I recently reviewed my last market report from October 2019, just before COVID struck. Back then, I predicted that the market was healthy and prices would rise in 2020. I described it as "balanced but excited." With hindsight, that analysis was spot on. Pent-up demand unleashed in late 2020 and early 2021, combined with plummeting mortgage rates, led to unprecedented price increases. A surge of buyers, including new Canadians with significant resources, competed for a limited housing supply.
During the pandemic, Metro Vancouver's population grew significantly, impacting the housing market. The population rose from 2.64 million in 2021 to an estimated 2.8 million in 2023, with projections reaching 3.389 million by 2024. This growth, combined with high demand and limited supply, has kept housing prices under pressure.
So, what about now? What's driving today's unexpected market behavior? Traditionally, rising mortgage rates led to falling prices, as buyers could afford less. However, since late 2022, real estate prices have increased or stayed level. Now, with mortgage rates likely to decline, real estate prices may rise again if past supply and demand patterns hold.
In the next 12-24 months, real estate prices could increase if demand remains high and supply limited. Metro Vancouver's ongoing population growth, driven by immigration and a strong local economy, will likely sustain high housing demand, even as mortgage rates fluctuate.
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