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

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 pricedsingle-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 marketsoftened in more expensive parts of the region, such as West Vancouver and Vancouver's West Side.

Metro Vancouver's overall housing marketvulnerability remained moderate,the report says, addingthat overheating was not detected in the region, while estimates of overvaluation declined dueto growth in household incomesand declining mortgage rates.

Overall, most submarketsin 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.

Highestrental 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 ratenot seen since 1999.

CMHC analyst Eric Bond attributedthe higherrateto 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 buildingsmay 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.