February 2021: Watch for the rise of the strata market
February is traditionally a ho-hum period in residential real estate but this year, as with so much of the recent Metro Vancouver market, this February proved exceptional. Housing sales hit the highest monthly level since June 2017, with prices arcing nearly 9% higher than a year earlier to a composite benchmark of $1,084,000. The typical detached house now sells for more than $1.62 million –an average increase of $221,000 from February 2020 – with sales up 80% from a year ago.
Detached houses have been the headline news in Metro Vancouver for the past year, but we believe February marked the beginning of a major shift towards the townhouses and condominium sector.
February townhouses sales were up 82% year-over-year and condo apartment sales were 65% higher. Together, strata property sales accounted for nearly 65% of all February transactions, with condo apartments leading all sectors with a blistering pace of 62 sales every day. Condo developers reported “a sense of urgency” in new condo sales in February as 1,400 new condos started construction and 1,759 existing condos sold.
It may come down simply to supply. There is a lack of detached houses to meet demand, despite a 21% spike in new listings in February, and there has been a chronic shortage of townhouses, with just a 1.5-month supply now available. In Port Moody and Maple Ridge there were almost twice as many townhouse sales as active listings in February. And on Vancouver’s West Side the number of townhouse sales in February were the highest since June 2017.
Investors, we believe, are pivoting to condos, looking towards the easing of pandemic regulations that will bring vibrancy back to downtowns and foreign students back to Metro Vancouver campuses. Affordability is part of the equation. In the past year, condo prices have increased just 2.5%, while townhouse prices jumped 7.2% and detached houses soared 13.7%. In East Vancouver, as one example, the typical condo apartment sells for $599,000 while a neighbouring detached house sells for $1.58 million.
For an increasing number of buyers, condominiums are now the first, the smartest and only choice.
What to expect going forward…
We are now experiencing a perfect storm that is churning housing demand and prices to unprecedented heights. Mortgage interest rates are at the lowest level in our lifetime, even our parents lifetime. This combines with intense buyer demand and simply not enough listings, all in an environment where the home is now the centre for living and work for thousands of families. Multiple offers are now the majority of transactions. We don’t see that changing anytime soon.