The Vancouver Life Real Estate Podcast Vancouver Real Estate Market Update for December 2024
This episode delves deeply into the housing affordability crisis in Canada, a critical issue that remains at the forefront in 2024. With persistently high home prices, elevated interest rates, and a rising cost of living, homeownership is becoming increasingly unattainable for many Canadians.
The data tells a sobering story. Homeownership rates in Canada have declined from 69% in 2011 to 66% today, with younger generations facing even greater challenges. For Canadians aged 25 to 29, the homeownership rate has dropped sharply, from 44.1% in 2011 to 36.5% in 2021. This decline underscores the growing barriers to entering the housing market.
The struggles extend beyond prospective homebuyers. Developers are contending with soaring construction costs, skyrocketing municipal development fees, and high interest rates, creating a hostile environment for new projects. These challenges have led to a surge in shelved developments, land sell-offs, and insolvencies within the sector. Projects like "The Riv," a 37-story condo tower planned for Toronto, have been canceled due to insufficient buyer interest and unsustainable pre-sale thresholds. These setbacks highlight a looming crisis in housing supply that could worsen the affordability challenges Canadians already face.
Adding to the complexity, Oxford Economics projects that housing affordability will not return to reasonable levels until 2035. Their Housing Affordability Index, which evaluates factors like home prices, wages, and interest rates, reveals that homes were affordable between 2005 and 2020 but became increasingly unaffordable, peaking in 2023. While affordability has started to improve slightly, it remains far from sustainable. For many Canadians, the prospect of waiting more than a decade for improved affordability is daunting, particularly in historically expensive markets like Vancouver and Toronto.
Recent data from StatsCan challenges the narrative that home flipping significantly contributes to housing unaffordability. In British Columbia, only 3% of properties were flipped within a year in 2021, with minimal impact on overall market prices. While flipping can influence price volatility in overheated markets, its role in Canada’s broader housing crisis appears overstated. The core issue remains the chronic mismatch between housing supply and demand.
This episode also explores the November Greater Vancouver real estate statistics, offering insights into market trends. While total sales decreased by 20% month-over-month, they were up 29% year-over-year, signaling a potential shift. Inventory dropped to a seven-month low, though it remains 26% above the ten-year average. Despite elevated inventory levels, prices in some categories have remained stable or even increased, reflecting the market’s resilience.
Looking ahead, the episode discusses the Bank of Canada’s upcoming December meeting and the potential implications of a rate cut. While a reduction could stimulate an early spring market in 2025, questions persist about whether it would genuinely address affordability or merely fuel demand without resolving supply constraints.
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