The Lower Mainland housing market capped off 2021 with another mammoth month of activity while home values continued to surge alongside record-low inventory.
Multiple Listing Service sales in the region spanning Metro Vancouver and Abbotsford-Mission reached 4,435 units in December. This was second only to the record high observed a year prior when sales surpassed 5,100 units. Sales were 56% higher than the December average from 2010-19. Full-year sales reached 71,393 units, up 41.4% from 2020, smashing the previous record of 64,000 units in 2016.
Stellar sales have persisted despite a rapid erosion of affordability as demand remained buoyed by pandemic drivers including remote work, high savings rates and investment demand.
Mortgage rates remain low, and recent increases in contract rates may have pulled forward some sales as buyers looked to lock in rates.
Price growth intensified to the end of the year as strong demand deflated inventory levels to a record low. Total active listings fell below 7,000 units in December, down 43% year over year and by far the lowest level on record going back to 1995. Scant inventory of properties available for sale has triggered bidding wars by desperate buyers, further driving prices higher. The sales-to-active listings ratio surged to 63% or 1.6 months of inventory.
As a result, the average price moved above $1.2 million for the first time on record, marking a 0.5% increase from November and a 19% year-over-year increase. The latter marks a $245,000 increase in the span of 12 months. The benchmark index gained 2.3% from November and 23% year over year with momentum still strongest for detached properties, reflecting the lust for space. Detached homes were up 30% year over year, while apartments rose 17%.
January conditions likely remained tight. Rise of the COVID-19 Omicron variant and inclement weather may have slowed traffic, but low inventory persists. Prices will continue to ascend until eroding affordability prices out more buyers and contributes to higher inventory. The demand for long-term housing remains strong due to higher immigration, which will benefit large urban markets. •
Bryan Yu is chief economist at Central 1 Credit Union.
