The dynamic COVID-19 situation is generating unique real estate conditions on the west coast. While a hyperactive and expensive Vancouver real estate market was evident prior to the pandemic, there have been some shifts in how this market is expected to rebound now and in the near future.
Here are a few trends to watch out for in the Vancouver condo real estate market:
Active Market, for Now
Overall homebuying has been on the rise in Vancouver due to lowered interest rates and eased anxieties over COVID-19. The number of condo sales year over year experienced a 36.9% increase, jumping to 1,596 in September 2020 from 1,166 sales in September 2019.
Demand is putting upward pressure on prices, as year over year condo prices continue to rise according to the Metro Vancouver Real Estate Board. While there was a slight cooling of the market with a month over month price decrease of 0.3%, the average price of an apartment property in Vancouver is steadily high at $683,500.
Despite these strong trends, RBC has forecasted that condo prices in large markets like Vancouver and Toronto may start to weaken in 2021. This is in contrast with townhome and single-detached housing markets which have increased in demand, representing a growing preference for these housing types.
Shifting Attitudes: Condo-living
There seems to be shifting perceptions about housing needs due to the COVID-19 pandemic. Previously, high-rise condos with beautiful balcony views were desirable by many young business professionals and those with have an affinity for city living.
Yet, the effects of the virus may soon change ideal amenities and home space for many people. Some are more aware of the limitations of condo-living such as lack of green space and size of floorplan. Social distancing had more city-dwellers feeling the impact of being cooped up in cramped living spaces, with limited opportunities to go outside to get fresh air.
The pivot to a remote work-from-home environment required many to convert their home into a workspace as a result of not being able to go into the office. Parents also required extra space to homeschool their children during this time. As working from home becomes the norm, more people are desiring spacious homes with dedicated workspaces, less crowding, limited shared amenities, as well as access to personal greenspace such as a backyard or front yard.
Another driving factor for buyers’ shifting preferences for single-detached and townhomes is taking social distancing proximity into account. Sharing elevators, lobbies and hallway space has become another reason why in some markets, condos may have seen a decline in activity.
Based upon the most recent market data, there continues to be an appetite for condo-living in the Vancouver market in the short-term, although it is uncertain if this will be the case as we shift into 2021.
Increased Supply in the Vancouver Condo Market
Perhaps a symptom of shifting homebuying attitudes, the condo inventory in Vancouver is trending higher as the fall months continue.
Another demographic contributing to this boost in condo inventory may be baby boomers – currently considered a vulnerable medical population during this pandemic – who are less likely to downsize to a condo unit during this time of increased risk. Considering the risks that could occur during the home search alone, this may enough to dissuade older generations from entering the market at this time, who may wait out the virus before revisiting downsizing.
Meanwhile, border closures have stopped mass migration, whereby condo markets are usually a first choice for immigrants new to the country. Less immigrants in the country scooping up condo properties could be another reason for the decreased demand within this segment in Vancouver, and country wide. Foreign investment – previously a key driver of the Vancouver condo market- has also slowed due to government restrictions, further limiting market demand.
Students are spending less time in the city and may not require housing due to post-secondary school closures. This could result in more landlords deciding to convert their condos into long-term rentals or sell their properties altogether.
The Vancouver condo market may have increased its supply, but it remains uncertain if there is enough demand to meet this new inventory.
The Vancouver condo real estate market is typically a popular market to purchase a home in. This trend seems to be continuing despite COVID-19, yet the economist predict condo prices may start to weaken in this market due to shifting lifestyle preferences and increasing supply.