Payam Javan: The Greater Vancouver housing market is showing definitive signs of a power shift, moving increasingly into a buyer’s market due to elevated inventory levels and sustained soft sales activity. Despite a slight monthly uptick in average sold prices, the overall trend continues to be one of correction, with the benchmark home price sitting over 9% below the all-time peak set in the spring of 2022. The lack of purchasing urgency, largely due to high interest rates, is finally providing buyers with wider selection and stronger negotiating power.
The primary factor driving this market rebalancing is the rise in active listings, which have reached their highest point in three years. This surge in available homes means that the days of intense competition and limited supply driving prices skyward are now over. Consequently, properties are staying on the market longer, and many buyers are feeling less rushed to make decisions, a significant change from the frenzied pace of previous years. This increased supply dynamic is particularly evident in the condo sector, where vacant units are reportedly double the amount from a year ago.
In a challenging turn for developers, the new construction market is facing a severe slowdown. Reports indicate falling prices for new homes and a struggling presale market, with some developers laying off staff or even canceling luxury projects, such as a major 204-unit development in the River District. This development indicates that the industry is grappling with a difficult squeeze between falling sale prices and persistently high construction costs, making speculative projects less financially viable and further tilting the balance in favor of the cautious buyer.
From an affordability perspective, while Vancouver remains Canada’s least affordable market, the easing prices offer a slight reprieve. High interest rates have created a “double whammy” where many potential first-time buyers cannot qualify for mortgages, yet the same high rates are preventing existing homeowners from moving up, thus increasing the total inventory. However, experts are forecasting a possible, albeit gradual, recovery in activity due to a loosening of monetary policy by the Bank of Canada, though the full impact of lower rates may take up to 18 months to fully materialize.
For prospective buyers in the Vancouver area, the current environment presents a unique opportunity, particularly in the condo sector where excess supply is most acute. The prevailing sentiment is that time is on the buyer’s side, and strategic negotiation with both private sellers and developers is now possible. The market is not expected to see a swift return to its previous peak highs, suggesting that the current period of moderation and increasing buyer leverage is likely to persist throughout the medium term.
