Elevated interest rates are putting pre-sale buyers in Metro Vancouver and the Fraser Valley in a tough spot.

Before construction begins, buyers agree on a price, but financing is not arranged until closer to completion.
Thus, many buyers find that the developer's already agreed-upon price no longer qualifies them for a mortgage.
The pre-sale market is less transparent, so it's hard to know the scale of how many people are caught in this situation.
This trend is likely to continue unless interest rates drop off, which is not the mainstream view economists have.

Elevated interest rates putting pressure on presale buyers

Elevated Interest Rates Putting Pressure On Presale Buyers

Vancouver is the least affordable housing market in Canada and it is getting worse, according to a recent report.
In 2021, a homebuyer needed to earn $200K to afford a home in Vancouver.
However, the qualifying income has risen to $268K by the end of 2022, which is 3 times BC's median household income.
This is the highest affordability barrier in the country and represents a 34% increase in just one year.

Vancouver housing affordability sets a Latest Record

Vancouver Housing Affordability Sets A New Record

There could be an increased demand for alternatives to condo living in 2023, with corresponding regulatory changes.
Reasons for this include many condominium owners disagreeing with recent changes to rental and age restrictions.
There was also a desire for more housing choices within established single-family neighborhoods.
Alternatives include individually owned row houses and semi-detached housing, which may be preferable to duplexes.

An increased demand for alternatives to condos

An Increased Demand for Alternatives To Condos

Despite expectations, mortgage rates are not likely to be cut in the near future.
However, BoC also stated that they will continue to monitor the situation closely.
Economic recovery and increased demand for housing may also play a role in rate changes.
BoC raised its policy rate on January 25 to 4.5%.

No rate cuts anytime soon

No Rate Cuts Anytime Soon

The avg listed rent for all property types across Canada grew by 12.2% annually to reach ~$2K in December
This marked the 2nd consecutive month of avg Canadian rent rates exceeding $2K. 
The avg rate of annual rent increase overall 12-mo of 2022 was 10.9%.
Rental demand is primarily being driven by a quickly growing population that is finding it difficult to afford homeownership.

What’s the latest about Canada rent prices?

What’s The Latest About Canada Rent Prices?

Canadian home prices ↓ 2.8% yearly to ~$757K in Q4 of 2022.
It’s the first yearly decline since 2008 during the financial crisis.
Prices ↓ in 2022 as mortgage rates ↑, due to the BOC’s rate-hikes.
However, they remain above pre-pandemic levels.

Canadian prices still above pre-pandemic levels amid declines

Canadian Prices Still Above Pre-Pandemic Levels Amid Declines

Canada's office market has been impacted by remote work during the pandemic.
2023 will see less market volatility and slower rise in interest rates and inflation.
Sublet office space will ↑, but it's not a long-term problem.
The office market will be challenging in 2023, with issues being short-term.

2023: a year of recovery for Canada's office market

2023: A Year of Recovery for Canada's Office Market

Metro Vancouver’s industrial vacancy rate ended 2022 unchanged at 0.2%.
4.4M-sq-ft were added to the market in 2022, and a further 6.9M-sq-ft are under construction.
It would take another 6M-sq-ft delivered to the market to push vacancies above 3%.
~25% of the space under construction is smaller, strata-titled units, while 75% is for larger tenants requiring >100K-sq-ft.

Metro Vancouver industrial market remains tight as 2023 begins

Metro Vancouver Industrial Market Remains Tight As 2023 Begins

BoC is considering new regulations for mortgage market to ↓ risk and protect consumers.
New regulations could have a positive impact on long-term stability of market.
The new mortgage-underwriting rules will look beyond the current stress test.New measures also include loan-to-value limits and debt-service ratios.

BoC's newly-built regulations: a step towards stability

BoC's New Regulations: A Step Towards Stability

Prince George home sale price averaged ~$525K in 2022.
Prices ↑5% due to high demand.
Economic uncertainty led to a ↓12% in sales.
Lack of inventory created a competitive market with a ↓20% in available houses.
The market is expected to recover in the coming year with a predicted ↑5% in population and job growth.

Prince George real estate market fluctuations in 2022

Prince George Real Estate Market Fluctuations in 2022

Recessions have minimal impact on BC housing market.
Sales activity decreases temporarily during recessions.
During 2008 recession, median prices ↓ only 2.6%.

BC housing market weathers economic storms

BC Housing Market Weathers Economic Storms

The population and job growth in Metro Vancouver are driving the demand for rental housing.Delivering new rentals in the area is difficult due to lack of land and regulations.

Solutions to address the issue:

Laneway houses
micro-apartments.
Co-living
Co-housing

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Elevated Interest Rates Putting Pressure On Presale Buyers

Vancouver Housing Affordability Sets A New Record

An Increased Demand for Alternatives To Condos

No Rate Cuts Anytime Soon

What’s The Latest About Canada Rent Prices?

Canadian Prices Still Above Pre-Pandemic Levels Amid Declines

2023: A Year of Recovery for Canada's Office Market

Metro Vancouver Industrial Market Remains Tight As 2023 Begins

BoC's New Regulations: A Step Towards Stability

Prince George Real Estate Market Fluctuations in 2022

BC Housing Market Weathers Economic Storms

Metro Vancouver Rental Solutions Emerging

Localized Real Estate Videos to Win Leads using Vancouver real estate Social Media Content

Sign Up to Add Your Branding to Social Media-Ready Real Estate Videos

Elevated Interest Rates Putting Pressure On Presale Buyers

Vancouver Housing Affordability Sets A New Record

An Increased Demand for Alternatives To Condos

No Rate Cuts Anytime Soon

What’s The Latest About Canada Rent Prices?

Canadian Prices Still Above Pre-Pandemic Levels Amid Declines

2023: A Year of Recovery for Canada's Office Market

Metro Vancouver Industrial Market Remains Tight As 2023 Begins

BoC's New Regulations: A Step Towards Stability

Prince George Real Estate Market Fluctuations in 2022

BC Housing Market Weathers Economic Storms

Metro Vancouver Rental Solutions Emerging

Localized Real Estate Videos
to Win Leads using Vancouver real estate Social Media Content

Sign Up to Add Your Branding to Social Media-Ready
Real Estate Videos