The trajectory for Metro Vancouver’s housing market continues to be upwards, with heightened demand expected to propel prices even further next year.
According to Royal LePage’s new market forecast, by the fourth quarter of 2022, the median price of a single-family detached property in the region is expected to increase 12% year-over-year to $1.893 million.
Condominium homes will also see substantial growth, with the median price expected to rise by 8% year-over-year to $767,000.
For all home types, the aggregate price by the end of 2022 is forecast to grow by 10.5% year-over-year to $1.375 million.
“We’ve been experiencing a chronic shortage of housing supply for over a year, and inventory levels are steadily decreasing. This continues to be a main driver of price appreciation in Vancouver and the greater region,” said Randy Ryalls, managing broker of Royal LePage Sterling Realty.
He adds that inventory would have to double in order for Metro Vancouver to return to healthier levels considered a “balanced market.”
As of the time of writing today, available listings in Metro Vancouver dipped below 10,000 units, which has only occurred three times since 1989.
“Just about every listing receives multiple offers and ultimately sells above the asking price, many without conditions. This competitive environment makes it especially difficult for first-time buyers to transact,” said Ryalls.
The number of available listing could further fall over the coming weeks and well into January, as families are now preparing for the holiday season and winter. Ryalls notes historically lower supply and pent-up demand is possible from buyers who were not able to buy a home in 2021.
Additionally, a surge in demand is possible, ahead of the Bank of Canada’s possible interventionist measures of increasing borrowing rates to reduce demand and mitigate historic inflation. This would also cool some of the demand from first-time home buyers, on top of the factor of the further escalation in home prices becoming far too out of reach for prospective buyers.
The impact of the Omicron coronavirus variant and the devastating floods in BC on the housing market remains the to be seen. But it is possible Omicron will delay “inevitable” hikes in the borrowing rate.
Across Canada, the aggregate price of a home is expected to rise 10.5% year-over-year to $860,000 by the end of 2022, with the median price of a single-family detached property and condominium projected to increase 11% and 8% to $918,000 and $594,000, respectively.
Greater Toronto was the only region in the country where condominium price increases are forecast to outpace that of detached homes, with prices expected to rise 12% year-over-year to $764,000. In contrast, the Toronto area’s single-detached property increases will go up by 10% to $1.564 million. The overall aggregate price appreciation in Greater Toronto is expected to be 10.5%.
The federal government’s three-year plan that began in 2020 of allowing 1.2 million immigrants into Canada is also expected to bring a surge of new housing demand, especially in the housing markets of Vancouver and Toronto.
BC’s housing market has been heated since the middle of 2020, with pent-up demand driving price escalation throughout 2021. It is anticipated 2021 will be a record year for housing in Metro Vancouver, exceeding the activity experienced in 2016.
“The lack of housing supply in Canada is a very real issue; one that cannot be solved overnight. While some believe that housing is now overvalued, signals point to a level of demand that will continue to outpace inventory, keeping prices rising on a steep upward trajectory,” said Phil Soper, president and CEO of Royal LePage.
“That said, I do expect to see price appreciation ease from the unhealthy levels that we have been grappling with over the last 18 months.”