As Vancouver’s housing supply dwindles, an increasing number of buyers — from seasoned investors to deep-pocketed parents — are turning their focus to condos.

Condominium apartments made up 53% of Greater Vancouver housing transactions in November, representing a 33.3% increase from this time last year. In the Fraser Valley, condo sales spiked 42.8% year-over-year.

“We suspect more buyers are opting for a condo apartment because there is simply such little choice amidst unprecedented low inventory across all of Metro Vancouver,” said Kevin Skipworth, partner and chief economist at Dexter Realty in a recent report. “As well, apartments attract more investors than other sectors of the housing market, which further reduces the inventory.”

According to the Canada Mortgage and Housing Corporation, there were less than 1,500 unsold condo units across Metro Vancouver at the start of November, marking the lowest number in three years.

Reduced inventory and increased demand extends across the Lower Mainland, particularly in Surrey, where six new condo projects have pre-sold a total of 1,400 new condos since the summer.

Flamingo One, a 35-storey tower in central Surrey developed by Tien Sher, recently pre-sold 365 condos in a single weekend as both investors and parents scooped up units.

“A typical one-bedroom 480-square-foot new condo costs around $500,000, and this average holds steady throughout most Metro Vancouver suburbs,” said Skipworth. “Investors and owner-occupiers continue to buy due to expectations that prices will be even higher in the months and years ahead, which does appear certain due to the stubbornly low inventory.”

Price increases in the resale market reflect the surging demand. The benchmark price for a resale apartment in Greater Vancouver has reached $752,800, an increase of 11.1% from a year ago. Prices in the Fraser Valley ($530,400) are more moderate but increasing at a higher rate, up 21.7% year-over-year.

“The housing supply issue in Metro Vancouver is seriously out of whack with market demand,” said Skipworth. “We have seen recent municipal and provincial government attempts to increase supply, but it is too little and too late to correct the current shortage any time soon.”

Looking to speed up residential building permit approvals, Surrey is now guaranteeing that the entire process will take no more than 12 weeks. Vancouver is following suit, following recent claims from some developers that it has taken up to seven years to secure a permit for a new condo or townhouse development.

However, fast-tracking the permitting process won’t address short-term inventory issues. Skipworth expects historically low supply heading into 2022, forecasting less than half of the 20-year average (12,015) for year-end active listings.

“Greater Vancouver will likely see the smallest ever inventory of homes to begin a new near,” he explained. “The lowest we’ve seen at the start of a year is at 6,200 active listings. We will likely have less than 6,000 at the end of December which would translate into less than 5,000 active listings in Greater Vancouver when 2022 starts, after all the expired listings come and go at the end of December.”

Greater Vancouver Condo Sales Spike Due to “Stubbornly Low Inventory” by Ryan Garner | Livabl