The Vancouver real estate market experienced a surge in home sales in December, concluding a prosperous year for the region.
The Real Estate Board of Greater Vancouver (REBGV) recently released a report stating that despite high borrowing costs, the Vancouver real estate market closed out 2023 with balanced market conditions and a significant rise in home sales compared to the previous year. In December alone, 1,345 homes changed hands, marking a 3.2% increase from the same period in 2022. However, the number of sales was still 36.4% below the 10-year seasonal average, hinting at a potential slowdown.
Increased Market Activity in December
The report also revealed that there were 1,327 new property listings in December, representing a 9.9% increase from the previous year. Yet, this number remained 22.7% below the 10-year seasonal average. While the average composite benchmark home price for Metro Vancouver increased by 5% to $1,168,700 in December 2023 compared to the same month in 2022, it fell by 1.4% from November 2023.
"In our 2023 forecast, we predicted modest price increases while others anticipated declines," said Andrew Lis, the REBGV's director of economics and data analytics. This increase in home prices across all market segments demonstrates that Metro Vancouver continues to be an alluring and desirable destination. High borrowing costs alone are insufficient to discourage buyers determined to enter this market."
Lis further explained that the story of 2023 revolved around limited housing inventory relative to the number of eager and qualified buyers. The scarcity of available properties led to intensified competition among buyers, resulting in price hikes.
Positive Shift in Market Sentiment
Tim Hill, a real estate agent at Re/Max All Points Realty, noted that the market is starting to stabilize after several interest rate hikes caused hesitation among potential buyers. However, market sentiment began to shift in September when the Bank of Canada announced that it would maintain its key interest rate due to slowed inflation.
"The holding of interest rates provided much-needed positive reassurance to consumers, which increased their confidence," explained Hill. He pointed out that while Vancouver is currently in a higher interest rate environment, there was a surge of energy in the market towards the end of November and December. Prospective buyers in the region felt more comfortable exploring real estate options and discussing potential moves.
Residential sales in the region totaled 26,249 for the year, reflecting a 10.3% decrease from 2022 and a 23.4% decline compared to the 10-year annual sales average. Looking ahead, Lis speculated on how the market would have fared if mortgage rates were lower in 2023. He mentioned that professional forecasters and bond markets predict lower borrowing costs and expect modest rate cuts in the first half of 2024.
Graph illustrating the rise in Vancouver home prices throughout 2023.
The Vancouver real estate market covers a range of areas and municipalities, including Bowen Island, Burnaby, Coquitlam, Maple Ridge, New Westminster, North Vancouver, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, South Delta, Squamish, the Sunshine Coast, Vancouver, West Vancouver, and Whistler.
In conclusion, the Vancouver real estate market's performance in 2023 indicates stability and resilience, with rising home sales and prices. With expectations of lower borrowing costs in the near future, the market is poised for a potentially prosperous 2024.
