The sluggish spring market in the Lower Mainland continued as buyers sat on the fence through May, waiting for the Bank of Canada’s now-commenced rate cut cycle. Dashing hopes of a more robust spring bounce, MLS home sales in the region spanning Metro Vancouver and Abbotsford-Mission came in at 4,166 units in May—a level of activity that was 1.5 per cent lower than April and 17 per cent below a year ago. Seasonally adjusted sales were steady from April but remained near cycle lows.
For May, this was the fewest sales since the 2020 pandemic, and sales last month were 20 per cent below the 2010-2019 same-month average, despite a period of rapid population growth. In 2023, Metro Vancouver’s population expanded by four per cent, and over a three-year period, it has grown by eight per cent. Abbotsford-Mission grew by 3.1 per cent and 5.3 per cent, respectively. The economy has held steady.
While demand bubbled under the surface, the latest data points to a market that is stifled by record-low affordability due to a combination of high mortgage rates and still elevated prices. At the same time, more sellers listed their homes, reflecting normal spring optimism, financial pressures on investor-owners and the consequences of Ottawa’s changes to the capital gains inclusion rate. New listings were 9.5 per cent higher than a year ago, albeit lower than late-year peaks. Inventory (active listings) surpassed 20,000 units and was the highest since September 2020, with seasonally adjusted levels at their highest since late 2019.
For buyers able to qualify for financing, there are more homes available to choose from, but prices are not showing significant downward pressure, if at all. The average price reached $1.25 million, which was one per cent higher than May 2023, albeit with decelerated growth. The seasonally adjusted trend held steady and, by our calculation, moved higher. Moreover, unadjusted benchmark values for single-family homes and townhomes rose by one per cent and 0.6 per cent, respectively, while condominium apartment prices fell by 0.2 per cent.
The Bank of Canada’s recent cut will lift home sales in coming months with improved affordability and increased buyer confidence, but it is unlikely to fuel a surge in home values as affordability remains stressed.
Following consecutive labour force expansions, employment in British Columbia reported a decline of 7,900 people (down 0.3 per cent) in May. Despite the dip, year-over-year hiring rose by 2.8 per cent and exceeded the national gain of two per cent. The unemployment rate jumped 0.6 percentage points (up 0.3 per cent) to reach 5.6 per cent as B.C.’s labour force expansion continued, reversing the drop seen last month. The labour participation rate edged up to 65.3 per cent from 65.2 per cent last month along with a 0.3-per-cent increase in population.
Part-time employment in the province fell by 1.7 per cent (10,000 people) following an increase during the previous month. Full-time employment edged up 0.1 per cent (2,100 people). The Vancouver census metropolitan area (CMA) saw a 1.1-per-cent decrease in its employment level, while the area’s unemployment rate jumped to 6.1 per cent from 5.3 per cent in April. During May of last year, Vancouver CMA’s unemployment rate also sat at 5.3 per cent.
By sector, B.C.’s services-producing industries led the May decline in employment with a 0.6-per-cent decrease, offsetting a 1.3-per-cent gain in goods-producing industries. The province’s manufacturing sector saw the highest proportional monthly increase at 4.6 per cent (7,800 people), leading the overall increase on the goods-producing side and reversing April’s drop. Information, culture and recreation (down 17,400 people or 10.6 per cent) reported a large decline in May following a jump the month prior. An employment contraction was also seen in sectors such as educational services (down 2.6 per cent) and wholesale and retail trade (down 1.6 per cent).
Bryan Yu is chief economist at Central 1.
