Economist says stability will return to Metro detached market
David Carrigg
The Province
Metro Vancouver detached home prices should stabilize later this year but condo prices will continue to fall, according to the deputy chief economist of Central 1 Credit Union.
“We expect to see some stabilization by the end of this year, we are going to see those prices stabilize,” Bryan Yu said of detached homes in Metro that have plunged in value since 2016.
However, condo prices, which started falling after detached prices, will keep going down.
“If we look at where the market has already declined, it’s been in the detached market up to this point,” Yu said. He said with more condo complexes coming on the market, downward pressure on prices will continue.
He said the market for detached homes will stabilize faster than for condos because prices in the detached segment have been dripping for a longer time.
Central 1 released its Resale Market Housing Outlook 2019-2021 on Tuesday morning.
The report, written by Yu, said the Metro real estate slump is not related to the economy, which is expanding. Instead, it is being driven by government policy at all three levels of government. The federal government has put in place stress tests for new buyers, meaning they have to be able to afford payments at a higher interest rate than the rate on offer. The provincial government has increased its foreign-buyers tax to 20 per cent, forcing more foreign investors away from Vancouver housing, while the City of Vancouver has introduced a tax on high-value homes that are left vacant.
Yu led the report with this statement: “Hope for a better year for B.C.’s housing market were dashed early as the culmination of federal and provincial policies continued to weigh heavily on demand.”
He said the market is particularly bad in Metro Vancouver, while Vancouver Island is doing OK and in Northern B.C. the market is rising.
“Housing prices remain firm outside Metro Vancouver,” Yu wrote. “Inventories remain low on Vancouver Island which continues to support price levels. Larger markets in the Okanagan are drifting lower. Northern B.C. prices are generally rising with strong momentum in areas tied to liquefied natural gas.”
He found that Northern B.C. housing prices would continue to rise faster than in the rest of the province over the next two years.
Yu said interest rates were expected to remain low and steady during the 2019-2021 study period.
According to the Real Estate Board of Greater Vancouver’s monthly report for April, “reduced demand and increased supply remain the trend across Metro Vancouver’s housing market.” This had led to an 11 per cent fall in the benchmark price of a detached home over the past year to $1.425 million, and a 6.9 per cent drop in benchmark price for an apartment to $657,000.
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