Vancouver's Real Estate Dynamics: SWWA Mulit-family Update

 

 

A revised pace of leasing activity, combined with a strong and consistent delivery of new projects, has led to a noticeable increase in vacant properties in Vancouver throughout the last year. This shift has seen the annual rent growth rate adjust significantly to -1.9%, a stark change from the 10-year high of 9.0% reached in the middle of 2022. Although construction starts have decelerated in recent months, this slowdown may provide an opportunity for the market to absorb the influx of newly finished developments, suggesting that the bottom of the demand curve may have been reached.

The U.S. Census Bureau notes that Vancouver has continued to attract residents, being one of the rare locales in the area to experience positive population growth from 2021 to 2022. This appeal is largely due to an influx of individuals from beyond state borders, rather than merely a migration of people from Portland over the Columbia River. With the region's economic fundamentals expected to remain stable, Vancouver is likely to remain a prime destination for those considering moving to the area.

In response to such pronounced population increases, developers have found an opportunity in the ample supply of land ready for construction and the supportive development and planning regulations in the area. This environment has enabled the rapid introduction of new housing to meet demand in growing neighborhoods. Over the past ten years, this surge in development has increased the total housing inventory by 43.1%, significantly outstripping the broader metro area's growth of 35.0% and making Vancouver the largest submarket in Portland by unit count.

The market has seen the introduction of both mid-tier and luxury residential units, enhancing the variety of investment opportunities. Despite a keen interest in a diverse array of newer and smaller properties, the total sales volume in the past 12 months, amounting to $102 million, remains considerably lower than the high of $946 million seen over the past five years. The tightening of capital markets, a direct consequence of the Federal Reserve's efforts to combat inflation, has markedly slowed transaction activity.

 

 

 

Source: CoStar MULTI-FAMILY SUBMARKET REPORT