“Between saying and doing, many a pair of shoes is worn out.”

Iris Murdoch

Townhouse sector exposes razor-thin housing supply

We are in the heat of a hastily-called federal election and housing is the central platform of the major parties, all of which say they will make housing more affordable for the so-called ‘missing middle’, us common folk who may simply need to buy a townhouse.

Yet the Lower Mainland’s townhouse market exposes the razor-thin housing supply that is the true barrier to more affordable and accessible housing. Townhouses are hugely popular, providing indoor and outdoor space and ground level living at a price that is generally half that of detached house in the same community. With the right planning, zoning and development permit streamlining, they are simpler and faster to build than high-rise condo towers and provide four to six times the density of a detached house. Yet, out of a total of 216 new listings in August across North Vancouver, Coquitlam, Richmond and South Delta combined, only four townhouses remained unsold at month’s end.

In Port Moody, where 217 townhouses have sold since January, only 9 townhouses were added to the market in August: and 8 of them sold. And, in the Fraser Valley in August, 94 out of every 100 townhouse listings were snapped up by month’s end. The result is not surprising: the average townhouse price has increased by $165,555 in the past year alone across the Lower Mainland. Townhouses are the homes the missing middle are looking for, yet the federal election promises are almost totally focused on building subsidized rental apartments. The supply is shallow across the entire Metro housing market. The total number of new listings in August were at levels last seen in 2018-19, two of the slowest years in real estate since the turn of the century.

With 3,166 properties sold across Greater Vancouver in August, new listings were in a freefall, dropping to 4,099 homes. After declining for months, total active listings at the end of the month were just 9,243 units. This compares with more than 13,500 in August of 2020 and more than 10,300 active listings in July 2021. Without a significant increase in listings in September, pressure will again be on prices this fall as buyer activity picks up from the summer break. While some pulled back from real estate activities this month, the lack of properties available likely limited activity of buyers as they waited in anticipation of new listings that never came in August. And like Charlie Brown waiting to kick the football, will it get pulled away again in September if sellers still hold back from listing?

Repeated attempts to stifle housing demand in Greater Vancouver have failed simply because people desire the freedom and financial gains that homeownership provides.
After suffering under the speculation tax, the foreign-home buyer tax, the vacant homes tax, the property transfer tax, rising development fees and community amenity costs, the current federal government now plans to add an anti-flipping tax that will chip away at home equity and punish flexibility. Metro Vancouver home buyers are the most resilient in the country, as shown in August which posted the sixth highest for any August on record.

All that is needed to regain balance in this market is increased supply.

Evidences is seen in the current condominium market. August condo sales were far above the detached and townhouse markets. And a key reason is supply and selection. In August there were more new listings – 2,158 – for condos than for detached houses and townhouses combined. As well, there are about 38,000 new condos under construction across Metro Vancouver, compared to just 3,150 new townhouses and about 2,000 detached houses.

Condo sales in August were up 22% year over year, while townhouse sales were down 7% and detached homes off by 14%. But here is the clincher: despite the soaring sales, a healthy supply has kept condo prices relatively in check: the average Lower Mainland condo apartment has increased in value by 6.9% in the past year (to $729,700), compared to 12.6% for detached houses (to $1,615,000) and 13.1% for townhouses (to $849,900), both of which are seeing a significant shortage. Supply is the answer. The rest is rhetoric. Remember this at the voting booth on September 20.

August Housing Market Highlights

Biggest year-over-year detached house price increase: Westside Vancouver, up $422,000.
Deepest month-over-month sales drop: Pitt Meadows, down 38%
Lowest number of new townhouse starts in 2021: North Vancouver City, Zero.
Biggest month-over-month detached house price decrease: Port Moody, down 0.4%
Biggest month-over-month new listings increase: Port Coquitlam, up 6%

Source: Real Estate Board of Greater Vancouver August 2021

Greater Vancouver: Total housing sales in August were 3,166 – down from 3,375 (-6%) in July 2021, but up 1% from August 2020. Condominiums accounted for most of the sales, caused partially by the lack of option. With a lack of townhouses, condominium apartments capture demand from all parts of the market – investors, first- time buyers, downsizers and buyers moving from one condo to another. Total active residential listings were at 9,494 at month end compared to 13,511 at that time last year and 10,367 at the end of July; new listings in August were down 9% compared to July 2021, and down 31% compared to August 2020. Month’s supply of total residential listings is steady at 3 month’s supply (seller’s market conditions) and the August sales- to-listings ratio of 77% compared to 75% in July 2021 and 52% in August 2020.

Fraser Valley: Total residential transactions in the Fraser Valley in August were 2,087, the strongest August performance since 2005. But the inventory of homes for sale has dropped to 1980 levels. In August, only 2,107 new listings were added, down 37% from a year earlier and the lowest monthly level this year. August ended with total active inventory sitting at 4,077, a 16.8% decrease compared to July 2021, and 45% fewer than in August 2020.

