Mid-Year 2023 Report Highlights
Overall housing sales were 194% higher in June compared to January
Composite home benchmark price is up 8% from the start of the year
Record high prices are being seen in suburban markets
Investors pile in as condo prices are nearing record highs
Vancouver’s benchmark home price is now higher than New York City
Fraser Valley housing sales are up 51.1% from June 2022
The first six months of 2023 proved a thrill ride for Metro Vancouver home buyers and sellers, who switched reins at least three times and still managed to post a surprising pace of real estate transactions, with June sales up 194% from January 2023.
As sales and prices increased, 5,466 new listings joined the action. There were 9,990 properties for sale as June ended, the highest increase month-over-month since earlier in 2022. It was still not enough to satisfy June demand as nearly 3,000 homes were sold. We are still seeing multiple offers at a pace indicative of a true seller’s market. Despite back-to-back months of higher listings, the low inventory keeps buyers competing in most markets, even detached houses in some areas.
In June, the Bank of Canada threw up another interest rate hike to slow the market, but buyers rode right over it. June’s 2,988 total home sales surpassed June 2022 and both sales and prices blew past projections.
“The market continues to outperform expectations across all segments,” said Andrew Lis, REBGV’s director of economics and data analytics.
As they say, what a ride.
Condominium buyers, some of them investors, snapped up 1,573 apartments in June to lead the property trifecta: that was more sales than all the detached and townhome sales combined in the month. As Lis noted, “The benchmark price of a condo apartment is almost cresting the peak reached in 2022, while sales of apartments are now above the region’s 10-year seasonal average.”
Data from the Canadian Housing Statistics Program (CHSP) shows that 45.6% of Vancouver condos are owned by investors who hold at least three condo apartments. In some Fraser Valley markets, it is even higher.
The surprise, though, is not that so many people own multiple condos, but that more don’t. You don’t need to be a statistician to figure out why buyers are drawn to condominiums. In Greater Vancouver, the benchmark price of a condo apartment increased by $47,000 during the first six months of this year, to $767,000. In Abbotsford, which led the province with multiple owners accounting for nearly 70% of the condo investment market, the average apartment price in June was $16,000 higher than in January 2023.
With the highest rental rates in the country – a one-bedroom condo rents in Metro Vancouver for an average of $2,700 a month and can easily top $3,000 – investors with enough equity can achieve positive cash flow as they watch the condo appreciate. Thanks to new provincial regulations, virtually all condos are now rental allowable units since the province outlawed strata rental restrictions, except for a strata still being able to have an age restriction of 55-plus. Even in those, an older tenant can still be welcomed.
Condominiums of course remain the most affordable option as first-time buyers deal with higher mortgage rates and a mortgage stress test rate of 5.25%. The detached-house benchmark is now $1,991,300 and is rising by nearly 2% per month. Scarce townhouses sold in June at a benchmark of $1,098,000, up 9% compared to the first of the year.
The Bank of Canada’s nine interest rate hikes were meant to stall housing sales, and they certainly did. In June 2023, the latest rate hike helped drive detached house sales down 19% from a month earlier, but the median price had already increased about $180,000 compared to January.
To learn more about the current real estate market, please contact me. I’m happy to help you whether you want to buy or sell your home.