B.C. Construction Trends & Macro Insights: January 2025 🏗️

As we step further into 2025, Vancouver’s real estate and construction markets are unveiling critical shifts that buyers, sellers, and investors need to watch closely. From declining building permits to surging completions and macroeconomic uncertainties, this blog breaks down the latest trends impacting the B.C. market. Let’s dive in.

🚨 Construction Slowdown: What’s Happening in B.C.?

The November 2024 building permit data reveals a significant construction slowdown across B.C., raising concerns about future housing supply.

Residential Decline

Residential building permits took a major hit, plummeting 30% from $1.25 billion in October to just $868 million in November.

Multi-Unit Developments Struggle: Permit values in this segment dropped 37%, largely due to higher construction costs and weaker pre-sale activity.
Implications: Waning buyer interest and mounting unsold inventory may lead to fewer housing starts in 2025 and beyond.

Non-Residential Growth

While residential permits declined, non-residential permits rose 25% to $686 million in November.

Key Drivers: Industrial, commercial, and governmental projects are picking up the slack, signaling steady demand in non-residential sectors.

📊 Takeaway: Residential construction faces mounting challenges, while non-residential activity is providing some stability in B.C.’s overall construction landscape.

🏠 Housing Supply Trends: Starts Fall, Completions Surge

Two opposing trends are shaping the housing market: falling housing starts and record completions.

Housing Starts Decline

December 2024 saw housing starts drop by 13% month-over-month, falling to an annualized pace of 232,000 units—the steepest monthly decline since 2016.

Why It Matters: Fewer housing starts today mean a constrained supply pipeline in the years ahead, especially as pre-sale activity continues to weaken.

Record-Breaking Completions

On the flip side, purpose-built rental completions surged to nearly 90,000 units in 2024, the highest in years.

Cooling Rent Growth: This uptick in completions has helped stabilize rent increases across Canada.
But Watch Inventory: Over the last four months, unsold inventory has hit a 35-year high, with an additional 3,200 units added recently.

📉 Market Dynamics: While more rental units are coming online, declining starts and rising unsold inventory signal long-term supply and pricing challenges.

🔍 Macro Trends: Interest Rates & Employment Signals

The macroeconomic environment is sending mixed signals for the real estate market:

Falling Bond Yields

The 5-year Canadian bond yield recently dipped to 2.94%, its lowest since November. This drop could pave the way for lower fixed mortgage rates.

Labor Market Concerns

While the job market remains strong in many sectors, private sector employment growth is slowing, signaling potential headwinds for the broader economy.

BoC Rate Cuts Expected

The Bank of Canada is poised to cut its policy rate by 0.25% this week, with additional cuts expected by March 2025. Markets anticipate a terminal rate of 2.5%, which could stimulate buyer confidence.

💡 Real Estate Impacts: Lower interest rates may boost purchasing power, but affordability remains a key challenge for many buyers in Vancouver.

🔑 Coming Soon: Scandinavian-Inspired Luxury

✨ Sneak Peek: A stunning Scandinavian-designed half duplex near Main Street is coming to market this February!

Architect: Designed by award-winning Randy Bens, known for his modernist designs and attention to detail.
Features: Expect clean lines, natural light, and impeccable craftsmanship—perfect for buyers seeking modern elegance and functionality.

📅 Stay Tuned: Full details will be released in the second week of February.

📩 Let’s Connect & Strategize for 2025

The 2025 real estate market brings unique opportunities and challenges. Whether you’re buying, selling, or investing, now is the time to create a plan tailored to your goals.

🔹 Book a consultation today: Schedule Here
🔹 Check your BC Assessment values: Visit Here

Here’s to navigating the market with confidence this year!

– Kyle Mark
Your Vancouver Real Estate Specialist

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