RE/MAX Housing Market Outlook 2014 for Vancouver
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A Look Back at 2013
May’s election marked a turning point for the city, which had suffered through six consecutive quarters of tepid sales activity throughout 2012 and the first two quarters of 2013. The current momentum is expected to propel the number of homes sold to 28,000 by year-end 2013, a 10 per cent increase over the 25,445 sales reported in 2012. Overall average price is projected to climb five per cent year-over-year, rising to $765,000, although certain price ranges and neighbourhoods will perform better than others.
Vancouver’s housing market has returned to more balanced conditions, with the sales-to-listing ratios in most communities sitting between 40 and 60 per cent. Inventory levels continue to decline, with just over 15,000 properties listed for sale at the end of October. Local buyers have been most active, taking advantage of softer housing values to move up to larger homes and/or better neighbourhoods. Offshore investors maintain a solid presence, although their impact is less noticeable than in years past.
Vancouver’s luxury market, in particular, has experienced a solid upswing in home buying activity, with sales over the $2 million price point up more than 20 per cent over one year ago.
Condominiums continue to be a major factor in the Lower Mainland, representing the first and second step in homeownership for many purchasers. With an average price of approximately $560,000, condominiums represent an affordable alternative for entry- to midlevel purchasers. Single-detached homes remain a sought after commodity, with the average now approaching $1.25 million.
New Housing
New construction has picked up in recent months, with multi-unit residential dominating the landscape once again. The city’s commitment to build along major transportation routes is gaining traction, with signs of progress evident along the up–and-coming Cambie corridor where a vibrant live/work community is developing.
Southeast False Creek, one of the projects currently underway, focuses on ‘efficient energy solutions, high-performance green buildings’ and easy access to transportation. The mixed-use community with a residential, retail, and commercial component— surrounding the 2010 Olympic Village—is designed to accommodate between 11,000 and 13,000 residents. Despite tighter lending practices, there is a movement afoot to create more affordable housing. Builders and developers are challenging conventional design and displaying a level of creativity that is bound to set the standard for years to come.
Greater Vancouver’s economy is ideally positioned for growth after an extended period of reduced activity. Housing starts in the Vancouver CMA are expected to top 18,200 in 2013, and climb another percentage point to 18,400 in 2014. The unemployment rate has steadily declined, hovering at seven per cent in October/November. Eighteen capital projects over $15 million, totaling just over $1.5 billion, are scheduled to start in the Lower Mainland in 2013, with another $500 million in proposed construction planned for the following year. The largest project now underway is the Little Mountain Housing Redevelopment valued at $300 million, while construction has also started on the $100 million Low Level Road Re-Alignment. The city’s commitment to transportation infrastructure remains intact, with a proposed extension of rapid transit from the Expo Line to UBC—a $2.8 billion dollar investment—expected to be completed by 2015.
Vancouver’s CMA population continues to climb, up just over nine per cent to 2,313,328 in the 2011 Census, with suburban communities such as Surrey, New Westminster, Langley, and Burnaby experiencing double- digit growth. Immigration remains strong, with 14 per cent of the 257,515 new Canadian residents in 2012 moving to British Columbia—the vast majority choosing to call Vancouver home. Given strong underlying fundamentals, the Greater Vancouver economy is expected to experience steady growth, which should serve to buoy home buying activity in the years ahead.
Real Estate Market Forecast
Vancouver’s real estate market should continue to benefit from the momentum gained during the latter half of 2013. Pent-up demand is expected to play a role moving forward, with purchasers at all price points demonstrating greater confidence in the market overall. Balanced conditions are expected to prevail throughout 2014 as inventory is absorbed. Moderate upward pressure on prices is anticipated, with slow but steady appreciation. As values improve, there could be an upswing in the number of homes listed for sale, which in turn may hold price increases in check. Although local purchasers have the ability to sustain the market’s current momentum, foreign investment in the Greater Vancouver Area will continue, although not at the same frenetic pace experienced in 2011. Changes to financing have created a more qualified purchaser base, which should bode well for the market in the coming year.
A continuation of low interest rates should further stimulate home buying activity, particularly in higher-end move-up markets priced between $1.5 and $2.5 million in the core. Greater Vancouver’s luxury segment—priced in excess of $2 million—is forecast to climb further as baby boomers and Generation X move to secure their next step. Modest increases in both unit sales and average price are forecast for 2014, with the number of homes sold expected to climb two per cent to 29,000 units and values are anticipated to reach the $800,000 benchmark, an increase of almost five per cent over 2013.
“Greater Vancouver” refers to the area covered by the Real Estate Board of Greater Vancouver: Burnaby, Ladner, Maple Ridge, New Westminster, North Shore, Pitt Meadows, Richmond, Squamish, Tri-Cities, Tsawwassen, Vancouver and Whistler.
© 2013 Real Estate Weekly