The Vancouver Life Real Estate Podcast Vancouver Real Estate Is NOT Normal
If you live anywhere else in Canada, it’s pretty clear in today’s market that without demand, the supply of homes will rise creating a decline in sales volume and that effectively helps to lower prices along with very low consumer confidence. With credit having been restricted through quantitative tightening at the most aggressive pace in recent history - affordability has reached heights we've never seen before and everyone is feeling the squeeze.
Toronto saw new home sales fall 96% last month - just 45 new homes sold in October, and only 250 new condos - in a region where 6 million people live this isn’t good news for the market. So why is it that in Vancouver, under the same set of financial conditions, hasn’t experienced the rise in inventory needed to bring prices down? In this episode we discuss the unique case of Vancouver’s inventory, why it performs so much stronger than the rest of the market and how existing re-sale inventory will be a formidable problem for the market to tackle in the years to come.
Is it any surprise that new home builders are getting hurt the most? With new layoffs announced in both Canada and the US, it’s a sealer sign there’s more pain to come. And let’s not forget we need these very same people to help solve our housing crisis by building more inventory. They are now paying interest on their inventory they can no longer afford to pay. As this problem persists, expect to see these properties begin to sell as Builders are forced to bring their prices down to reduce their debt load in the short run.
But at the same time, Developers will freeze projects or push them out until prices are restored and the environment improves. Looking at the longer term metrics, it’s without a doubt that it will - Canada recently announced it is gearing up its ultra aggressive immigration policy. With more than 500,000 new Immigrants per year by 2025 - and the majority of those people will be technically skilled individuals immigrating to Canada to add to the workforce. As these people accumulate and new home builders freeze out the inventory and existing inventory not coming to market because home owners have locked in ultra low rates, we are poised for another housing boom on the other side. However in the short run, Buyers who can capitalize on this softening trend will thank themselves in the years to come.
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