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A New Phase for Vancouver's Housing Market
Vancouver’s housing market is entering a phase of gradual adjustment rather than experiencing sharp price swings or dramatic changes. After two years of fluctuating interest rates and stalled transactions, the market is stabilizing. This shift is driven more by slow-moving fundamentals, such as population growth, household formation, and construction timelines, than by short-term sentiment or headlines. These factors shape the market's direction in a more predictable, steady manner, offering clearer insights into future trends.
Housing cycles are often viewed through price changes, but prices are just an outcome, not the cycle itself. The true cycle involves shifts in market activity, the availability of homes, and the ability of households to transact. In Vancouver, early signals of a market change can be seen in sales volumes, new listings, and rental conditions, with price changes following behind. Current data shows that while sales are low and inventory is up, the market is adjusting rather than correcting. Affordability constraints are limiting transactions, but demand is still there, preventing significant price drops.
Demand in Vancouver is driven by population growth and household formation, but these are not the same. While the population has grown, much of the increase has been absorbed by the rental market, as many newcomers rent or delay purchasing. Rising interest rates have further restricted potential buyers, deferred ownership demand while pushing more people into rentals. This shift in demand helps explain why Vancouver’s market hasn’t seen a major price correction. Demand exists, but affordability is preventing it from turning into transactions.
On the supply side, Vancouver’s housing market faces a significant lag. While construction activity has remained steady, the delivery of new homes takes years, especially for multi-family developments. Rising construction costs and financing challenges have slowed down the pace of new builds, and approval timelines add further delays. As a result, supply struggles to keep up with demand, especially in more affordable segments. This mismatch contributes to ongoing pressure on the market, even though sales activity has slowed.
Affordability remains the key constraint. Though home prices have eased, higher interest rates have raised borrowing costs significantly, making homeownership less accessible. This has limited the number of buyers, and those who are already homeowners are reluctant to sell due to manageable carrying costs. Fewer listings are contributing to market stagnation. At the same time, developers struggle to sell new units when buyers can’t secure financing. With rental demand still strong, the market is adjusting slowly, and Vancouver’s housing market is likely to continue this gradual shift in the years to come.