The development of Vancouver’s real estate market has recently incited debates about the possible consequences of the current disparity between resale prices and fundamentals such as rents or incomes. According to the latest surveys, active listings are near an all-time high while sales are at decade lows, which makes the City of Vancouver one of the most threatened among all Canadian cities as far as the risk of significant price declines is concerned. What is even more concerning is the fact that the interconnection between Vancouver and other regional markets might finally trigger corresponding crashes everywhere.
Another indicator that might at least ease the overall situation is an increase in the annual rate of housing starts across the country. The number of new units rose from 214,800 in March to 244,900 in April. These positive trends have been reflected in the report published by the Canada Mortgage and Housing Corporation, according to which “the city of Vancouver continues to record strong new home construction activity with condominium apartments accounting for most of the housing starts.” Finally, an increase in building permits suggests corporate and consumer optimism, but a completely different trend can be observed in Vancouver. The city’s value of building permits has decreased in recent months from $489.1 million to $482.1 (-1.4 per cent).
It’s clear that Vancouver’s overheated housing market remains one of the most risky in Canada and it will be interesting to observe its development in the months to come as well as the consequences it will have for the Canadian real estate market as a whole.