Everyone’s talking about what’s in store for the Vancouver real estate market in 2022 but what does the data actually suggest? President of REW.ca, Simon Bray, sits down with Adam & Matt this week to conduct a deep dive on the data collected from the most popular real estate search portal in the province. And his findings are nothing short of remarkable. Has the impact of Covid on the real estate market run its course? Where are young people searching for real estate today? Which neighbourhood will be 2022’s comeback kid? And will this year go down as the ‘year of the condo’? All this and a bag of chips on today’s episode!
Vancouver Real Estate News, Market Updates, Insider Tips, Stats, & Analysis
What is REW? Does REW have data about the real estate market?
We’re a great data source because the majority of British Columbians who are looking for a new home start their search on our platform. That gives us a lot of great insights into what people are wanting from their homes. We can then present that data back to other players in the industry.
We’ve got data on assessments, sales, listings across new homes and rentals, data on realtors, etc. We’re trying to aggregate the market data into one place. Other information, like how long people are searching and for what property types, isn’t as publicly available. We’re looking at how we can package that information into valuable data for the market. But right now, it’s easier to unpack that in a conversation like this while we work on the right tools.
How has covid impacted the real estate market and REW?
We were way more optimistic in the summer but now, at the onset of 2022, we feel this growing cynicism. The real estate market has been a roller coaster throughout the last two years; you wouldn’t have been able to predict the search trends.
The one thing we did learn during the pandemic is how important real estate is to people and how much more needs to be done to help people enter the real estate market and be prosperous. Canadians, and British Columbians in particular, are spending more and more on their homes. We need to figure out solutions to support that.
Home ownership seems to be so important to Canadians. Is the demand for home ownership unique to Canada?
The intensity of the desire to own your own home is somewhat unique to Canada. New Zealand is another place where that desire is quite strong. In Canada, home ownership is seen as the base of the financial pyramid for a lot of people. It’s a cultural reference point. I can’t say whether that’s right or wrong, but it is more intensely felt in Canada than other markets I have been a part of.
We’ve seen a huge jump in search traffic from younger demographics so it feels like young Canadians are seeking home ownership too. This, despite the huge financial hurdle they have to overcome to enter the market.
Many Canadians want to enter into home ownership for stability, and less so for the investment aspect.
Housing is a basic need and sits at the bottom of Maslow’s Hierarchy of Needs. In a market like Vancouver with such a supply constraint, that’s felt in both buying and renting a home. So even if you’re not looking to buy a home, you have challenges in finding suitable accommodation. That pressure drives the need for stability and certainty.
Where are millennials and Gen Z-ers looking to buy homes in Canada?
It’s been very interesting to see the young generations enter into the search for homes; it’s informing a lot of our future plans at REW. Currently, they’re looking into pockets of opportunity where they can find good value. And there aren’t very many of those left! Areas like Delta, Port Coquitlam and Langley are popular, as are more affordable opportunities, like condos or apartments, in those areas. We’re not talking about freestanding homes. But there aren’t too many apartments or condo buildings in those neighbourhoods, so supply is limited.
We’ve seen a huge jump in the number of leads per listing. That tells us there’s increased demand. The condo listings in Delta, Port Coquitlam and Langley are very busy and under huge pressure. It’s about the affordability that they offer.
What type of housing is most popular? Are people moving for more space or more affordability?
Starter homes in communities within striking distance of Vancouver are the most popular. Value offerings are where the market is gravitating towards, particularly the younger market. So how can we stimulate that side of the market? You want to see more good value supply coming into the market to satisfy the obvious need we see from younger generations and new immigrants looking to get onto the property ladder.
How can we balance the housing market?
For the market to become more balanced, we need larger growth plans that involve multiple partners in the industry. Supply constrained markets with high demand are an on-going issue, despite pandemics, inflation, interest rates, etc. And they’re not going anywhere. High demand is great for the economy but we need to solve the housing inventory issue.
Compared to Hong Kong, Metro Vancouver has a lot more space to develop. Hong Kong can’t expand but we don’t have that challenge. We have to think regionally, instead of just focusing development in small pockets. You can see that starting to happen, like with some projects coming up in Mission, but it needs to be applied more broadly in order to solve our housing crisis.
Everyone talks about the affordability crisis but really that’s just a symptom of not having enough homes for people to live in. Across all of the neighbourhoods in the Lower Mainland, we’re at 35% less inventory than we were at this time last year. And at the same time, all of the prices have gone up 20-40%.
Why is housing inventory such a problem? How can we fix housing supply?
Constrained housing supply speaks to structural problems in the real estate market. Listing inventory is down but demand is as high as ever. Sales are down, because there are fewer properties, and price points are high. In a balanced market ,if you have high demand and high prices like we do, you should see inventory coming into the market and sales going up. When you don’t have that inventory, that tells you there is a structural problem. There is a supply constraint.
