With the Bank of Canada’s policy interest rate now clearly on a downward falling trend, all signs point to a major resurgence in Metro Vancouver’s housing market.
This is being propelled by pent-up demand, with prospective homebuyers holding back for much of the past three years amid highly unfavourable borrowing costs. With more people holding back home purchases, this has put further strain on the rental housing market.
By the end of 2025, according to a new housing market forecast by Royal Lepage, the aggregate price of a home within the jurisdiction of Greater Vancouver Realtors (formerly known as the Real Estate Board of Vancouver) is expected to increase by 4% year-over-year to $1.27 million. The median price of a single-family detached house will rise by 2% to $1.77 million, while the median price of a condominium is expected to increase by 4.5% to $795,000.
“Looking ahead to 2025, price gains in the condo and townhome segments are expected to outpace those of single-family detached homes, given the relative affordability of these property types,” said Randy Ryalls, managing broker of Royal LePage Sterling Realty, in a statement today.
“Inventory is already thinning out. I anticipate that demand will outstrip available supply next year, as improved lending conditions draw more and more sidelined buyers back to the market.”
Ryalls points out that housing market activity in the region began to pick up in October 2024 after months of stalled activity.
He says this is a sign of renewed momentum, with competition now increasing for most property types and growing instances of multiple-offer scenarios.
“As borrowing conditions improve, sidelined buyers are reentering the market,” continued Ryalls.
“There’s been a shift in consumer sentiment, with many buyer hopefuls feeling the market has bottomed out. This has brought buyers back to the table and set the stage for an active and early spring market.”
Greater Vancouver Realtors’ newly released November 2024 market performance report indicates the momentum first seen in October 2024 has continued. Home sales within its jurisdiction increased by 28% in November 2024 compared to the same month in 2023, mirroring the 30% year-over-year increase seen in October 2024.
The number of single-family detached house sales went up by 19.7% year-over-year in November 2024, with the benchmark price reaching $1.997 million.
Condominium home sales went up by 28% year-over-year, with the benchmark price now at $753,000, while townhouse sales went up by 42.7% year-over-year, with the benchmark price at $1.118 million.
In late November 2024, Central 1 issued an updated forecast for how the Bank of Canada could adjust its policy interest rate over the coming year. They predict the rate could further fall in 2024’s final rate announcement on December 11, and with subsequent decreases it could reach 2.75% as early as Spring 2025. The last rate announcement on October 23, 2024, sent it down by 0.5% to 3.75%.
But there is also a high degree of economic uncertainty with the incoming second US presidency of Donald Trump, who has threatened to start a major trade war with Canada and Mexico with a blanket 25% tariff on all exports entering the American states.
Even without the trade war, Canada already has weak fundamentals, with former Bank of Canada governor Stephen Poloz suggesting this week that Canada is now in a recession and not merely a technical recession.
Greater Vancouver home price index, 5-year trend. (Greater Vancouver Realtors)
Historical residential average sale price in Greater Vancouver. (Greater Vancouver Realtors)