Multi-million dollar home sales in Metro Vancouver this year aren’t hot, hot, hot — despite their prices — according to a new report, which looked at the ongoing impacts the high interest rates and low supply are having on the priciest properties.

In its new report, Re/Max Canada’s 2024 Spotlight on Luxury Report, the real estate company found that 2024 has become the year of the condo in Metro Vancouver.

While other markets, like Saskatoon, are leading the country with an uptick in luxury home sales, it’s a bit of a different scene in Vancouver.

According to the study, demand in Metro Vancouver has cooled for these uber-luxe properties due in part to the foreign buyer ban, vacant home taxes, land transfer taxes, high property taxes, and interest rates.

“While the idea of a Foreign Buyer Ban sounds good in principle, it makes less sense in practice,” says Re/Max Canada President Christopher Alexander. “The ban was originally intended to make a greater number of properties available to Canadians and reduce upward pressure on housing values. The Bank of Canada’s 10 rate hikes were all that was needed to achieve that objective, all the while supply remains at historical lows.”

Compared to the last two months of 2023, sales for detached luxury homes (worth more than $6 million) have seen a 50% drop so far in 2024.

But, for smaller homes, it’s a different story.

“27 strata condo sales averaging $4 million were recorded between January 1 and February 29 of this year. In contrast, there were 16 sales during the same period in 2023, with an average price of $4.5 million. Just over half of 2024’s strata sales (14) occurred in Vancouver’s westside, compared to 11 sales in 2023,” the report reads in part.

“Luxury condo buyers at the top end of the market have adjusted expectations, allowing them to sidestep higher interest rates by choosing smaller apartments rather than larger units in the city’s most coveted strata buildings,” the report reads in part.

So why haven’t we seen major price drops despite fewer buyers? The study found that sellers aren’t budging when it comes to the sale prices.

“Local buyers are the driving force in Vancouver’s housing market, but momentum has yet to reach the upper price points for detached housing. Long-anticipated cuts to interest rates are expected to breathe new life into the city’s luxury segment as the ripple effect moves through the overall market in the latter half of the year,” the report adds, suggesting that things could improve.

The Bank of Canada held the interest rate at 5% in March, but many predict that slow cuts will start as early as June. Inflation currently sits at 2.8%.

On Monday, The Bank of Canada released its look into consumer expectations for the first quarter of this year and found that many are now thinking about homeownership.

“Despite these barriers, intentions to buy a home have increased since 2023. This pickup is likely driven in part by newcomers, who typically have stronger buying intentions than other Canadians,” the survey reads in part.

“Survey respondents also indicated they continue to anticipate that home prices will increase at about the same pace as expected before the pandemic.”

Metro Vancouver’s Uber-Luxury Housing Market Sees Slow 2024 Start by Claire Fenton | DH Urbanized