Housing prices in Metro Vancouver are going up, especially in the suburbs: CMHC report

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Housing prices in Metro Vancouver increased 12 per cent year over year, says the  Canada Mortgage and Housing Corporation in a quarterly report released Thursday. (Jonathan Hayward/Canadian Press - image credit)
Housing prices in Metro Vancouver increased 12 per cent year over year, says the Canada Mortgage and Housing Corporation in a quarterly report released Thursday. (Jonathan Hayward/Canadian Press - image credit)

Metro Vancouver's housing market recently experienced a quarterly pace of sales not seen since 2017, leading to significant price increases, says a new report by the federal housing agency.

The Canada Mortgage and Housing Corporation (CMHC) says the price growth was most pronounced on lower priced single-detached homes, as demand grew in suburbs such as Langley and Surrey.

The agency's quarterly report, released Thursday, says both sales and new listings in the region were unseasonably high in the fourth quarter of 2020 — continuing a trend from the third quarter — as both buyers and sellers returned to the market after the initial COVID-19 lockdown.

Prices in the region increased 12 per cent year over year, with a backlog of transactions and low interest rates on mortgages driving sales in the fourth quarter.

The report says the market softened in more expensive parts of the region, such as West Vancouver and Vancouver's West Side.

Metro Vancouver's overall housing market vulnerability remained moderate, the report says, adding that overheating was not detected in the region, while estimates of overvaluation declined due to growth in household incomes and declining mortgage rates.

Overall, most submarkets in the region have swung to a sellers' advantage compared to a year ago, the report says.

"Typically, this implies a rise in prices as buyers face greater competition for scarce homes," it said.

Highest rental vacancy rate since 1999

While house sales took off, Vancouver's rental market vacancy rate remained higher than usual at more than two per cent, a rate not seen since 1999.

CMHC analyst Eric Bond attributed the higher rate to reduced migration to the region and international students leaving during the pandemic — impacts that are likely to be temporary, he said.

The report says the rate signals moderate evidence of excess inventories, particularly newly completed units marked at higher prices.

Bond said rental operators in those buildings may face "financial headwinds" in the short term as they hold out for higher rents.

In the long term, the region still faces a rental housing crunch for households with different levels of income, Bond said.

"Additional supply will be crucial to meeting the housing needs of the region going forward," he said.