Vancouver sees sustained weakness in housing demand

Vancouver sees sustained weakness in housing demand

Vancouver sees sustained weakness in housing demand

Latest numbers from the Real Estate Board of Greater Vancouver (REBGV) showed that the region’s home sales fell anew last month, amid continuously weak levels of demand.

The number of transactions fell by 29.1% year-over-year, down to a total of 1,829 sales. This is despite a 5.9% increase from the 1,727 deals completed in March.

Among other economic and policy factors, B-20 has been cited as the main culprit in the Greater Vancouver market’s sluggish activity.

“Suppressing housing activity through government policy not only reduces home sales, it harms the job market, economic growth and creates pent-up demand,” REBGV president Ashley Smith said in a statement, as quoted by BNN Bloomberg.

“The federal government’s mortgage stress test has reduced buyers’ purchasing power by about 20%, which is causing people at the entry-level side of the market to struggle to secure financing.”

The phenomenon has contributed to larger inventory, with new homes entering the market at a steady clip. In April, Greater Vancouver saw 5,742 new residential properties for sale, up by 16% from the prior month’s 4,949 new listings. Overall supply stood at 14,357 homes for sale, fully 46.2% larger on an annual basis.

“There are more homes for sale in our market today than we’ve seen since October 2014,” Smith noted. “This trend is more about reduced demand than increased supply.”

In a recent study, Zoocasa reported that an income of at least $205,475 is needed to purchase a Vancouver home at the benchmark price ($1,441,000), assuming a 20% down payment at a 3.75% mortgage rate on a 30-year term.

Condos have become increasingly out of reach for most people, as well. An income of at least $93,527 is required to be able to buy a unit at the benchmark cost ($656,900).