Vancouver Housing Market Predictions for 2020
The latest housing market outlook report from the Canada Mortgage and Housing Corporation (CMHC) predicts that starting in 2020 and through 2021, there will be a modest increase in sales volume and prices in Metro Vancouver. Across British Columbia, the resale market forecast is similar to that of Metro Vancouver.
Sales and prices are expected to grow in 2020 and 2021 after a couple of weak years. The British Columbia Real Estate Association’s recent forecast also predicted that home sales would increase in every region over the next year.
Factors such as increased mortgage rates and new taxes have resulted in a recent dip in housing prices and sales but over the next two years, upward pressure is expected in pricing. This is due to projected economic growth, annual population growth, as well as low interest rates.
Over the past three years, expensive markets, such as West Vancouver and Vancouver Westside houses, have seen a significant drop in value. Surrounding areas have also been impacted. Since the peak, house prices in most parts of East Vancouver have dropped over $200 000.
The good news for townhouse owners is that house prices have dropped more than townhouse prices. Townhouse owners could have a great opportunity to upgrade to a full house and many of them are looking at Vancouver east homes for sale.
Still a challenge for first-time homebuyers
Prices may be dropping in Metro Vancouver but they are still out of the reach of households with an income of $75 000. This is the before-tax income of the median Metro Vancouver household.
If the prices continue dropping, there is some hope for them but currently, they are only able to get a mortgage of about $320, so it would be necessary to have a cash down payment of $330 000 just to buy an entry-level condo of $650. However, prices are very volatile and it is possible that they could drop quite a bit by the end of 2020.
The strongest demand for inexpensive condos and apartments
The strongest demand will be for apartments, condos and attached homes in the under $700 000 price range, according to the CMHC report. In Metro Vancouver, prices of condos skyrocketed to a peak in mid-June 2018, but since then, prices have dropped. Lower-priced condos are finding willing buyers, not like the more expensive ones.
More multi-family units being constructed
The vast majority of new homes being constructed are likely to be multi-family units due to the continuing challenge of affordability and increasing densification. In the first eight months of 2019, 88% of unit starts were multi-family homes and this share is likely to increase.
Tight rental market likely to continue
The tight rental market is likely to continue, driven by a net gain in population. This pushes up demand and rental prices. More expensive rental units are coming onto the market and rents for existing units are rising, which means higher average rent levels.
Full recovery from recent declines
Resale activity and house prices are expected to recover fully from recent declines, supported by the growth in income and population. With close to full employment and an increase in wages, consumers have more confidence to make major purchases, such as homes.
Market conditions are expected to become more balanced as market participants adapt home price growth expectations in the light of government policy changes at all levels and rising mortgage rates since the market highs of 2015 to 2017.
The combination of this stabilization and a record number of new units under construction will mean that the level of housing activity remains above the 10-year average.