

1. Declining Mortgage Rates: What’s the Impact?

The Bank of Canada’s continued rate cuts have brought down mortgage rates, yet this hasn’t translated into a significant uptick in real estate activity. Despite the lower rates, mortgage originations, the new mortgages made available to buyers, fell year-over-year in June.

What Does This Mean for You?
While variable rate mortgages are seeing a slight increase in popularity, thanks to expectations of further rate cuts, the overall market remains sluggish. Most new mortgages are still locked into fixed terms, with borrowers waiting for rates to drop even further before committing. If you're a buyer, run the options through the mortgage calculator, because this might be the time to secure a variable rate mortgage while waiting for fixed rates to drop to more favorable levels.

2. Housing Supply is Dwindling: A Crisis in the Making?

Housing supply in Vancouver is facing a severe crunch, with fewer new builds and an overall drop in available inventory. While CMHC reported the annual pace of total housing starts up 16% in July 2024 from June, driven by higher multi-unit starts, the outlook for single-family homes and condos is far less optimistic.

Impact on the Market:
With rental starts climbing, there's a noticeable shift towards rental properties over homes for sale. This could create a logjam in the market, where rental properties become more abundant, but single-family homes and condos remain scarce. If you’re looking to buy a home, be prepared for limited options and potentially higher prices as demand outstrips supply.

3. Future Supply and Construction: What’s on the Horizon?

The recent surge in housing starts is likely a one-off event, driven by developers rushing to beat changes in financing rules. Forward-looking indicators show a sharp slowdown in new construction activity, with Statistics Canada reporting multi-unit permit values down 19.8% in June 2024.

What to Expect:
This slowdown in new construction could lead to a significant shortage of housing in the next few years, especially in the condo and single-family home segments. If you’re a homeowner or investor, now might be the time to consider how this future shortage could impact property values. On the flip side, for renters, the increase in rental units could provide more options and potentially stabilize rent prices.

4. How do inflation and the economy affect Vancouver real estate?

Statistics Canada put inflation at 2.5% in July 2024, down from 2.7% in June, indicating that the Bank of Canada’s efforts to control inflation are working. However, this drop in inflation is heavily influenced by mortgage interest rates, which the Bank of Canada can control. Without the impact of mortgage interest, inflation would be lower still.

Why It Matters:
While lower inflation is good news, it also highlights the need for more aggressive rate cuts to stimulate the economy. If the Bank of Canada continues to ease financial pressures, we could see more significant improvements in the housing market, making it easier for buyers and sellers alike to navigate these challenging times.

5. The Future of Vancouver Real Estate: What Should You Do?

Given the current trends, the Vancouver real estate market is likely to remain in a state of flux for the foreseeable future. With declining mortgage rates, dwindling housing supply, and a potentially significant economic shift on the horizon, you'll want to stay informed and make strategic decisions, and the Kyle Mark Report keeps the numbers current.

For Buyers:
If you’re in the market for a home, patience could pay off. The spring market of 2025 might bring more opportunities as the effects of rate cuts fully take hold. However, if you find a good property now, consider making a move before competition heats up.

For Sellers:
If you have a well-located property with a good layout, you’re likely to see strong interest, even in a tight market. However, if your property needs work or is in a less desirable area, you might want to hold off until the market stabilizes, potentially in the spring of 2025.

Need More Information?

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