Monthly Rental Report - February 2019

February Real Estate Happenings

The combination of receding foreign investment, increased interest rates, and stress testing has finally succeeded in cooling the real estate market. The punch bowl has finally been taken away, and the RE industry is starting to feel the hangover. You know it's bad when even the Real Estate Board starts admitting that things have gone south.

According to the REBGV's February monthly report, "sales were 42.5 per cent below the 10-year February sales average." As a numbers guy let me tell you - it's not easy to be that far below the average. Link

Continuing with last month, I want to cover another measure of affordability. We can use these measures as an indicator of when things have "returned to normal." Last month, we talked about RBC's affordability index, which is a ratio of cost of servicing a mortgage to median income. Today I want to talk about the housing price index from Teranet and National Bank.

Teranet's HPI is based on the famous Case-Shiller index. The index is calculated from paired sales data - a difference in sales prices for the same property. Case and Shiller's thesis is that home price appreciation largely matches inflation over the long run.

Here's a chart of Vancouver's HPI up to 2018, inflation-adjusted HPI, and inflation. Chart of HPI inflation adjusted

Looking at the chart, we see two distinct "phases" in the market. Between 1991 and 2005, the adjusted HPI fluctuated between 65 and 81. Then, between 2005 and 2018, the adjusted HPI rockets from 81 to 213, with growth accelerating in 2015. From 2005 to 2015 it grew from 81 to 147, a compounded growth of 6% a year. Then from 2015 to 2018 it grows from 147 to 213, a compounded growth of 13% a year.

I'm watching three particular levels of the adjusted HPI that might indicate the bottom of the market: 1. Mild = 186: The adjusted HPI in 2018 if growth continued at the "normal" pace between 2005 and 2015. 2. Moderate = 147: The adjusted HPI reverts to 2015 levels. 3. Crisis = 100: The adjusted HPI collapses back to when this cycle started around 2006.

This corresponds to 12%, 31% and 53% decline respectively. Obviously, I'm hand waving furiously. Don't take these numbers too seriously. It's just a framework for thinking about how divorced the market is from historical norms.

OK. Enough about sales, rents up next.

February Rental Stats

In February, we saw 5,089 units listed. This was a drop of 7.22% from January but a 4.7% increase from February 2018.

Asking rents change was mixed MoM but down year-over-year. One bedroom rents were down -1.2% YoY, two bedrooms -3.9% and three bedrooms were down -1.7% YoY.

Digging a bit deeper into the data, we saw that softening of the two and three bedroom asking rents were primarily driven by weaker asking prices in the unfurnished segment. Interestingly, asking prices for one bedrooms were stable for both furnished and unfurnished, so softening in the aggregate is likely due to a shift in the composition of one bedroom units.


  • 1 bedrooms $1925 (1.3%)
  • 2 bedrooms $2595 (-2.0%)
  • 3 bedrooms $2900 (0%)



MnYrFetched Beds Unfurnished PctChange Furnished PctChange
19-02 1 1499 -8.2 761 -3.7
19-02 2 1534 -7.1 550 -13.9
19-02 3 373 -5.1 108 4.9


MnYrFetched Beds Unfurnished PctChange Furnished PctChange
19-02 1 $1800 0.0 $2300 0.0
19-02 2 $2400 -2.0 $3300 3.1
19-02 3 $2700 -2.7 $4495 12.4

If you want to stay up-to-date on Vancouver's rental market, sign up for my newsletter in the navigation bar.

By @Louie Dinh in
Tags :