housing
05. housing
As regions grow, so too should the number of homes that are for sale and sell. To the extent this is true, British Columbia's regions are building quite the war chest of would-be buyers.
POISED FOR A SALES SUPERNOVA?
Given the current inflation and interest rate environment, it shouldn’t come as a surprise that housing market activity has been subdued of late across the country. Not only has buyers’ purchasing power been diminished by the highest interest rates we’ve seen in two decades, but prices have remained stubbornly high. Additionally, uncertainty around interest rates has kept participants on the sideline as they await for information and clarity. But even with the aforementioned conditions, there’s a certain number of real estate transactions you can expect in a given market. There will always be some people who need to buy or sell residential real estate, like those who moved cities, changed jobs, got married or divorced, or had a baby. In other words, people who need to move because their current home no longer fits their circumstances. And given our rapid population growth throughout the country, it’s reasonable to expect transactions to be increasing over time. So looking at monthly sales counts is useful in comparing
how active a local real estate market is relative to history, but it doesn’t tell us what we could reasonably expect to see for transaction counts if macroeconomic conditions were relatively stable, or how many transactions we can expect once those conditions return. For that we turn to per capita sales, which here in Metro Vancouver were below average in the two years leading up to the pandemic, followed by a period of above-average per capita sales as interest rates were historically low. Since mid-2022, however, as the Bank of Canada engaged in its rate tightening cycle and sales counts dropped off, per-capita sales have been well below the past 10-year average, suggesting that there are buyers waiting on the sidelines. Overall, since the start of 2018, there have been 34,000 fewer sales than one would otherwise expect given today’s population, suggesting that as interest rates start to decline, there will be many potential buyers waiting in the wings.
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