Vancouver Westside: Westside detached house sales saw a decline in sales, month over month, while townhome and apartment sales were the highest since May. Price was likely a factor. The benchmark detached house price in August was $3,462,000, up 12.2% – that is $422,000 – from a year earlier, though unchanged from July 2021. (As an aside on Westside house appreciation: In 1960 Vancouver retailer Sonny Wosk paid $121,500 for a ‘mansion’ on South Granville. It was listed this week for $19.8 million.) Total Westside housing sales in August were 593, up 4% from a month earlier and 21% higher than in August 2020. Active Listings were at 2,389 at month end compared to 2,671 at that time last year and 2,558 at the end of July 2021. New listings in August were down 1% compared to July 2021 and down 24% compared to August 2020. Condos dominated the Westside market, accounting for 443 of the 597 sales and 70% of the total new listings. The total sales-to-listing ratio was 65%, up from 61% in July and far ahead of the 41% in August of last year.

Vancouver East Side: August sales reached 295 homes, down from 360 (-18%) in July 2021, down from 330 (-11%) in August 2020. Even at a benchmark price of $1,689,700, East Side detached sales in August were the second highest of any Greater Vancouver submarket, with 105 transactions. The East Side condominium market, which saw 155 sales in August, offers comparative value with a benchmark price of $629,500, about $100,000 less than the Lower Mainland average. Condo investors are quite active in this market as construction of the SkyTrain Broadway and Millennial Line extensions become visible and work starts on the massive $2.1 billion new St. Paul’s hospital campus.

Active listings were at 1,090 at month end compared to 1,319 at that time last year and 1,191 at the end of July; New Listings in August were down 12% compared to July 2021 and 42% lower than in August 2020. The supply of total residential listings is up to 4 month’s supply and the sales to listings ratio of 69% compares to 74% in July 2021 and 45% in August of last year. This remains a solid seller’s market.

North Vancouver: North Vancouver is suffering a startling lack of inventory. Only 439 homes were added in August, down nearly 50% from August of 2020 and below the 512 new listings in July of this year. North Vancouver continues to be inventory starved and with little new strata development, this will be an issue in the years to come. Not a single new townhouse has started construction this year in North Vancouver City and just 17 have started in North Vancouver District, as examples of the looming shortage. Total August sales were lower, at 212 transactions, down 16% from a month earlier and down 15% from the same month a year earlier. The supply shortage is reflected in prices: detached houses benchmarked at $1,865,800 in August and townhouse prices reached $1,140,100, third highest in Metro Vancouver and up about $114,000 from just six months ago. There were 99 condo apartment sales in August, at a benchmark price of $649,600. With the total sales-to-listing ratio running at 86%, North Vancouver has a mere 2 month supply of housing at the current sales pace. I would advise any owners considering a sale to list now into a seller’s market on steroids.

West Vancouver: New condominiums in Ambleside – the first in years in the waterfront community – are being listed north of $6 million to give an idea of the rarified market in West Vancouver. The city saw total sales fall in August to 67 transactions, down 21% from a month earlier but exactly the same as in August of last year. At a benchmark of $3,088,900, detached sales led the market, accounting for 43 of the transactions. Active Listings were at 536 at month end compared to 667 at that time last year and 572 at the end of July; New Listings in August were down 18% compared to July 2021 and down 33% compared to August 2020. With 52% of new listings selling, West Vancouver is considered a rare balanced market in Metro Vancouver.

Richmond: Richmond is seeing a spike in the supply of new homes this year, with starts rising 158% in the second quarter, to 294 units, compared with the same period in 2020. They will be needed. Richmond total housing sales in August were 3% higher than a month earlier and 29% above the pace in August 2020. New listings, however, dropped 12% from July 2021 and 20% below the same month a year ago. Due partially to a rezoning move three years, which encouraged townhouse construction along major roadways, Richmond had the highest new listings for townhouses of any Metro Vancouver market in August, with 107. But with a 99% sales-to-listing ratio, there was only one townhouse still available at month’s end from what came on. The benchmark price of a Richmond townhouse is now $938,400. Detached houses now sell at a benchmark of $1,9120,400, up 10.1% from six months earlier. Richmond’s inventory of total residential listings is down to a 3 month’s supply, with a sales-to-listings ratio of 82% in August.

Ladner: Like all of South Delta, Ladner should be getting ready for a new 8-lane, $4.15 billion traffic tunnel expected to be built by 2030, replacing the current George Massey crossing. The Massey Tunnel replacement has been debated for years, but the province appears confident this time. Whenever it is opened, it will change Ladner home values forever. Ladner, where the benchmark detached house price in August was $1,287,300, saw a total of 35 residential sales, down 6% from a month earlier. With a sales-to-listing ratio of 77%, active listings were up 9% from July and there is an estimated 3 month supply of inventory.

Tsawwassen: This South Delta community bucked the Metro sales trends in August as sales rose 28% from July, to 74 transactions. It fit the listing pattern, however, as active listings dropped to 142 homes, down from 168 in July and about 60% below August 2020. The result is a screaming seller’s market, with the sales-to-listing ratio at 112% in August – highest in Metro Vancouver. Tsawwassen has posted a 3.1% composite home price increase over the last three months, also the strongest in the Metro region. This should be a strong September market- if buyers can find anything left to buy.

