2024 Outlook

After a challenging 2023 for the real estate market, total sales reached 26,249, concluding 23% below the 10-year average. Despite the highest mortgage rates in over a decade, the Metro Vancouver housing market surpassed expectations with a 5%+ increase in home prices across all segments. This defied earlier forecasts of price declines, emphasizing Metro Vancouver's enduring appeal as one of the most desirable destinations, and the determination of real estate consumers. Although the market achieved a semblance of balance towards the year end, the sustainability of this trend remains uncertain.

The main narrative revolves around holding rather than speculation. Discouraging homeowners from selling, especially in the context of a growing population and changing demographics favoring more buyers, is counterproductive. Policies such as the B.C. NDP's anti-flipping tax and other demand-side measures are likely to decrease listings, exacerbating pressure on prices. If we are to alleviate our holding dilemma and mitigate supply constraints, additional incentives are required for sellers to participate in the market.

In 2024, we foresee government entities at every level poised to further impact Canadian incomes through a surge in various taxes. This onslaught includes anticipated increases in vacant home tax, property taxes, school taxes, carbon taxes, speculation tax, credit card rates, rental rates, car insurance rates, CPP premiums, and interest payments. 

Economists like Benjamin Tal, David Rosenberg, and Doug Porter anticipate rate cuts around March/April, but their potential impact may be limited. While talk of lower rates is circulating, especially with marginal reductions of 0.75%-1%, it offers minimal relief for those already grappling with debt. Despite this, sentiment plays a pivotal role in market dynamics, and even a psychological shift could propel demand. It seems the era of cheap money is behind us, with no imminent return on the horizon.

Against a backdrop of ongoing global conflicts, the domestic battle over real estate markets escalates, drawing all levels of government into the fray. Developers, builders, and homeowners find themselves at the center of the blame game. The very essence of Canadian suburban communities hangs in the balance, with the looming threat of multi-family homes in cul-de-sacs and high-rises eroding walkability and character. 
Compounding the issue is record-breaking population growth of 430,635 immigrants in Q3, intensifying the challenges of housing affordability. With a quarterly growth rate of 1.1%, this marks the most significant increase since Q2 1957, pushing the total population beyond 40.5 million. Alberta experienced the fastest population growth among all provinces, primarily driven by migration from Ontario and BC. Experts warn that the robust pace of Canada's population expansion poses a substantial threat to housing affordability, emphasizing the nation's struggles in scaling up home construction.

Assessed values stabilize 

BCAssessment released its updated assessments earlier than anticipated at the close of the year, revealing changes notably lower than those of preceding years. Changes were observed within a modest range of +5% to -5%. However, the assessment serves as an imperfect gauge of actual value, relying solely on data as of July 1st. Nevertheless, it provides insight into the seller's expectations, challenging property owners to exceed those projected figures.

One caveat is that assessors do not consider the development potential of a site, nor alterations in the maximum allowable Floor Space Ratio. Furthermore, the absence of a physical property inspection means that any upgrades undertaken might not be factored into the comprehensive valuation process.

In British Columbia, a total of 2,184,692 properties were assessed, reflecting a 1% increase from the previous year. The aggregate value of the assessed real estate increased by 3%, reaching an impressive $2.79 trillion compared to 2023. Notably, an overwhelming 98% of homeowners acknowledged and accepted their assessments without opting for an appeal.

Maintaining its prestigious position, the highest-valued property continues to be the iconic waterfront residence of Lululemon founder, Chip Wilson, situated in Point Grey. His iconic property now boasts a valuation of $81,765,000, marking a "modest" appreciation of $7 million since the last assessment period.

Property tax increase

In an effort to reconcile a $2.15 billion operating budget, Vancouver is slated to for a 7.5% uptick in property taxes. Mayor Ken Sim characterizes this budget as a "transitional" phase, expressing an expectation for more modest property tax increases in the future. Notably, this figure marks a decrease of over 3% compared to the previous year. For property owners, this translates to approximately $98 annually for a benchmark strata unit and $260 annually for a benchmark single-family home. The 10.7% hike helped Sim’s ABC Vancouver party fulfill a campaign promise and unlock money to begin the hiring of 100 police officers, 58 mental health workers and 33 firefighters and staff.

