Residential Property Sales in Metro Vancouver
Home prices remain steady, buyers and sellers become more comfortable operating in today’s market
VANCOUVER, BC – June 4, 2020 – Metro Vancouver home prices have remained steady since provincial health officials implemented physical distancing requirements in March.
The Real Estate Board of Greater Vancouver (REBGV) reports that the MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver today is $1,028,400. This is virtually unchanged from April 2020, a 1.4 per cent increase over the last three months, and a 2.9 per cent increase compared to May 2019.
2020 February Metro Vancouver Market Highlights
Sales of detached homes reached 534. The benchmark price for a detached home is $1,456,700.
Sales of attached home reached 298. The benchmark price of an attached home is $792,700.
Sales of apartment homes reached 653. The benchmark price of an apartment property is $686,500.
"Home prices have been stable during the COVID-19 period. While we’re seeing a variety of long-term projections for the market, it’s critical to understand the facts and trends as they emerge." Colette Gerber, REBGV Chair. “Home sale and listing activity are down compared to typical, long-term levels and up compared to the activity we saw in April 2020. Homebuyers and sellers are adapting today, becoming more comfortable operating with the physical distancing requirements that are in place in the market.”
The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 9,927, a 32.4 per cent decrease compared to May 2019 (14,685) and a 5.7 per cent increase compared to April 2020 (9,389).
For all housing types, the sales-to-active listings ratio for May 2020 is 15 per cent. By housing type, the ratio is 13.5 per cent for detached homes, 18.9 per cent for townhomes, and 14.8 per cent for apartments.
Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
Commercial Insights in Metro Vancouver
Office and Industrial Quarter Stats Q1 2020
- Building off the record fundamentals established over the last two years, Vancouver's office market tightened further in Q1 2020. Not only does the overall vacancy rate currently rest at a near-record low 3.9%, but 89.2% of all new supply expected for delivery in 2020 is already pre-leased.
- Both the downtown and suburban Class A average net rental rates increased this quarter, closing at $46.24 per sq. ft. and $24.00 per sq. ft. respectively. This is a new record for the downtown market and represents a $1.26 per sq. ft. increase since last quarter.
- Despite a slight vacancy rate increase to 5.6%, Vancouver's suburban office market continues to be one of Canada's tightest suburban markets. Leasing activity continues to be most active in Class A business parks and in projects under construction, which increased 8.6% to 1.7 million sq. ft. this quarter.
- Vancouver’s industrial market experienced strong fundamentals in Q1 2020, as the overall availability compressed by 30 bps this quarter to 2.1%, which is well below the market’s 5-year average of 3.1%. Of the space currently available, 55.0% is available for lease, unlike Q1 2017 when these opportunities reflected 83.0% of the market.
- Following market rental growth of 10.9% in 2019, average net rental rates have increased a further 3.8% this quarter alone, rising to $13.65 per sq. ft. Twelve consecutive quarters of rental rate growth have not slowed leasing velocity, instead Metro Vancouver recorded a further 1.1 million sq. ft. of positive net absorption this quarter.
- As a result of sustained market demand, there is currently only one existing warehouse availability greater than 100,000 sq. ft. in Metro Vancouver. For mid-bay users, only ten options exist between 50,000 and 100,000 sq. ft., of which six are available for lease and sublease. Alone these blocks of space account for nearly one-quarter of all vacant space in the market.
- Of the 557,187 sq. ft. of new supply recorded this quarter, 58.7% was delivered in the Surrey submarket. Since 2016, 29.1% of all industrial development activity has taken place in Surrey.
ECONOMICS Market Intelligence
Commercial Activity Nosedives in 2020 Q1
The BCREA Commercial Leading Indicator (CLI) was down sharply in the first quarter of 2020 from 134.2 to 123.2, reflecting the slowdown prompted by the COVID-19 pandemic.
* The BCREA Commercial Leading Indicator was designed to forecast changes in broad commercial real estate activity.
Going forward, the environment for commercial real estate activity in the province will be weak as the economy gradually re-opens, and temporarily unemployed individuals slowly return to work.
BC's economy was beginning to slow in the last quarter of 2019, but the rate of slowing was exacerbated by the pandemic in the first quarter of 2020. A fall in manufacturing sales of both durable and nondurable goods was the main drag on economic activity. Also contributing to the drag, but to a lesser extent, were lower wholesale trade sales in motor vehicles, and building material and supplies.
Employment growth in key commercial real estate sectors such as finance, insurance, real estate and leasing was negative for the first time since the summer of 2018, down by about 13,500 jobs in the first quarter. Additionally, manufacturing employment fell by about 1,830 jobs from the previous quarter.
- Economic activity started to feel the impact of the pandemic in March, as declines were reported in manufacturing sales (-2.4%), retail sales (-0.5%), and wholesales (-0.1%).
- Employment fell by about 13,500 jobs in key commercial real estate sectors for the first time since the summer of 2018 and by about 1,830 jobs in manufacturing.
- Financial markets entered a full meltdown in late February amid growing fears of the potential impact of the COVID-19 pandemic. The panic sent Canadian REIT prices lower and led to a spike in risk premiums, causing a tightening of private sector credit conditions.