We have a fantastic opportunity for governments to stimulate economic activity through housing. If we got serious about building homes, we’d have a medium to long term solution. If we built more homes, we’d create an economic boost for the country and alleviate some of the social challenges we have.
Why are people not selling their houses?
There’s always going to be people who are holding out. Especially in an imbalanced market with supply constraints, potential sellers may hold onto their properties to see where prices go. They’re incentivized to build their portfolios.
So you have one group of people who want to sell but they’re scared they won’t be able to find something new to buy if they do sell. The certainty in listings isn’t there. And then you have another group of people who see the price growth potential and want to hang on for their big pay day. Both of these groups put pressure on the market but it still comes down to not enough supply to begin with. The supply issue is what created these groups in the first place.
How is the downtown Vancouver real estate market?
The most neighbourhood excitement we’ve seen is in those regions that are further out that have seen some new home supply in the last couple of years. But the downtown condo activity has grown back over the last six months. Downtown condos are bouncing back and we’re seeing the interest. There was a period when the downtown market was asleep but now we’re seeing a lot more activity.
For example, South Cambie is 80% up in search activity over the last 12 months. That’s a proxy for what’s happening in neighbourhoods around that area. We’re hearing anecdotal stories of multiple offers and seeing that excitement in the data.
But the downtown Vancouver market could still use some support. The condo market would benefit greatly from resolving the issue of condo insurance. Still the urban core market is starting to move quickly again and should have a good 2022.
I encourage policy makers to look at the tax incentives that could stimulate housing supply, rather than trying to curb demand. I’m a fan of things like development zones, where you have public and private forums to decide what development looks like in a region and incentivize that development.
REW is launching as a new brand: Real Estate Works. What does “Real Estate Works” mean?
The idea is to look at real estate as a personal journey that has its ups and downs, but is ultimately rewarding. We want to make the journey more pleasant for people, inspire enthusiasm and create an overall better experience. Real estate may be tough and challenging, but you should enjoy it. We think REW can play a big role in that.
We recognize real estate is a personal journey; we’re calling it a personal adventure. We want to equip you with what you need for that adventure. We’re giving you the data in the right format so you can take the next big leap.
We have a plan to create a lot of supportive content. We want to deliver insights into the market and package content in a more entertaining and informative way. So we’re focusing on both content and accessibility.
Can you tell us about the REW app?
We’re looking to bring a new app to the market to personalize the real estate experience for our audience. We have a lot of steps to go but we’re looking at where we want to be in the market and earning the trust of our audience.
We believe we can really meet consumer expectations in a digital way, cast the industry in a fantastic light, and ultimately facilitate better matches between what people are looking for and what they buy. That should be happening in a seamless experience with the device in your hands. We want to take it to that next level; we’re setting the stage for that.
Are we seeing a lot of inter-provincial real estate searches? Are people moving from BC to Alberta?
We’ve seen huge growth in search traffic going from BC markets to Calgary and Edmonton; so lots of inter-provincial flow. There’s a trend towards the value that Calgary and Edmonton offer that BC-based buyers want. You have a lot of new homes entering the market there, which generates a lot of interest and confidence from younger buyers and investors.
What are the top real estate markets in the Lower Mainland? What are the top real estate markets in BC?
Areas 45-60 minutes from Vancouver have had the biggest increase in views per listing per day – places like Abbostford, Maple Ridge, Delta, Chilliwack, Squamish, etc.
Hot neighbourhoods in the Lower Mainland include Silver Valley in Maple Ridge, Burnaby Lake, East Cambie in Richmond, Edmonds in Burnaby, Mosquito Creek in North Van, Pebble Hill in Delta. Silver Valley is seeing four times more traffic than it did last year.
Elsewhere in the province, Kelowna is doing very well. They have a lot of new home stock coming onto the market. Kelowna has been very busy for the last six months and should be for the next six months too.
What will happen in the real estate market in 2022?
From what we’re seeing, it looks like more of the same in 2022. We have supply constraints; we hope for more listings but expect we’ll see 20-40% fewer listings than last year. That will result in fewer transactions. With the high demand we’re still seeing, that will mean price growth. I don’t think prices will rise as rapidly as we’ve seen in the last two years, but they will grow.
Interest rates is the one I would really watch. If the cost to borrow goes up, the impact could be really significant or it could be fairly mild. If we see the overnight rate going up quite quickly in the next few months, that will have a big cooling impact on the market. If it’s a slow and gradual increase, people won’t be as reactive to it. But that’s the big unknown. We think interest rates will go up but how quickly is the question.
I think we’ll see home search and finance more integrated. How can we bring financing, mortgages, approvals, etc. into the home search experience? It’s vital to consider financing before or at the same time as your home search in a market as expensive as Vancouver.
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