The Vancouver Life Real Estate Podcast Vancouver Real Estate Market Update for July 2024
The Vancouver real estate market has largely held strong in 2024, with prices rising for the first five months. However, a significant downturn appears to be building. High interest rates for two years, a ten-year low in sales volumes, and a spike in consumer and business insolvencies are all pointing to a decline in real estate prices.
The June numbers are out, and we’ll dive into them to discuss how low prices may go. Additionally, we’ll provide updates on insolvency figures, the SSMUH initiative, and new tenant laws requiring landlords to give four months’ notice if the new owner plans to live in the property.
June's total sales were 2,398, down 19% year-over-year and 13% month-over-month, marking the second consecutive monthly decline and the slowest since 2019. With sales 24% below the ten-year average and rising inventory levels, owners are choosing to stay in their homes, while buyers remain hesitant. The expected rate cuts did not bring buyers but instead increased new listings and inventory.
June saw 5,737 new listings, a 7% increase year-over-year, and a 3% rise above the ten-year seasonal average, marking the third month of elevated listings. This year has seen more listings than usual, with sellers eager to get deals done, whether for more space or relocations due to work.
Inventory stood at 13,405, up 0.5% month-over-month and 35% year-over-year, reaching a four-year high and 20% above the ten-year average.
The sales-to-active ratio fell to 18%, down 3% month-over-month, indicating a balanced market for the first time since January. The ratios for detached homes, townhomes, and apartments all dropped, suggesting a continued downward trend over the summer.
Prices, which had been increasing every month of 2024, saw a decline in June. The Home Price Index (HPI) dropped by $5,000 to $1,207,000, though it remained up 0.5% year-over-year. The median price fell by $18,000 to $980,000, and the average price rose by $2,000 to a new all-time high of $1,350,000. However, with high rates, spiking inventory, and low sales, a peak in HPI prices for this cycle appears to have been reached, and a decline is expected over the next four months.
Insolvencies are a growing concern, with consumer and business insolvencies in British Columbia, Alberta, Ontario, and Quebec rising by 1,750% since mid-2022. This financial stress will likely lead to business layoffs and forced property sales, further driving prices down.
New tenant laws effective July 18th require landlords to give four months’ notice to tenants for personal use. This change could complicate transactions and mortgage approvals, making rental properties harder to sell and potentially pushing rental prices up as investors withdraw from the market.
While the Vancouver real estate market has shown resilience in early 2024, multiple factors are now converging to indicate a potential downturn in prices and lower sales volumes. High interest rates, rising inventory, low sales, increasing insolvencies, and new regulatory challenges are expected to exert downward pressure on prices for the foreseeable future.
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