Burnaby East: This more affordable market – the composite benchmark home price is $1,018,300, the lowest in Burnaby – saw total sales drop 37% in August from a month earlier, to just 29 transactions. Active listings were 83 at month end, unchanged from July; New listings were down 11% compared to July 2021 and 20% lower compared to August 2020. Month’s supply of total residential listings is up to 3 month’s as the sales-to-listings ratio dipped to 57% compared to 81% in July 2021. This is a seller’s market that is tilting towards balance.

Burnaby North: As if North Burnaby didn’t have enough going for it, a new $127 million community centre has just been announced for its Confederation Park, which already has three large community complexes. The new centre will address the rapid growth in the market, which also includes the massive Brentwood development. Total housing sales in August were down 8% from July 2021 and when compared to August of last year. Active Listings were at 467 at month end compared to 591 at that time last year and 497 at the end of July. New listings in August were down 12% compared to July 2021, and down 31% compared to August 2020. The current sales to listings ratio of 76% reflects the ongoing seller’s market.

Burnaby South: Burnaby South has the highest detached house prices in the municipality, at a benchmark of $1,788,100 in August, but it also has the most stable sales. Total August transactions, at 199 homes, were down just 1% from July and 53% higher than in August 2020. With new listings increasing 4% from July, the August sales-to-listing ratio was 71%, down slightly from the 75% pace in July, but still indicative of a seller’s advantage.

New Westminster: That rumbling noise from the Royal City waterfront in September will be from 429 cement trucks feeding the largest continuous concrete pour in the Metro region this year, for a 53-storey condo high-rise rising from the Quay. Condos are big news in New West. In August 103 condo apartments sold, dwarfing the 23 sales of townhouses and 21 detached house transactions. While total sales were down 10% from July, this remains a clear seller’s market. Condo transactions represented an 81% sales-to-listing ratio and 91% of new listings for detached houses sold during the month, at a benchmark price of $1,328.500. This compares to condo prices at $567,100 and townhouse benchmarks at $845,500. The current supply of total residential listings is steady at a 2 month’s supply.

Coquitlam: While Coquitlam Town Centre continues to emerge, Burquitlam’s master planned neighbourhood, also linked to SkyTrain, is coming to life big time. In the works are a new $77 million YMCA fitness and health centre, 31 and 50-storey condo towers, a new park and a new police station, plus a retail village, with much of it completed within two years. With an overall sales-to-listing ratio of 93% in August, Coquitlam is also a very strong housing market. The composite home prices is $1,093,400, virtually unchanged for three months, as are sales which were up 3% from July to 293 transactions, even as new listings were down 11% in the same period.

Port Moody: The small waterfront suburban city has had development challenges in the past, but has just received $403,000 in funding from the Union of B.C. Municipalities, money that is meant to streamline the development process. The PoMo market is tight, with a drop in total new listings – just 76 in August – and a sales-to-listing ratio of 73% that spiked to 100% for townhouse listings. This is a seller’s market and anything to help increase supply would likely be appreciated by buyers.

Port Coquitlam: Port Coquitlam is the affordable destination in the Tri-Cities, the only market where the composite benchmark is under $1 million, at $924,300 in August. One can buy condo apartments at a benchmark of $523,300, even less. Total sales in August were down 6% from a month earlier, at 103 transactions, but new listings were up 6%, which is rare in Metro Vancouver. The August sales-to-listing ratio was a robust 84% and hit 94% in July, indicating a seller’s market where the inventory is moving quite quickly.

Pitt Meadows: With a composite home benchmark price of $924,300 in August, Pitt Meadows was automatically on the radar for family buyers. Condos priced at a benchmark of $544,300, a value that has held steady for three months, continue to attract first-time buyers and investors. Sales have slowed, though, with August transactions down 38% from July, though listings were up modestly from a month earlier at 49. The August sales-to-listing ratio dropped to 64%, compared to a stunning 108% in July.

Maple Ridge: Active listings in August plunged more than 50% from a year ago, down to 318 homes, and new listings were off 7% compared to last month. But new supply is coming, with 174 new townhouses and 383 new condo apartments under construction. Sales remain strong, down a mere 2% from July in August to 185 transactions. With a composite home price of just over $1 million, Maple Ridge edge as an affordable market is being challenged, but the benchmark price for townhouses is $686,900, lowest in Greater Vancouver, and these prices have held stable, up just 1.3% over the past three months. With the sales-to-listing ratio at 84% in August, the new housing supply will be welcomed.

Surrey: The second-biggest B.C city saw total detached house sales rise 4.3% in August compared to July 21, but were down 11.8% from August 2020. The average detached house in Surrey sold for $1,564,060, which is nudging closer to the Greater Vancouver benchmark. Townhouse posted 301 sales in August at an average price of $715,500, up 22% from a year earlier. The lowest strata prices are in North Surrey, where townhouse benchmark at $607,500 and typical condo apartments traded at $427,500 in August.

Kevin Skipworth, Partner/Broker and Chief Economist at Dexter Realty