Despite having about one-fifth of Canada’s population, how did British Columbia avoid both a massive coronavirus outbreak and a provincewide lockdown? Since May, the province has been relaxing COVID-19 pandemic rules, but British Columbia had fewer than many other provinces to begin with as it maintained a lower hospitalization rate than Alberta, Ontario, and Quebec. Overall, the West Coast has maintained a steady steam of good news throughout this public health crisis.
Since the coronavirus was largely contained in B.C., does this mean the Vancouver real estate market was unaffected, too? It has been a bumpy ride, but it appears the worst could be over.
According to the Real Estate Board of Greater Vancouver (REBGV), sales activity in the Greater Vancouver Area in June surged 64.51 per cent, up from the 35.8 per cent gain in May. This is also up 17.62 per cent from the same time a month ago. Prices recorded a modest 3.5 per cent increase from the same time in 2019 as a drop in supply and demand attempted to balance the market. The current MLS Home Price Index composite benchmark price for all residential properties in Metro Vancouver is $1,025,300.
But with the economy – provincially and nationally – starting to reopen, can the Vancouver market return to pre-crisis levels?
Vancouver’s Housing Market
The Canada Mortgage and Housing Corporation (CMHC), the government’s mortgage insurer, forecasts a major drop in the nation’s biggest real estate markets. CMHC projects that Vancouver will face the biggest decline of all, with prices falling 12.35 per cent by 2022 from the 2019 average.
With the increase in sales activity over the last month, not everyone is convinced of a national slowdown. That said, local experts say that it is critical to monitor the data to pinpoint developing trends.
“REALTORS® continue to optimize new technology tools and practices to help their clients meet their housing needs in a safe and responsible way,” said REBGV Chair Colette Gerber in a statement. “Over the last three months, home buyers and sellers have become more comfortable operating within the physical distancing and other safety protocols in place.”
Greater Vancouver is reporting a bump in new listing activity. In June, there were 5,787 new listings, which is up 57.1 per cent from the same time a year ago. These dramatic trends have surprised analysts considering that the spike has occurred so soon after the outbreak. The number of active listings came in at 11,424, up 15.1 per cent from June 2019.
The sales-to-active-listings ratio for June was 21.4 per cent – anything below 12 percent suggests downward pressure on home prices.
Suffice it to say, if you have been waiting to dive into the Vancouver housing market, now could be the best time to dip your toe in real estate investment. The city’s fundamentals are still there:
- Vancouver is one of the cleanest cities in the world.
- The city offers moderate temperature seasons all year long.
- Close proximity to the United States border.
- Vancouver is a culturally diverse metropolis.
- Residents can enjoy the myriad of sea-to-sky activities.
And then there are the dollars and cents.
One of the most important factors for any investor right now is how low borrowing costs are. In March, the Bank of Canada (BoC) slashed interest rates by 150 basis points to 0.25%. The new head of the central bank, Tiff Macklem, left rates unchanged at the June monetary policy meeting, suggesting that low rates are here to stay to support the economic recovery. Whether you want to purchase a rental property or you want to take out a loan to renovate a house, financing these endeavours has never been cheaper.
Housing Affordability to Attract More Buyers?
One of Canada’s biggest banks released its housing affordability data for the first quarter of 2020. The Royal Bank of Canada (RBC) noted that Canadian affordability is still getting worse, but Vancouver has seen the largest affordability improvement in the Great White North.
According to RBC, the median Vancouver household now needs 79 per cent, down 4.2 per cent from last year. This is the steepest drop in the country. Although prices are still 30.57 per cent higher than the long-term average, affordability is improving.
This is a positive development for both homebuyers and investors, particularly for millennials. In recent years, this demographic has been driving new trends in the Vancouver housing and condo market.
Vancouver Adapting to COVID-19
Industry insiders say that an essential trend in Vancouver real estate has been homebuyers and sellers adapting to this new COVID-19 society. Whether it is practicing social distancing or embracing more stringent hygiene routines, everyone is doing their part – and this is benefiting the real estate market.
Like other key markets, Vancouver REALTORS® have installed physical distancing mechanisms to abide by the government’s health and safety recommendations. And more people are becoming more comfortable with this new normal for real estate transactions.
In addition to wearing masks, gloves, and limiting contact, agents are taking advantage of digital tools, from business documents to virtual tours. This makes buying and selling real estate in Vancouver still doable, despite a public health crisis still gripping Canada.
A Pre-Pandemic Housing Market
British Columbia is transitioning into the third phase of its reopening plan. Phase three will permit residents to travel across the province as hotels, motels, resorts, and RV parks restart operations. More people will return to work, local economies will be stimulated, and anybody who had suspended plans to buy or sell a home will reconsider their options. Amid low interest rates and pent-up demand, Vancouver real estate is primed to pick up where it left off before the coronavirus pandemic.