If March data is any indication, Lower Mainland MLS home prices look to be heating up – but in a low-sales and low-inventory environment.
While demand is constrained by affordability challenges, buyer impatience is setting in, and more are taking the plunge into homeownership.
Meanwhile, inventory is limited, with existing owners seemingly content to stay put in their homes amidst the backdrop of a tight labour market, robust immigration and high rents.
The region, which spans Metro Vancouver and Abbotsford-Mission, saw its average price march higher for a second straight month, increasing 2.2 per cent to reach $1.15 million. Prices have rebounded 8.4 per cent from January’s low of $1.07 million, and have narrowed the gap from last February’s peak to about 13 per cent.
Sales composition is a factor but, even so, constant-quality home benchmark values also increased (up 1.8 per cent month over month), pointing to positive momentum. The big benchmark month-to-month movers were detached (up 2.4 per cent) and townhouses (up 1.9 per cent) as households stretch for ownership. Apartments were up about one per cent.
The price bump comes despite continued low MLS sales, which reached 4,029 units, a 41 per cent decline from a year ago, and a 55 per cent drop from the frenzy of 2021. While higher than same-month 2019, sales trailed the 10-year March average (2010-2019) by 18 per cent. Momentum is changing with a second straight month of higher seasonally adjusted sales.
Undoubtedly, affordability challenges continue to hamper demand as buyers are shut out by high interest rates and prices. However, those able to purchase have found negotiating power curbed by resale listing scarcity.
March new listings were down 38 per cent year over year and were at their lowest level since early in the pandemic, when adjusted for seasonality. By extension, active listings or month-end inventory continue to dwindle, and there are signs that a seller’s market may have returned as buyers compete for scarce supply.
The unadjusted sales-to-active listings ratio rose to 30 per cent, although we are probably still closer to a marginal – rather than strong – seller’s market. This suggests home prices have found a bottom for the time being, with risk to the upside from insufficient supply. Moreover, strong immigration and massive demand for housing are likely to limit much in the way of downside, particularly as rates begin to descend.
B.C. exports were relatively flat in February. On a seasonally adjusted basis, the value of exports was $5.2 billion, increasing by 0.2 per cent after rising 2.8 per cent from December to January. Imports declined by 2.8 per cent in February, down to $6.6 billion and falling short of January’s 11.8-per-cent increase. On an unadjusted basis in February, the value of B.C. exports fell by 0.7 per cent year over year, while imports increased 7.6 per cent compared to same month in 2022.
Aircraft and other transportation equipment and parts led B.C.’s export value gain with an increase of 33.7 per cent to $38 million from January to February. The dollar value of exports in energy increased further in February. Motor vehicles and parts increased by 7.5 per cent in February, partially reversing the 9.6 per cent dip observed in the prior month. Farm, fishing and intermediate food products increased 4.2 per cent.
The commodity group with the largest decline was basic and industrial chemical, plastic and rubber products, which fell by nearly 39 per cent. Metal ores and non-metallic mineral exports also fell 34.9 per cent, and the value of consumer goods exports decreased by 5.8 per cent.
Bryan Yu is chief economist at Central 1.
