February 2025 Vancouver Real Estate Market Update

Real Estate - February 2025 Report

Date: March 6, 2025 Source: Excerpts from "Greater Vancouver & Fraser Valley Real Estate: February 2025 Report" (Dexter's Report)

Executive Summary:

The Greater Vancouver and Fraser Valley real estate markets in February 2025 were characterized by significant uncertainty driven by impending tariffs, ongoing political discussions surrounding a federal election, and anticipation of the Bank of Canada's next interest rate decision. While sales in Greater Vancouver saw an increase from January, they lagged behind the previous year, and new listings declined month-over-month – an atypical trend. The Fraser Valley experienced a more significant year-over-year sales decline. Active listings continued their accumulation, albeit at a slower pace. The report highlights a market with underlying demand but one where both buyers and sellers exhibited caution in February due to the prevailing economic and political ambiguities.

Key Themes and Important Ideas/Facts:

1. Market Uncertainty Driven by Tariffs and Political Climate:

• Tariff Implementation: The looming implementation of tariffs on March 3rd created a "hush that came across from buyers," and some sellers also paused activity in February. The report explicitly states, "Tariff or not to tariff has been the question to start 2025 and continued through the month of February before culminating with a thud of tariffs on March 3."

• Federal Election Impact: The upcoming federal election and associated policy discussions are influencing market sentiment. "And the election promises are likely to impact what decisions people make with real estate. There is already talk of GST exemptions on new homes either up to $1M or $1.5M depending on which candidate wins, capital gains discussions and likely a push for supply from all sides."

• Interest Rate Uncertainty: The Bank of Canada's upcoming interest rate decision on March 12th added to the uncertainty, with "expectations somewhat mixed on whether another rate cut will happen." The report suggests the newly implemented tariffs might necessitate a "jumbo cut of at least 50 points" given low inflation and sputtering GDP.

2. Mixed Sales Activity and Declining New Listings:

• Greater Vancouver Sales: While February sales (1,827 units) were up 18% from January (1,552 units), they were down 11% year-over-year compared to February 2024 (2,070 units). This marks the first year-over-year decline since September 2024.

• Fraser Valley Sales: The Fraser Valley experienced a more significant decline, with February sales down 27% compared to February 2024.

• Declining New Listings: A notable trend was the drop in new listings in Greater Vancouver from January to February (down 9% to 5,163), which is "not a common occurrence in the real estate market." This suggests sellers were also hesitant to enter the market amidst the uncertainty.

• Below Average Sales: Greater Vancouver sales in February were "39% below the 10-year average," highlighting a sustained period of lower transaction volumes.

3. Accumulating Active Listings and Shifting Market Dynamics:

• Continued Listing Growth: Active listings in Greater Vancouver continued to accumulate, reaching 12,744 at the end of February, a 32% increase year-over-year and an 11% increase from January.

• Slower Accumulation Rate: The report notes that active listings are accumulating "at a slower rate," likely due to the decrease in new listings.

• Rising Sales-to-Listings Ratio: The sales-to-listings ratio in Greater Vancouver rose to 35% in February (from 27% in January), but remained below the ratios of February 2024 (45%) and February 2023 (51%), indicating "more favourable conditions for buyers as well."

• Months of Supply: The months of supply in Greater Vancouver remained steady at 7 months, indicating balanced market conditions overall. However, detached homes saw a decrease to 9 months (from 11), while townhomes (5 months) and condos (6 months) remained relatively stable. Townhomes continue to be the "least available and most competitive."

4. Regional Nuances within Greater Vancouver:

• Seller's Markets: North Vancouver and Port Coquitlam remained in a seller's market for total residential listings with only 4 months of supply. The townhouse segment showed even tighter conditions in areas like Port Moody, Port Coquitlam, Pitt Meadows, and Maple Ridge with only 2 months of supply. Squamish also saw a significant decrease in townhouse supply to 2 months.

• Buyer's Markets: Vancouver Westside (9 months) and West Vancouver (15 months) continued to exhibit buyer's market conditions. Richmond and Burnaby South also showed buyer's market conditions with 8 months of supply.

• Price Index Fluctuations: Month-over-month price index changes varied across regions, with some areas seeing increases (e.g., North Vancouver +1.4%) and others experiencing decreases (e.g., West Vancouver -2.0%, Pitt Meadows -2.6%, Maple Ridge -1.8%). Over the last six months, most areas showed a decline in the house price index.

5. Long-Term Perspective on Transaction Volume:

• The report emphasizes the low transaction volume compared to historical figures, stating, "Only fives times since the year 2000 have we seen less than 2,000 sales in Greater Vancouver for the month of February. Considering there were 4,051 sales in February 1989, this goes to show how few transactions are occurring given the increase in population and housing stocking over the last 35 years." This suggests a trend of homeowners holding onto their properties longer, contributing to supply constraints.

6. Supply-Side Developments:

• A project in North Vancouver's Lynn Canyon shifted to all rental, reducing the number of strata units available for purchase by 205.

• Port Moody approved new towers in its downtown core, adding over 1,000 units near the Moody Centre Sky Train station, indicating efforts to increase housing supply in certain areas.

7. Fraser Valley Specifics:

• While sales were up 10% from January, they were significantly down year-over-year (27%).

• New listings were down 8% from January but up 12% from February 2024.

• The average price was down 1% month-over-month but up 0.4% year-over-year.

• Active listings saw an 8% increase from January and a substantial 39% increase from February 2024.

• The months of supply remained at 8 months, indicating buyer's market conditions in the Fraser Valley.

Quotes Highlighting Key Points:

• On tariff impact: "And while the hush that came across from buyers wasn’t all too unexpected, some sellers as well joined in the pause of activity in February."

• On the unusual listing trend: "While sales in February were above the totals in January, new listing totals declined in February from January, not a common occurrence in the real estate market."

• On the impact of uncertainty: "It appears that the uncertainty around tariffs and interest rates affected the real estate market in February. This uncertainty may play out in the coming months, not to mention Canada’s own federal election coming this year."

• On the potential for a large rate cut: "With tariffs now in place, the Bank of Canada may need to do another jumbo cut of at least 50 points."

• On the underlying market desire to move: "The real estate market has undertones of a market wanting to move – literally."

• On the historical context of low sales: "Considering there were 4,051 sales in February 1989, this goes to show how few transactions are occurring given the increase in population and housing stocking over the last 35 years. People are holding on to the homes they buy, which exacerbates the lack of supply of available homes."

Conclusion:

The February 2025 real estate report for Greater Vancouver and the Fraser Valley paints a picture of a market navigating significant headwinds of economic and political uncertainty. The anticipation of tariffs and the upcoming federal election, coupled with fluctuating interest rate expectations, contributed to a cautious approach from both buyers and sellers. While Greater Vancouver saw a month-over-month increase in sales, the year-over-year decline and the unusual drop in new listings signal a period of adjustment. The Fraser Valley experienced a more pronounced slowdown. Despite the current hesitancy, the report suggests an underlying demand in the market. The coming months, with the implementation of tariffs, the Bank of Canada's interest rate decisions, and the unfolding federal election, will be crucial in shaping the direction of the real estate market in the region.