It was a year for the ages for Canada and the rest of the world. A public health crisis, a deep but brief recession, and unprecedented fiscal and monetary support and relief – it would be not easy to replicate what happened in 2020 anytime in the future.
One of the most compelling headlines in 2020 was the remarkable resilience and strength of the Canadian real estate market amid all the volatility of the past year. Nearly every major city, small town, suburb, and rural community experienced record- or near-record-setting growth in prices and sales last year. British Columbia was not isolated from these trends.
The British Columbia real estate market quickly recovered following a two- to three-month drop in prices and sales activity. The spring and summer pent-up demand led to double-digit gains in many of the province’s housing markets. As a result, however, the province is now enduring inventories that are parked at all-time lows, with almost no relief on the horizon.
How did the province’s housing sector perform in 2020, and what is the current state of housing stocks?
BC Real Estate Market Continues to Struggle with Record Low Inventory
Demand for housing in British Columbia is not surprising. The West Coast province boasts all the characteristics of an appealing place to live; a spectacular coastline, moderate weather, and breathtaking mountain views wherever you look. But demand over the last 12 months has resulted in depressed supply levels in real estate markets across the province. This is driving up prices and turning B.C. into a seller’s market.
According to the British Columbia Real Estate Association (BCREA), the average residential price climbed 12.5 per cent year-over-year in December to $847,600. This brought the total sales dollar volume to about $7 billion, representing a 77.5 per cent spike from a year ago. Overall, on an annual basis, the average residential price surged 11.7 per cent to $782,027, raising the total sales dollar volume by 35 per cent to $73.5 billion.
Housing sales increased 21.5 per cent in 2020 to 93,953, up from 77,350 in the previous year.
Close to the entire province witnessed price and sales growth last year, with B.C. Northern being the only region to report a decline in valuations (-8.5 per cent).
While these are noteworthy numbers, industry observers are focusing on the listings data. In December, total active residential listings fell 16.1 per cent to 20,725. And these falling inventory levels are contributing to upward pressure on prices provincewide.
“While 2021 is expected to get off to a roaring start, the level of supply in the market is near a record low,” said BCREA Chief Economist Brendon Ogmundson in a news release. “That will likely translate to considerable pressure on prices until listings pick-up.”
Will Housing Supply Improve in the BC Real Estate Market This Year?
The consensus in British Columbia is that the province’s stellar real estate market will repeat its performance this year, mainly since there is no relief in sight when it comes to housing stocks.
“Housing markets across the province staged a remarkable recovery during the COVID-19 pandemic and recession,” noted Ogmundson. “We expect considerable momentum heading into 2021.”
But when could new supply come to British Columbia’s real estate market? Here is a look at the current housing data in the province as of the fourth quarter of 2020, courtesy of the Canadian Housing and Mortgage Corporation (CMHC):
- Housing Starts: +0.7 per cent year-over-year to 10,520
- Housing Under Construction: -4.53 per cent year-over-year to 62,951
- Housing Completions: +15.09 per cent year-over-year to 10,211
Most of the housing that is under construction is for semi-detached, townhomes, and condominiums/apartments.
This means that inventory levels could start rising again toward the end of 2021 and heading into 2022. Moreover, since interest rates are at historic lows, this makes borrowing a lot cheaper for developers. This would allow businesses to take advantage of sky-high prices and record-low rates.
The British Columbia Housing Market in 2021
Most cities across British Columbia will witness growth and impressive sales activity, despite the nation still embroiled in a global health pandemic and economic downturn. With rates as low as they are and many consumers accumulating a vast amount of cash savings during the pandemic, homebuyers are taking advantage of these options.
Here is how some of the province’s real estate prices are forecast to perform over the next 12 months, according to the latest RE/MAX Housing Market Outlook:
“We’re going to have very strong price increases through at least the first half of the year,” Ogmundson told Global News in a recent interview.
Anything Can Happen
From the coronavirus pandemic to the real estate sector explosion, even the most astute analysts could not have envisioned what would transpire over 2020. The uncertainty was intense a year ago. But we now have a sense of what to anticipate, and there is light at the end of the tunnel: a vaccine rollout, a steady decline in new infections, a rebounding economy, and fiscal and monetary support relief.
One thing remains certain: no matter what happens, the real estate industry will be prepared as it was in the early stages of the public health crisis, embracing innovative digital tools and practicing the necessary public health guidelines to allow the industry to continue to thrive, safely!