Despite a current slowdown in demand and rising inventory, Vancouver's housing market remains structurally undersupplied, according to Ali Wolf, chief economist for housing data firm Zonda. She highlighted a divergence between the market's long-term fundamentals and short-term cyclical dynamics, suggesting a period of adjustment before a return to growth.
Wolf described the Vancouver housing market as "tricky," influenced by both structural and cyclical factors. While the long-term outlook points to a persistent shortage of homes, the present cycle is characterized by a pullback in demand. This situation is exacerbated by economic headwinds such as a "recessionary" economy, job losses, and tariff fears. Furthermore, builders are contending with a cost-prohibitive environment due to rising costs for labor, land, and construction inputs, alongside regulatory hurdles and planning delays.
Several factors are pulling the market in different directions. On the positive side, off-peak mortgage interest rates, increased incentives for buyers and renters, a diversified British Columbia economy, and the city's high quality of life, including its universities, act as tailwinds. However, challenges persist, including the highest unemployment rate since 2016 (excluding 2020) and a 20 percent decrease in home sales compared to Vancouver's 10-year average. Inventory has also increased, with re-sale listings up 20 percent year-over-year and 40 percent above the 10-year average.
Vancouver's housing affordability ranks third globally among developed nations, with current home values remaining 32 percent higher than in 2019, despite recent easing. While affordability has improved slightly compared to the past couple of years, it remains poor when viewed in a longer-term and global context. Wolf anticipates that conditions may worsen before improving, describing the current period as a "reshuffling." Despite these short-term difficulties, she remains optimistic about the long-term prospects, stating that the fundamental ingredients for success in the real estate industry are present in British Columbia.