The December 2024 real estate market brought a strong finish to the year, with sales up 31% compared to December 2023. This momentum closed a year that saw renewed buyer activity driven by declining interest rates and optimism about what lies ahead. But as we head into 2025, the market continues to face challenges, from new tax policies to constrained supply in key segments like townhomes. Here’s a look at the highlights from Dexter Realty’s December report and what they mean for the coming year.

Key Highlights

• Sales Surge: December sales in Greater Vancouver increased 31% year-over-year and 35% compared to December 2022, driven by declining interest rates and pent-up demand.

• Q4 Sales Up: Fourth-quarter sales were 30% higher than in 2023 and 36% higher than in 2022.

• Townhomes in Demand: Townhome sales rose 55% year-over-year, reflecting strong demand in this segment.

• Interest Rates Drop: The Bank of Canada’s 50-basis-point rate cut in December spurred buyer activity, with another 25-point cut anticipated in January.

Interest Rates and Policy Shifts

Interest rate cuts have provided much-needed relief for buyers, but new tax policies present hurdles for both buyers and sellers. The provincial flipping tax, effective January 1st, 2025, imposes a 20% tax on profits for properties sold within one year, declining to 0% in the second year. This builds on the federal tax introduced in 2023, which treats such profits as income. These measures could influence seller behavior, particularly in the presale and assignment markets.

Meanwhile, new mortgage rules effective December 2024 are creating opportunities for buyers, including extended 30-year amortizations for presales and an increased threshold for insured mortgages up to $1.5M.

Market Activity

December defied expectations as the slowest month of the year, with 1,765 properties sold. While this was a decline from November’s 2,181 sales, it far outpaced December 2023 and 2022. Sellers were also active, with 1,737 new listings—54% fewer than November but 35% more than the same time last year.

However, inventory tightened as December progressed, with active listings at 10,948 by month-end—a 23% increase year-over-year but far below earlier peaks in 2024.

Segment Breakdown

• Detached Homes: Sales rose 31% year-over-year, with 8 months of supply keeping this segment balanced.

• Townhomes: The hottest segment, with just 4 months of supply, firmly in seller’s market territory.

• Condos: Sales increased 23% year-over-year, with inventory up 30%, presenting opportunities for first-time buyers and investors.

Looking Ahead to 2025

The stage is set for an improved real estate market in 2025, with declining interest rates expected to sustain buyer activity. However, supply constraints—particularly in new developments—remain a challenge that could limit options for buyers and drive competition.

New listings are anticipated to pick up in January and February, but whether supply growth matches demand will be a key factor in determining price trends. With federal immigration targets softening and rental prices beginning to decline, the market faces a mix of opportunities and uncertainties.

Opportunities and Challenges

For buyers, the condo market offers increasing opportunities, especially in areas with higher inventory. Townhomes remain scarce, so buyers should act quickly when options become available. Sellers may find that strategic timing—considering both tax implications and evolving market dynamics—will be crucial to maximizing returns in 2025.

Conclusion

As we turn the page to a new year, the real estate market continues to evolve. Whether you’re a buyer, seller, or investor, understanding the dynamics at play is essential to making informed decisions. With interest rates likely to decline further and market activity expected to remain strong, 2025 promises to be another fascinating year for Vancouver real estate.

Ready to navigate the market in 2025? Let’s connect to discuss your goals and how you can make the most of the opportunities ahead.

As of January 1, 2025, British Columbia has implemented the BC Home Flipping Tax. This legislation aims to curb speculative real estate activities by taxing profits from properties sold within a short period after purchase.

Key Aspects of the BC Home Flipping Tax:

• Applicability: The tax targets profits from the sale of residential properties, including presale contracts, owned for less than 730 days (approximately two years). This measure is designed to discourage rapid property turnovers that can contribute to housing market volatility.
  
  

• Tax Rate: A maximum tax rate of 20% is applied to the profits earned from such sales. This rate is intended to serve as a deterrent against short-term speculative investments.
  
  

• Exemptions: Certain situations are exempt from this tax, acknowledging that not all short-term sales are speculative. Exemptions include life changes such as death, divorce, significant financial hardship, relocations due to employment, and health-related reasons or disabilities requiring a move.
  
  

• Federal Anti-Flipping Tax: It's important to note that this provincial tax is separate from the federal anti-flipping tax, which applies to residential properties sold anywhere in Canada within 365 days of acquisition. Both taxes aim to reduce speculative real estate activities but operate independently.
  

  Implications for Stakeholders:

• Investors: The introduction of this tax necessitates a shift from short-term flipping strategies to longer-term investment approaches, such as buy-and-hold or rental income generation.

• Homebuyers and Sellers: Prospective buyers and sellers should be aware of this tax to avoid unexpected financial liabilities. Understanding the exemptions and planning transactions accordingly is crucial.

For comprehensive information and guidance, refer to the official BC government resources:

• BC Home Flipping Tax Overview

• Exemptions from BC Home Flipping Tax