8 minute read
Vancouver
Vancouver holds blue-chip status and forecasts an influx of international buyers post-COVID.
Market Overview
As Vancouver begins to see COVID-19 restrictions ease, it is holding its position as a balanced market, with conditions favouring sellers on certain properties. The pandemic came following a difficult environment of increased taxes and government regulations incrementally introduced since 2016. The taxes were designed to tame years of exponential growth. Despite this, Vancouver is maintaining buoyancy and proving the strength of its value proposition.
In tandem with the COVID-19 lockdown, the total number of home sales declined steadily in the latter two weeks of March and into April. However, considering the first two weeks of March were the busiest of the year, signs pointed to market demand being paused rather than halted. From April to May, the sales to active listings ratio increased from 11.8 per cent to 15 per cent in May. 42
Listings began to increase and prices rose by 2.9 per cent in May year-over-year, signalling a recovery. 43
In June 2020, YoY residential home sales increased
17.6%
42 Real Estate Board of Greater Vancouver, May 2020 43 Real Estate Board of Greater Vancouver, May 2020 44 Real Estate Board of Greater Vancouver, June 2020
In June, the market began to normalize as home sales and listing activity returned to stable levels. Residential home sales increased by 17.6 per cent year-over-year from 2,077 to 2,443, with a sharp increase of 64.5 per cent from 1,485 sales in May 2020. Listings rose by 15.1 per cent compared to May 2020, proving that sellers are gaining confidence in the market, with more utilizing virtual tactics for transactions amid social distancing measures. 44
2901-120 W 2nd St
Engel & Völkers Vancouver
An In-Depth Look
Through COVID-19, health and safety was the top priority for people living in Vancouver. Lockdown measures worked, and Vancouver’s exceptional performance during the pandemic made headlines globally. This success is positioning it as a prime place to relocate for safety and livability. It is anticipating international buyer interest once it is safe for travel.
Locally, the most in-demand luxury neighbourhoods in the over $4 million segment are Shaughnessy, West Point Grey, and West Vancouver, areas with globally rare properties. West Vancouver’s pristine waterfront offers breathtaking views, and high-end properties are quick to sell. North and East Vancouver are neighbourhoods with a decent supply of homes over $1 million. For buyers looking for homes priced between $1-4 million, Mount Pleasant West is the ideal spot. In the over $4 million segment, sales volume has decelerated since 2016 on account of the foreign buyers tax and speculation and vacancy tax. In spite of this, prices continue to hold as sellers in Vancouver know the worth of their properties and are confident in the city’s reputation as a global destination.
Vancouver is forecasting an uptick in interest from buyers outside Canada’s borders. This is likely due to Vancouver being one of the best performing cities in the world for keeping COVID-19 in check. Dr. Bonnie Henry, the province's health officer, is proving to be one of the world’s most competent doctors amidst the pandemic.
Homes under $1 million are rarely found in Greater Vancouver, however, the outskirts are starting to gain popularity with prominent potentials. The top three up-and-coming areas include Delta, Langley, and Surrey, all supplying significant inventory.
: This data represents totals and averages from April - June 2020
Ahead of the pandemic, the year started off strong for the Vancouver real estate market. February saw sturdy year-over-year increases, while total inventory lagged. The first two weeks of March maintained February’s momentum before succumbing to the COVID-19 pause.
Despite the World Health Organization declaring the pandemic on March 11, home prices still managed to climb 0.5 per cent. 45 Activity sharply slowed in mid-March, and by month’s end, Vancouver was under lockdown. Real estate was named an essential service, allowing real estate advisors to carry out transactions under the new lockdown restrictions as the Vancouver market quickly adapted by leveraging 3D tours and video conferencing.
In March and April, Vancouver residents adhered to government mandates and stayed home, resulting in a tapering off of new listings. Sales in April took the strongest hit while COVID-19 was in full swing, decreasing by 39.4 per cent compared to the same time last year. 46
Despite the drops in sales, prices generally held steady.
