Greater Vancouver's real estate market has been experiencing a puzzling trend, where home prices continue to rise despite an overall lack of demand. According to data from Greater Vancouver Realtors (GVR), home prices substantially increased in March, a month typically associated with lower activity. The benchmark price of a typical home rose by 0.5% to $1,190,900 in March, even as sales volumes were among the lowest seen in decades. Though annual growth remained 0.6% lower, the sharpness of last month’s increase highlights the unusual dynamics at play, with prices potentially poised to return to positive annual growth if the trend continues.
Additionally, March saw a notable slowdown in home sales. The report added just 2,091 sales, a 13.4% drop compared to last year. This marks one of the weakest March sales figures in over two decades, only outdone by the start of the pandemic in March 2020. Despite this slowdown, the market saw an influx of new listings, 6,455, up 29% from the previous year. This created a market with abundant supply, yet rather than easing price pressures, it seemed to contribute to them.
This discrepancy can be seen in the sales-to-new-listings ratio (SNLR), which stood at just 32% in March. This indicates an oversupply of homes at the current price levels. Typically, this would drive prices down, but instead, the market saw the opposite effect, with prices continuing to rise despite a lack of buyer activity. This perplexing scenario has left industry observers baffled.
The situation is particularly odd given that mortgage rates have dropped significantly over the past two years, and the market is well-supplied with homes for sale. Only a handful of buyers have been willing to step in, and their willingness to bid up prices has kept the market afloat despite the low competition. This unusual scenario has left many in the real estate sector questioning the future direction of the Greater Vancouver housing market.
