Vancouver’s housing market is seeing some action going into 2020 after a few months of slow housing starts.
New data from the Canadian Mortgage and Housing Corp. shows that Vancouver housing starts grew 20% to 28,141 in 2019 from 23,404 in 2018, hitting a new record after two years of declines. The vast majority of the starts were apartment and condo units accounting for 76% of starts in 2019 while single family home starts dropped 25 per cent from 4,592 to 3,426.
Experts are mixed on whether this means we’ll see a drop in prices as supply increases over the coming years, or if the robust investment in the market is a sign of confidence and the market will start to rebound. Starts are higher than they were in 2016, which was a record-setting year for Canada’s housing market.
As more millennials prepare to enter the housing market, developers and building homes that suit their needs and budget, which is why we could be seeing more growth and investment into the relatively more affordable condo sector.
According to the Real Estate Board of Greater Vancouver, the benchmark condo price fell to $656,700 in Dec. 2019. Still steep for a first home, but many young people are seeing this as their best opportunity to get into the market. It’s still a gamble though.
Many young people have been shunning home ownership entirely, in favour of keeping rentals they may have locked in years ago at a much more affordable rate and finding other ways to save and invest than real estate.
There is the danger that a quick influx of housing supply will force developers to lower their prices if their homes stay on the market longer than they had hoped. In December 2019, 25% of new homes remain on the market after construction so that’s a very real possibility. The biggest declines in prices have been at the highest end of the market, perhaps attributable to the crackdown on foreign investment and empty homes.
However, Royal LePage is forecasting home prices in Vancouver to stabilize in 2020 after 2019’s decline, predicting an increase of 1.5% this year. The happy middle with slow growth would be the ideal outcome for many but there certainly is some buzz and excitement around all this new development ringing in a new decade for the housing market in Vancouver.
Ada Slivinski is the Founder & Principal of Jam PR, a boutique agency focused on helping small businesses get big exposure. You can reach her at [email protected]