Density significantly impacting property value

British Columbia's Premier, David Eby, is actively pursuing an ambitious goal of adding 250,000 homes to the province within the next decade. In a significant move in December 2023, the Province introduced amendments to the Local Government Act and Vancouver Charter, creating Transit-Oriented Areas (TOAs) near transit stations. These designated areas aim to facilitate transit-oriented development goals such as mode shift and the creation of complete communities. The government promptly released 52 Transit Oriented Development (TOD) maps, all of which took immediate effect.
Transit-Oriented Development

For residential properties around SkyTrain stations, the TOD outright zoning (called Minimum Allowable Density Framework by the Province) can be summarized as follows:
  • Within 200m, building heights of 20 storeys and a Floor Space Ratio of 5.0
  • From 200m to 400m, building heights of 12 storeys and a FSR of 4.0
  • Between 400m and 800m, buildings heights of 8 storeys and a FSR of 3.0
Designated bus exchange TOD outright zoning, can be summarized as:
  • Within 200m, building heights of 12 storeys and a Floor Space Ratio of 4.0
  • Between 200m and 400m, building heights of 8 storeys and a FSR of 3.0
In a comprehensive zoning update, the consolidation of RS Zones, excluding RT Zones, occurred. This involved aligning zoning districts and labels with recent changes and approved amendments to the Zoning and Development By-law:
  • Updated Single Detached House to Residential Inclusive
  • Updated Duplex to Residential
  • Updated Multiple Dwelling to Residential
  • Updated Other to Comprehensive Development
  • Updated FSHCA to FSD
  • Updated RS to R1
  • Added Residential Rental
  • Added RR-2B
  • Added RR
  • Renamed One-Family Dwelling to Single Detached House
  • Renamed Two-Family Dwelling to Duplex
Additionally, RR-2A, RR-2C, RR-3A, RR-3B will be incorporated upon approval and enactment of related Residential Rental applications. A significant consolidation involves merging nine zoning districts into R1-1, including RS-1, RS-1A, RS-1B, RS-2, RS-3, RS-3A, RS-5, RS-6, and RS-7.
Highlighting the impact of Official Community Plans and the ability to identify opportunities during city rezoning, underscores that this evolution represents the most significant change in real estate value within the shortest timeframe. The immediate surge in value for sellers the day before and after a City Council converts a single-family lot to a high-rise designation exemplifies this rapid transformation. It's crucial for homeowners to be aware that realizing capital gains on their principal residence and constructing a laneway home or 4-plex could potentially jeopardize their tax-free exemption.

AI takes center stage

In just one year, OpenAI and their flagship product, ChatGPT, have propelled Artificial Intelligence into a revolutionary era, democratizing its accessibility in unprecedented ways. This technological leap signifies a substantial transformation within the largest asset class, impacting aspects such as curated search, listing quality, chat bots, image generation and classification, autonomous contract review, underwriting, risk assessment, and so on.

We will transition from a period of AI experimentation to it being a core pillar in many a proptech offering. While a good real estate agent provides enormous value that computers simply cannot, perhaps we will see an AI enabled agent in 2024. Are we really prepared to hand over one of life's most significant investments to a robot devoid of emotional intelligence? Consumers will continue to go to real estate agents for advice, for psychological reassurance, and for local on-the-ground knowledge that isn’t stored in a database. But the agents that embrace AI will be miles ahead of the competition—offloading processes and paperwork to their digital companion, what computers and AI excel at. Make no mistake about it, consolidation is coming in a big way. Gone are the days of information asymmetry and disparate applications, and a new era of collaboration is upon us.
DALL-E-3 Prompt: Give me 4 different kitchen design ideas for renovation. The counters must be quartz, white subway tile backsplash, under-mount sinks. Clean, modern, minimal. Try alternative colour schemes, each with unique fixtures.
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