[05.11.2024 - 05.17.2024] Weekly Real Estate Review: Vancouver and Canada Markets

Decline in Canadian Home Sales and Construction in April

In April 2024, Canada experienced a slight decrease in housing starts, dropping by 1% from March to 240,229 units, as reported by the CMHC. The six-month average for housing starts also saw a decline of 2.2%. Notably, major cities like Toronto, Vancouver, and Montreal reported reductions in both multi-unit and single-detached home constructions. Concurrently, the Canadian Real Estate Association (CREA) noted a 1.7% drop in home sales from March to April, despite higher year-over-year figures, with the average sale price down 1.8% compared to April 2023.

Vancouver Misses Housing Targets Set by B.C. Government

Vancouver has fallen short of its ambitious housing targets set by the B.C. NDP government, completing only 1,607 net new units from October 2023 to March 2024 against a one-year target of 5,202 units. Despite a decline in housing completions over the past two years, there are 31,300 units in the pipeline, including 8,000 under construction and 14,600 approved, which could help exceed the five-year target of 28,900 units. The province requires 60% of new housing to be studio or one-bedroom units and 72% to be rentals. External factors like market conditions and limited resources could impact progress, but other municipalities such as Victoria are meeting or exceeding their targets.

Fragmented Industry Hampers Canada's Housing Construction Capacity

Despite Canada having the resources to build more homes, the CMHC reports that the construction industry is not meeting its potential due to fragmentation, labor shortages, and restrictive regulations. In 2023, 650,000 workers were involved in residential construction, yet housing starts fell short, with only 240,267 new units compared to a potential 400,000. CMHC’s Mathieu Laberge notes that the disparity is influenced by varying municipal regulations and productivity issues.

Lower Mainland Housing Sales Near Cyclical Lows Amid Peak Season

Housing supply in the Lower Mainland has risen, with inventory surpassing 18,500 units due to an influx of new listings, as homeowners try to capitalize on the peak selling season. Despite this, sales remain near cyclical lows, with April seeing 4,230 units sold, a slight 0.6% increase from the previous year. High interest rates and reduced demand from fewer international students have impacted the market. Prices have remained stable, with the average home price at $1.22 million, up 1.8% year-over-year. The market is expected to see higher sales but flat prices in the latter half of 2024.