It’s been dubbed the ‘COVID-19 Real Estate Boom’ by many. The global pandemic that is reforming daily life for just about everyone across the country has led to tremendous gains within the Canadian real estate market; especially for those who are looking to sell. The average home price in Canada (not seasonally adjusted) is up 22.8% from January 2020 to January 2021; a percentage that is largely being impacted by the prices in the Greater Toronto Area and the Greater Vancouver Area.
The Effects of COVID-19 on Real Estate
With Covid-19 restrictions being regularly modified to address the shifting state of the global pandemic, real estate professionals are remaining vigilant in their efforts to work with both prospective buyers and sellers to keep everyone safe and execute sales. Costa Poulopoulos, Chair of Canadian Real Estate Association (CREA) states, “The two big challenges facing housing markets this year are the same ones we were facing last year – COVID and a lack of supply. It’s looking like our collective efforts to bring those COVID cases down over the last month and a half are working. With luck, some potential sellers who balked at wading into the market last year will feel more comfortable listing this year. As lockdowns are once again easing and the spring market begins to ramp up, we will remain vigilant in adhering to all the latest government and health officials’ directives to keep our clients safe. Now as always, REALTORS® remain the best source for information and guidance when negotiating the sale or purchase of a home.”
In regards to the real estate landscape in Vancouver, Tom Davidoff, a professor in real estate finance for UBC’s business school, believes the pandemic has impacted the pricing surge for detached homes, “You don’t need to be at the office for a lot of people during COVID. And you do need to be at home. So big space… becomes more attractive relatively during the slowdown.”
So has the desire for more space softened demand for small-space urban living within Vancouver? Not according to the numbers!
The Greater Vancouver Real Estate Boom
Vancouver, British Columbia has always been known as one of the most expensive cities to live in Canada. For years, the media has been reporting drastic increases in housing costs, but over the course of the last year, it has been taken to new heights. The CREA reports that monthly sales in the Greater Vancouver Area have not just been breaking year-over-year records, but have smashed 10-year averages. February 2021 saw a 73.3% increase in the number of residential home sales. A total of 3,727 sales in the month of February alone is a staggering increase when compared to the previous month of January 2021 where 2,389 homes were sold.
This exorbitant number of residential home sales doesn’t necessarily seem logical when the prices of homes are considered. In fact, the CREA reports that, “The benchmark price for a detached home is $1,621,200. This represents a 13.7 per cent increase from February 2020 and a 2.8 per cent increase compared to January 2021.”
Part of the justification for this increase in both price and sales numbers can be attributed to the global pandemic. With more people working from home, residents are looking for more greenspace and living space. This leads to people forgoing their condominium or townhouse life in favour of detached homes with more space. The high demand for space and work-from-home lifestyle have pushed buyers away from the downtown core of Vancouver and into the surrounding areas.
The more rural and less populated areas of the Vancouver region have broken records in terms of year-over-year price increases across all property types. The MLS Home Price Index (HPI) reports areas like Bowen Island, the Sunshine Coast, West Vancouver, Maple Ridge, and Ladner have all experienced double digit price increases over the last 12 months.
Will the Greater Vancouver Housing Bubble Continue to Inflate?
With prices surging and demand growing, it would be safe to assume that the housing bubble in the Greater Vancouver Area will burst…but industry experts aren’t predicting a catastrophic burst to transpire any time in the near future. With the still present global pandemic, life is far from normal – that encompasses the real estate realm as well. The current climate is expected to continue into the spring and summer months as interest rates remain low, and as many Canadians continue to prioritize improving and expanding their living space in lieu of international travel still being frowned upon!
If we adjust our lens a little further into the future, it is safe to assume that the real estate market boom in Vancouver may be in for another influx once the Canadian borders reopen. With many prospective immigrants having put their plans on-hold during the pandemic, upon the ease of travel restrictions the Greater Vancouver Area could see another surge of first-time buyers.