It’s now been one year since the Bank of Canada embarked on its aggressive interest rate tightening cycle, and much of the past year has been characterized by weakened housing market activity and declining prices. And so it came as a bit of a surprise to some--but not all--when, in February, overall benchmark prices in Metro Vancouver increased on a month-over-month basis for the first time (with the exception of condos) since last Spring. One month ago we noted that not only was overall inventory well below typical levels, but when you dig a little deeper into the listings that are available, supply is even more constrained than it first appears. And as the market progressed through March—a typically busy month for both sales and new listings—the pace of sales did in fact quicken, while listings failed to keep pace, thereby yielding another month of price growth.
To put numbers to it, there were 4,022 sales in Metro Vancouver in March, which was a 50% increase from February and the first time sales surpassed the 4,000 mark since last May (and the first time above 3,000 since June). Last month’s sales count, however, was 41% lower than in March 2022, and 25% below the past 10-year March average. Inventory, meanwhile, was relatively stagnant, with March wrapping with only 11,758 homes available—a modest 3% increase from February and much less than the typical February-to-March increase of 7%. Overall, inventory now sits 25% below the long-run March average.
With the pace of sales increasing alongside barely-expanding inventory, market conditions have shifted considerably in the past two months. Specifically, the months-of-inventory (MOI) measure for Metro Vancouver declined to 2.9 in March—reflecting an entrenched sellers’ market (note: a sellers’ market is denoted by 5.0 or less MOI). Furthermore, conditions now favour sellers across the markets for each home type (detached homes, townhomes, and condos). Not surprisingly and as already noted, benchmark prices increased again in March, this time by an average of 1.9% (detached home prices increased 2.4%, townhomes 2.0%, and condos 1.0%).
That the Bank of Canada is likely to continue to hold its trend-setting interest rate where it is for the foreseeable future means that, going forward, there’s more macroeconomic clarity for both potential buyers and sellers. However, unless the latter group stimulates an expansion of resale housing supply, it’s more than likely that the most recent two-month upward price trend will continue for some months to come.
Ryan Berlin is senior economist and director of intelligence with Rennie.
