Much of 2020 has been marked by a global pandemic that has brought significant changes to the way we live. The way we work, the way we grocery shop, and even the way we socialize have evolved to adapt to our “New Normal”—and the real estate market is no exception.
An Unusually Busy Summer
Summer, usually a quieter season for home sales, was red-hot for Metro Vancouver’s real estate market. A boom in July and August produced record highs in Canadian home sales, with August seeing an increase of 33.5% compared with August of 2019 and a 33.6% increase in the Metro Vancouver region compared with the same month.
If a booming market during a time of global unrest and high unemployment rates feels counterintuitive, that’s because it is. Canadians faced growing job losses throughout the pandemic, a factor historically coupled with a slower market. Still, several unique pandemic-related factors combined to produce the opposite effect, leading to an atypical summer season with record sales.
Pent-Up Demand Meets Government Assistance
Early on in the year when COVID-19 officially reached global pandemic status, the nationwide lockdown (remember your sourdough masterclass?) delayed the busy season from spring to summer. This boost, attributed largely to pent-up demand, partially accounted for the record highs of home sales seen across the country. Although the market has been catching up from the pause it saw in the spring and is still going strong, that trend is starting to slow and will likely taper off eventually
Income assistance programs, such as the Canada Emergency Response Benefit (CERB) and mortgage deferral initiatives, also played a large part in helping Canadians weather the storm. While unemployment doubled, homeowners could fill the income gap with benefit payments and take advantage of the many mortgage deferral programs available. These factors may have allowed struggling homeowners to keep their homes off the market for longer than may have been expected, maintaining a competitive market through limited supply.
Meanwhile, interest rates dropped to stimulate the economy, creating a favourable climate for buyers and increasing the size of home they could afford. Resulting in a perfect storm of high demand and limited supply, producing property prosperity in the face of pandemic precariousness.
Changing Needs for Home Buyers
The pandemic also influenced the needs of today’s homebuyers. As people spent more time at home, their gaze shifted to more spacious homes. Yards and less-crowded areas have become increasingly attractive as people navigate a world of social distancing and stay-at-home orders.
Work-from-home arrangements also became more common, making it increasingly feasible to consider buying property regardless of work location. These aspects of our New Normal are helping shift demand from condos and apartments to detached homes, pushing buyers further away from the downtown core and towards rural and suburban areas.
Recent numbers from the Real Estate Board of Greater Vancouver reflect this reality, showing that while August’s overall home sales were nearly 20% higher than the 10-year average for that month, the condo market in downtown Vancouver is trending in the opposite direction. Though it’s still going strong, this growing division is being watched closely and could potentially present a vulnerability in the market as condo supply rises, and demand falls.
What Does the Future Hold?
It seems likely that the market will cool down somewhat in winter, but if we’ve learned anything in 2020, it’s that nothing is certain. Several unknowns could impact the market over the near-term, such as changes to new and existing COVID-related relief programs, new waves of the virus, the timeline for the development of a vaccine, as well as the question of re-opening borders to immigration.
Ready to Make Your Move?
Our best advice for moving forward in these uncertain times? Stay informed and talk to an expert Stilhavn REALTOR if you need guidance.