Inventory Hits 4-Year High - Vancouver Real Estate Market Update For May 2024

What a pendulum swing in just one month! There’s been a massive shift in the Vancouver real estate market and I’m diving into it right now.

The number of Metro Vancouver homes listed for sale on the MLS® rose 64.7 percent year-over-year, and 42 percent month-over-month.

This was 25.8 per cent above the 10-year seasonal average and the most inventory we’ve had since the summer of 2020.

Another surprising story in the April data is the fact prices continue climbing across most segments with recent increases typically in the range of one to two per cent month-over-month. Although, you wouldn’t guess it out there.

The one segment that didn’t see an uptick in prices in April was apartments, which saw a 0.1 percent decline month-over-month. 

Sales are up by about 3% from April 2023 and 17% from last month, indicating a typical seasonal upward trend. This was 12.2 percent below the 10-year seasonal average.

However, if we look at the 10-year average, sales volumes are still about 12% under the long-term average. Despite this being the fourth consecutive month of increases, the market's recovery feels sluggish. For a broader perspective, there were more sales in April 2007 and 2008, during the global financial crisis, than last month. This indicates a slow overall pace in the current market.

Last month a number of things happened in the market. First, the Canadian government revised the capital gains tax, effective June 25, 2024. For individuals, gains over $250,000 now face a 66% inclusion rate—up from 50%. Corporations have a flat 66% rate on all gains.

Next, first-time home buyer benefits have changed slightly. You can use up to $60,000 of your RSP's tax-free up from $35,000 previously allowed. Also, after August of this year, you will be able to use a 30-year amortization if you're first-time buyer purchasing a new build property. This results in approximately 5% more purchasing power.

So what does this mean for buyers and sellers?

This massive increase in inventory is giving buyers more selection and time to find the home they really want.

Sellers, this is going to be a bit of a wake-up call for you. All year long the sellers who have priced their homes sharply have seen success in their homes being sold. Those who are overshooting the perceived market value are seeing their homes sitting. I’m also seeing a lot of listing coming to the market at one price, sitting on the market for a few weeks, then reducing their price to try and encourage multiple offers. They may or may not get an offer but it’s not what they wanted so they then raise the price even higher than originally listed. This is a terrible strategy and I do not recommend it.

The new Airbnb regulations came into effect on May 1st. With the massive increase in Inventory, you might think it’s mostly due to the condo segment and property owners listing their properties in April to avoid the new restrictions on short-term rentals. Interestingly, the increase in inventory is not solely in condos but is evenly spread across all property types. We’ll have to see what impact these new regulations have on the market over the next few months

I talked about this last month the recently announced renter’s bill of rights is getting a lot of attention. Now I don’t have confirmation on this yet, just hearsay that on June 16,2024 the residential tenancy board will most likely be changing the two-month notice to end tenancy to four months notice.

This would have a negative effect for those properties on the market which are currently tenanted.

Still on the horizon is the much-anticipated rate cut, purportedly coming in June. Considering the continued strong demand by buyers and the current market's higher inventory levels, a June interest rate cut could impact our market in an interesting way.

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