VANCOUVER -- Vancouver’s booming real estate market came crashing down in 2018, but it appears to be recovering faster than expected.
A new report from Central 1 Credit Union found that buyers are returning to the B.C. market – particularly the Lower Mainland.
Bryan Yu, deputy chief economist for Central 1, said the bounce-back is due to first-time buyer incentives, job and wage growth, and mortgage rates.
"There’s been a sharp decline in mortgage rates to about 2.5 per cent in some cases," said Yu. "You're also seeing a price decline of 10 per cent, so buyers are finding it an opportune time to get into the market and make that plunge."
Home sales saw a 20.3 per cent drop in 2018 across the province, and the report attributes this to two major factors—the introduction of the foreign buyers' tax by the B.C. government and the federal government's mortgage stress test.
"In 2016, you would have seen many, many, many people buying. Probably a lot of people believing this price increase would go on forever," said Bryan Velve, a Vancouver realtor who's been working in the industry for 35 years. "You saw it in condos. They were buying presales and then when the presale was finished, they were selling for a lot more money. That’s not happening today."
Velve said the top end of the market also took a hit.
"The luxury market, which relied on foreign buyers for a great deal of their sales, has suffered greatly," he said.
But the report found there has been a pickup in "overall economic environment and home sales," and with stronger confidence comes an increase in home values.
According to the report, the median house price in Metro Vancouver in 2018 was $740,000. That number dropped by nearly 7 per cent this year, down to $690,000. By 2020, the price is predicted to rise to $715,000, and by 2021, it's expected to hit $760,000.
But the news isn’t great for renters. Vancouver has a 1.4 per cent vacancy rate and rents rose by 6.1 per cent in 2018. Yu said there’s just not enough supply to meet the demand.
"What we really need in that scenario is a lot more rental construction, and I don’t think we have enough given the population growth we’re seeing," he said.
But Yu thinks the attractiveness of buying could push some renters into the housing market and potentially free up rent spaces.
"I think it’s an excellent time to get in," said Velve."We’ve gone the downward trend for a while. If they can afford it, this is an excellent time."
