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Vancouver’s housing inventory: less than meets the eye

Ryan Berlin: You really have to go out of your way to try and ignore the persistence of housing supply scarcity in the Vancouver Region.

Please accept our apologies if it sounds like we’re beating a dead horse here, but one would really have to go out of their way to ignore the persistence of housing supply scarcity in the Vancouver Region.

Continuing the trend established months ago, the region’s inventory of homes available for purchase in October fell to 10,700--a large number, to be sure, if it represented how many hours we’d have to wait to experience sunshine once again in Vancouver, but a relatively small one when considering the historical context for housing supply in this market.

On this point, the 10,700 listings at the end of last month represented a 41% decline from October 2020, while also sitting close to 50% below the past 10-year average for October (meaning, for every 2 listings that have historically been available at this time of year, there currently is only 1). Furthermore, while we do typically see a dip in inventory between September and October--of 4%--total listings fell by 13% this year into October. And in tracking the data to the almost-midpoint of November, listings have fallen further, to 10,400. Oy.

What frames this constriction in supply even more dramatically is that October’s inventory was the lowest on record for any October in the Vancouver Region’s history. We say this based on examining data back to 1989 (the earliest date for which inventory data are available), a time when the region had 1.3 million fewer people, and approximately 500,000 fewer homes. So when we measure inventory on a per capita, or per-dwelling, basis, the current situation appears even more dire for buyers.

Additionally, the irksome reality is that the 10,700 listings are also somewhat of a mirage in that the average buyer isn’t really able to choose among all of these listings.

For example, if we segment the market based on prices, we see that 32% of October’s inventory was priced at $2 million or more, meaning that there are only roughly 7,300 listings priced under $2 million. It goes without saying that $2 million is not a realistic price point for most households (as only 11% of homes sold in October were $2 million or more), so we could also set the bar at, say, $1.5 million: in this case, only 5,900 (55%) of the 10,700 available homes in the Vancouver Region were priced below this threshold.

There are still few signs that this trend of declining---or, at least, suppressed--inventory will reverse course in the near future, given the ongoing economic and labour market recovery and rising incomes.

As such, it is more critical than ever that would-be buyers in this market are working with trusted advisors (realtors) to help them navigate what is a very complex supply landscape.

Ryan Berlin is the Senior Economist with rennie intelligence.