Metro Vancouver housing prices largely held onto gains made in 2023, despite a slight decline in the latter half of the year.
The prospect of a stable interest rate environment as the year began fuelled an 8 per cent rise in the Real Estate Board of Greater Vancouver’s composite benchmark price for residential properties in the first half of the year.
The benchmark price of $1.2 million inched up to $1.21 million in July before a slow decline to $1.17 million in December. However, this was still 4.9 per cent where it stood a year earlier.
“You could miss it by just looking at the year-end totals, but 2023 was a strong year for the Metro Vancouver housing market considering that mortgage rates were the highest they’ve been in over a decade,” said Andrew Lis, REBGV’s director of economics and data analytics. “The fact that we ended the year with five-per-cent-plus gains in home prices across all market segments demonstrates that Metro Vancouver remains an attractive and desirable destination, and elevated borrowing costs alone aren’t enough to dissuade buyers determined to get into this market.”
While sales activity improved in the latter half of 2023, with monthly tallies topping those of a year earlier from May onwards, the annual tally was down 10 per cent from 2022 as lingering concerns stalled activity well into spring.
REBGV figures indicate that residential sales in the region totalled 26,249 in 2023, down from the 29,261 sales in 2022, and a 41.5 per cent below the 44,884 sales reported in 2021.
Stronger sales in the latter half of the year also boosted listings. The total number of homes listed for sale in Metro Vancouver last month was 8,802, a 13 per cent increase compared to December 2022, with 1,327 detached, attached and apartment properties newly listed for sale during the month. This represents a 9.9 per cent increase versus a year earlier.
An analysis by Rennie Intelligence was more dour, noting that December was “yet another month of below-average sales counts” for the Lower Mainland, contributing to the lowest annual total in four years. It also said 2023 saw the fewest new listings brought to market in 18 years.
Seasonal trends were reasserting themselves, however, offsetting some of the gloom as the market found a new post-pandemic baseline.
The modest three-per-cent drop in the benchmark price was cold comfort to buyers looking to enter the market, however.
RBC Economics, in a December review of affordability trends through the third quarter, reported that any improvements in affordability in 2023 were reversed by the third quarter as interest rates once again resumed their upward march.
RBC said the average household now requires 76.1 per cent of monthly income to afford a home, the worst ever.
“Such a high bar to homeownership is pushing many potential buyers to the sidelines,” it said. “The resulting weakening in demand-supply conditions is now dampening property values.”
Vancouver in particular, where households now require 102.6 per cent of monthly income to afford a home based on aggregated measures, now depends on condos for any kind of affordable homeownership. And even here, prices are under pressure.
“We think the downward drift could pick up velocity in the near term in the face of excessive unaffordability pressures,” report author Robert Hogue, assistant chief economist with RBC, wrote.
