Metro Vancouver home sales declined by 3.8 per cent in September 2024 compared to September 2023, suggesting that recent interest rate reductions are having a limited effect on demand so far.
The Bank of Canada cut its key interest rate to 4.25 per cent on Sept. 4, its third consecutive quarter-point reduction from a high of five per cent. Many analysts believe the country is now in a monetary policy easing cycle, with further cuts expected as inflation is reined in and the central bank pivots to bolstering economic growth.
But these rate movements are not yet causing renewed strength in housing demand, said Greater Vancouver Realtors (GVR) in an Oct. 2 news release, pointing out that sales in the region fell from 1,926 in September 2023 to 1,852 last month. This was also 26 per cent below the 10-year seasonal average of 2,502.
“Going back to 2022-ish, we’ve seen those sales have been trending below the 10-year seasonal average and it’s been that way for some time,” Andrew Lis, GVR’s director of economics and data analytics, told BIV. “Demand has not been as strong as we would normally expect to see in the market. Interest rates and mortgage rates have been very high for the past few years, keeping a lot of buyers on the sidelines.”
Lis said inventory has been rising recently, as the growing number of listings is paired against slower sales. “There are factors that could stimulate demand for the rest of the year,” Lis said, pointing to last month’s unusually large half-point rate reduction by the U.S. Federal Reserve, which the Bank of Canada could potentially emulate in its next announcement on Oct. 23.
“We’ve really moved toward buyer’s market conditions with sales not being as strong and inventory beginning to rise,” Lis said.
The total number of properties currently listed for sale on GVR’s Multiple Listing Service (MLS) system in Metro Vancouver is 14,932, a 31.2 per cent increase compared to September 2023 (11,382). This is also 24.2 per cent above the 10-year seasonal average.
Broken down by property type, sales of detached homes fell 9.8 per cent from a year ago, with a benchmark price of $2,022,200. Sales of condos fell 4.9 per cent from a year ago, with a benchmark price of $762,000, but sales of townhouses and duplexes increased by 7.4 per cent, with a benchmark price of $1,099,200.
The MLS Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,179,700. This represents a 1.8 per cent decrease over September 2023 and a 1.4 per cent decrease compared to August 2024.
GVR's Lis will be keeping an eye on the condominium sector, which tends to be more responsive to interest rate movements. “The condo segment tends to find more first-time or entry-level buyers, and they are most sensitive to high costs to borrow,” he said. “This has impacted that segment, compared to other segments where people come with a lot more equity and it may be the second, third or fourth purchase in their lifetime.”
The condo market in Toronto has seen a significant degree of softening, according to media reports, but the Vancouver market is different in key respects. Compared to Vancouver, Toronto has a much bigger investment market in their condo segment.
“In Vancouver it’s not quite as large, so it’s not quite the same story,” said Lis. “Here in Vancouver and more generally in the region, we’ve seen patterns where the apartment market is moving a lot like the other segments to a degree.”