The pandemic’s peak saw buyer activity outpacing listings, suggesting sellers were staying mostly on the sidelines. By May, sellers began to emerge from isolation as sales increased by 33.9 per cent and inventory increased by 5.7 per cent month-over-month. 47
45 Statistics Canada, April 2020 46 Vancouver Regional Real Estate Board, April 2020 47 Vancouver Regional Real Estate Board, May 2020 48 Real Estate Board of Greater Vancouver, June 2020 From May to June 2020 new home listings increased
57%
In June, buyers and sellers became more comfortable with market conditions and virtual tools. Prices held while
listings and home sales showed healthy increases month-over-month and year-over-year. In June, 5,787 homes were listed, a 21.8 per cent increase compared to last year and a 57.1 per cent increase compared to May 2020. The benchmark price for all residential properties in Metro Vancouver in June was $1,025,300, representing a 3.5 per cent increase over June 2019 and a 0.3 per cent decrease compared to the previous month. 48
As restrictions lifted, some looked for properties that better accommodated their lifestyle by upsizing inside the city limits or seeking properties in the suburbs. Others stayed in their Vancouver condos while looking for second properties in local recreation markets.
The permanent work from home scenario, coupled with reopening from lockdown, is creating an uptick in buyers seeking more space in suburban homes or second homes in cottage country.
Vancouver is seeing a lack of new property inventory due year-to-date, the shop cited a 17 per cent closed volume increase in
to provincial regulations for developers. The current requirement forces developers to sell 60 per cent within nine months of the development in order to extend the permit and receive construction financing. As a result, Vancouver has faced a market downturn in new
development since 2017.
Q3 Outlook
Engel & Völkers Vancouver is forecasting a return to stability and normalcy. Its performance during the Canadian marketplace. City council’s supply cut on new housing could leave home buying in the city core out of reach for some. As borders reopen, Vancouver will continue to be a top destination for immigration with pentup demand as a result of the pandemic. Interest from the United States is forecasted to climb post-COVID and Engel & Völkers Vancouver reported 36 per cent of closed transactions over $1 million and had eight closed deals over $4 million at an average sales price of $5.5 million in June 2020. Year-over-year and
pandemic is encouraging, holding its position in the June 2020.
will continue into 2021, becoming a significant international contributor to Vancouver’s growth in the near future. Unrest in Hong Kong means 2020 could see some of the 300,000 Canadian passport holders, as well as an influx in asylum seekers, come to Canada following Beijing’s new national security legislation.
“ When Vancouver went into lockdown, people listened and stayed home. Word about British Columbia’s lockdown success is spreading and attracting wealthy shoppers who want to purchase property in a safe and secure location with an outstanding lifestyle. We’re forecasting an inflow of international buyers, mostly coming from the United States. ”
Andrew Carros, License Partner, Engel & Völkers Vancouver
Since COVID-19 put Q2 on pause, Q3 is expected to be busy as it replaces the usually-active spring season. Fall is forecasted to heat up with more listings and greater consumer confidence, boosting supply and potentially shifting to a buyer’s market. Overall, Vancouver is a safe investment for domestic and international buyers, cushioned by its high quality of life, good weather, incredible access to nature and highly rated schools. Investors looking for new opportunities in Vancouver should keep an eye on areas outside of Greater Vancouver, including Delta, Langley, Surrey, White Rock, and Coquitlam where new developments and transit are booming. Boutique townhouse developments from individual builders are also good opportunities as there will be a lack of inventory for the next few years.
This data represents totals and averages from April - June 2020
This data represents totals and averages from April - June 2020
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©2020 Engel & Völkers Canada, Inc. All Rights Reserved. Each brokerage independently is owned and operated. The information in this report is based on publicly available market data and as researched in cooperation with Bullpen Research & Consulting Inc. Actual results may vary and we cannot represent that the content is accurate or complete. This market report is provided for general information only and not to be relied upon in any way. Engel & Völkers Canada, Inc. and its affiliates do not assume any responsibility or liability whatsoever for any loss or damage that may result from any use of, reliance upon, or reference to the information provided in this market report. This document is not an offering of a franchise, and where required by law, an offering can only be made 14 days after delivery of the applicable franchise disclosure document. 44 Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020 Engel & Völkers Americas Canadian Luxury Real Estate Market Report Mid-Year 2020 44
