Overview
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,
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