UDI State of the Market Q1-2024
Overview
compared to the same quarter last year. Year-over-year,
the total number of housing starts has remained relatively
constant, experiencing a mere 0.2 percent increase, despite
the significant increase in population growth occurring in the
in the region over the past year.
Housing prices are more likely to fall in the event where
new housing supply exceeds current demand levels. Note
that most new housing starts have already been sold in
the pre-sale market and do not necessarily represent the
number of new units coming to market that will be available
for purchase.
The 2nd graph below shows the ratio of Metro Vancouver’s
population growth to housing starts. The Q1-2024 ratio of 4.2
was 6.4 percent above the quarterly five-year average. Out of
the 9,708 units released in actively selling pre-sale projects
that had not begun construction by the end of the quarter,
58 percent (5,621 units) have already been sold. This total
sold will continue to increase before construction of these
units completes. Further, the population tables above do
not factor in demand for housing from temporary residents
in Metro Vancouver each year (i.e. International Students &
Temporary Foreign Workers).
costs, labor shortages, and increasing development cost
charges (DCCs). These factors may render development
projects less feasible or lead to future cost increases for
homebuyers.
GLOBAL ECONOMIC FACTORS
The US economy grew at an annualized rate of 1.6 percent in
Q1-2024, which was below the 3.3 percent annual growth rate
observed in the preceding quarter. Despite the slowdown,
inflation in the US increased by 3.4 percent over the first
quarter of 2024, with some economists pointing to rising
oil prices and conflict in the Middle East as a contributing
factor. With inflation persisting above the Federal Reserve’s
two percent target, the anticipated interest rate cut initially
projected for this year could be postponed to 2025.
Major stock market indexes maintained their upward
trajectory in the first quarter of 2024 and were bolstered by
optimistic market sentiment and rising corporate revenues.
The S&P 500 recorded a notable 10 percent increase and
both the Nasdaq and S&P 500 indexes achieved record highs
in the first quarter of the year. Some of the top performing
companies over the past year were computer semiconductor
and chip manufacturers (i.e. Nvidia and Broadcom) who have
benefitted from the surge in demand for AI-related software
applications. We hope that you enjoy the most recent edition
of the State of the Market report and find it informative, helpful,
and convenient. As always, we welcome any feedback or
comments on the publication.
Sincerely,
Welcome to the latest edition of
Urban Development Institute’s
State of the Market Q1 2024
quarterly publication.
The Q1-2024 “State of the Market” report provides current
quarterly statistics and trends on the new home and re-sale
housing markets as well as a composite of relevant economic
statistics that impact the housing market. The report also
includes statistics on the newer purpose-built rental market
in Metro Vancouver, and the UDI/Zonda Urban Housing
Affordability Index derived from Zonda Urban’s NHSLive
database and BC Housing’s new home registry statistics.
The graph below shows the trend of Metro Vancouver’s
housing starts (one start = one unit) and population change
over the past five years. This quarter, Metro Vancouver’s
total population aged 15 and older increased by 26,200
residents, a 1.1 percent increase from the previous quarter.
Total housing starts (6,268 units in Q1-2024) were up by
682 units when compared to the five-year average of first
quarters but decreased by 402 units (six percent) when
LOCAL ECONOMIC FACTORS
Metro Vancouver’s new home market experienced a slow
start to the year, with a total of 2,713 pre-sales recorded
in Q1-2024. First-quarter sales were 15 percent lower than
the previous quarter but were still up 27 percent from the
short-term lows achieved in Q1-2023. The number of new
projects launched so far this year has been somewhat
restricted, with only 21 new project launches, totaling 1,937
units, introduced in Q1-2024. This total is significantly lower
than the 40 project launches and 5,431 units released to
the market last quarter. Some developers have proceeded
cautiously and others continue to wait for optimal conditions to
launch their respective projects. Successful project launches
in Q1-2024 have been characterized by strategic community
placements, competitive pricing, low deposit structures, and
creative incentive offerings.
BC’s provincial government unveiled its annual budget in
early 2024, which included several housing related legislative
items. One of the more notable items was the Flipping Tax
which, when implemented in 2025 will levee a tax on the
profit from selling a home unless the property has been
owned for at least two years. In addition to the Flipping Tax,
the BC government raised the Property Transfer Tax (PTT)
thresholds for first-time homebuyers and new construction
homes.
Supply issues persist as a primary concern in the Lower
Mainland, particularly as municipalities strive to meet their
housing targets outlined in the Housing Supply Act. The
Federal government continues to allocate additional federal
funding from the $4 billion Housing Accelerator Fund (HAF) to
various cities in BC to alleviate supply constraints. However,
numerous hurdles persist for stakeholders in the housing
industry to effectively address market challenges associated
with higher interest rate environments, high construction
OVERVIEW