CONSUMER SENTIMENT the rennie brief
WHAT YOU NEED TO KNOW ABOUT CHANGING SENTIMENT IN METRO VANCOUVER • A survey of consumer sentiment in Metro Vancouver was recently conducted by rennie intelligence, in partnership with Mustel Group. • The survey sheds light on consumer expectations and potential future behaviours, adding a layer of insight that does not often accompany traditional housing market metrics. • Key findings include a slight increase in buying intentions in the next 6 months, with pre-sale poised to meet some of the increased future demand.
MAY 2022
A recent survey of Metro Vancouver residents shows continued engagement in the housing market and an expectation of rising home values, despite deepening concerns about personal finances.
Additionally, the proportion of respondents indicating an intention to sell their home in the next 6 months is approximately half of the proportion intending to buy (17% vs 33%); this suggests that the pre-sale market has the potential to play a significant role supporting housing demand. AN EXPECTATION OF RISING HOME VALUES One of the larger response shifts in our consumer sentiment survey between October 2021 and April 2022 was in the context of future home values. More specifically, 69% of respondents in our October survey said they expected home values to be higher in one year, versus 62% in our April survey. As well, the proportion of respondents who indicated they expect home values to be lower in one year doubled between October and April, from 8% to 16%. While these changes are material—and likely a function of some combination of rising interest rates, growing economic uncertainty, and home price fatigue—it is worth underscoring that almost 2/3 of respondents continue to anticipate that home values will rise in the next 12 months. GROWING CONCERNS OVER PERSONAL FINANCES More respondents indicated, as part of the April survey, that they expect their personal financial situation to be worse in one year (21%) than did as part of the October survey (15%). Again, this is not surprising when considered against the backdrop of too-high inflation and rising interest rates. Meanwhile, fewer respondents expected to be better off in one year in April (31%) than in October (34%). Overall, the most common response in April—equating to about half of those surveyed—continues to be that consumers’ financial situations will remain unchanged one year from now. TAKEAWAYS FROM THE APRIL 2022 SURVEY As it relates to housing and personal finances, consumer sentiment in Metro Vancouver has clearly shifted since October, with growing concern around worsening macroeconomic conditions. That said, residents continue to perceive the local housing market as being resilient despite the increased headwinds.
STRIVING TO BETTER UNDERSTAND CONSUMERS Most of the data we rely on to evaluate our real estate market is concerned with the “whats”, “whens”, and “wheres” of the world around us, and less so the “whys” or the “hows”. Furthermore, our data almost exclusively reflects actions or events that happened in the past. Against this traditional information backdrop, how do we better understand why buyers and sellers make certain decisions? How do we gauge their views about the health of the housing market and their personal finances, and how does this influence their future housing-related intentions? To help us answer these questions—and others—we recently completed our second semi-annual consumer sentiment survey (carried out by the Mustel Group in April 2022). As part of this, 800 adult respondents were surveyed throughout Metro Vancouver. Highlights from the survey are outlined below. PREVALENT BUYING INTENTIONS The proportion of respondents that indicated they plan to buy a home in the next 6 months rose to 33% in April, up from 31% in October 2021. If this proportion (33%) is expanded into the adult population of Metro Vancouver as a whole, and taking into account average household size, it translates to more than 380,000 households potentially taking steps, in the next 6 months, towards purchasing a home.
summary of consumer sentiment survey results METRO VANCOUVER, OCT 2021 & APR 2022
31%
No Yes
Planning to buy? [within 6 months]
33%
69%
67%
Oct-21 Apr-22
8%
Better No Change Worse Higher No Change Lower
16%
Home Values [in 12 months]
24%
22%
69%
62%
15%
21%
Personal Finances [in 12 months]
51%
49%
34%
31%
For further information please contact Ryan Berlin (rberlin@rennie.com) or Ryan Wyse (rwyse@rennie.com). The information set out herein (the “Information”) is intended for informational purposes only. RAR & RMS has not verified the information and does not represent, warrant or guarantee the accuracy, correctness and completeness of the information. RAR & RMS does not assume any responsibility or liability of any kind in connection with the information and the recipient’s reliance upon the information. The recipient of the information should take steps as the recipient may deem necessary to verify the information prior to placing any reliance upon the information. The information may change any time without notice or obligation to the recipient from RAR & RMS.
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