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Surprisingly Strong Recovery to Propel Housing Market in 2021

BCREA 2020 Third Quarter Housing Forecast Update


The recession prompted by COVID-19 is on pace to be one of the worst on record for the BC economy. However, looking at recent data in the housing market, it would be difficult to tell there was a recession at all. While home sales initially fell to historic lows in April, sales have recently soared, more than regaining pre-pandemic levels. Consequently, the outlook for the housing market is much brighter following a stronger than expected summer.


The explanation for the counter-intuitive performance of the housing market lies in the very unusual characteristics of the COVID-19 recession. Unlike in a typical recession, many of the job losses have been felt in lower-wage, frontline service sector jobs, typically held by younger workers. Meanwhile, higher-wage sectors that tend to drive the ownership market have seen employment levels fully recover. As a result, sales activity has spiked as record-low mortgage rates unleashed a wave of pent-up demand previously sidelined by the pandemic.


Moreover, while a recession typically means a buildup of inventory as job losses and falling incomes force households to sell, social distancing measures, mortgage deferrals and sellers’ reluctance to move during the pandemic caused the supply of re-sale listings to decline through the spring.


The combination of strong home sales and an undersupplied market, along with a desire for more space on the part of buyers, has meant that many markets are now seeing sharply rising average prices despite a weak provincial economy.


While significant uncertainty remains, including the end or transition of key government supports and a concerning rise in COVID-19 cases, the unexpectedly swift rebound in the market means that BC home sales will almost certainly finish 2020 higher than 2019. We are forecasting total sales of 82,380 this year, before rising to 96,860 in 2021, as a recovering economy and low mortgage rates continue to drive demand. The average home price is forecast to rise 7.7 per cent this year and 3.7 per cent in 2021.


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Provided by: BCREA

“Copyright British Columbia Real Estate Association. Reprinted with permission.”

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Canadian housing markets set multiple records in July 2020

Statistics released today by the Canadian Real Estate Association (CREA) show national home sales and new listings continued to rebound in July 2020, with new listings hitting their highest level on record for the month of July, while sales posted the highest level of any month in history.


Summary:

  • National home sales rose 26% on a month-over-month (m-o-m) basis in July.
  • Actual (not seasonally adjusted) activity was up 30.5% year-over-year (y-o-y).
  • The number of newly listed properties climbed 7.6% from June to July.
  • The MLS® Home Price Index (HPI) rose 2.3% m-o-m and was up 7.4% y-o-y.
  • The actual (not seasonally adjusted) national average sale price posted a 14.3% y-o-y gain.

Home sales recorded over Canadian MLS® Systems rebounded by a further 26% in July 2020, raising them to the highest monthly level ever recorded.


For the third month in a row, transactions were up on a m-o-m basis across the country. Among Canada’s largest markets, sales rose by 49.5% in the Greater Toronto Area (GTA), 43.9% in Greater Vancouver, 39.1% in Montreal, 36.6% in the Fraser Valley, 31.8% in Hamilton-Burlington, 28.7% in Ottawa, 16.9% in London and St. Thomas, 15.7% in Calgary, 12.1% in Winnipeg, 9.7% in Edmonton and 5.4% in Quebec City.


Actual (not seasonally adjusted) sales activity posted a 30.5% y-o-y gain in July. The 62,355 transactions recorded in July 2020 marked the highest monthly sales figure on record going back more than 40 years.


“With more and more of regular everyday life opening back up, REALTORS® and their clients across Canada are making up for lost time, and it’s been a very busy summer as a result,” stated Costa Poulopoulos, Chair of CREA. “With sellers and buyers returning to the market in record numbers as lockdowns are increasingly lifted, we continue to make sure clients stay safe by complying with government and health officials’ directives and advice, while continuing to use virtual technology to show properties and complete required forms and contracts. Now more importantly than ever, REALTORS® remain the best source for information and guidance when negotiating the sale or purchase of a home,” continued Poulopoulos.


“What a difference three months makes, from some of the lowest housing numbers ever back in April to the multiple monthly records logged in July,” said Shaun Cathcart, CREA’s Senior Economist. “A big part of what we’re seeing right now is the snap back in activity that would have otherwise happened earlier this year. Recall that before the lockdowns, we were heading into the tightest spring market in almost 20 years. Things may have gone quiet for a few months, but ultimately the market we’re seeing right now is mostly the same one we were heading into back in March. That said, there are some new factors at play as well. There are listings that will come to the market because of COVID-19, but many properties are also not being listed right now due to the virus, as evidenced by inventories that are currently at a 16-year low. Some purchases will no doubt be delayed, but the new-found importance of home, lack of a daily commute for many, a desire for more outdoor and personal space, room for a home office, etc. will certainly also spur activity that otherwise would not have happened in a non-COVID-19 world.”


The number of newly listed homes climbed by another 7.6% in July compared to June. New supply was only up in about 60% of local markets, as the rebound in supply appears to be tapering off in many parts of the country. The national increase in July was dominated by gains in the GTA.


With the ongoing rebound in sales activity now far outpacing the recovery in new supply, the national sales-to-new listings ratio tightened to 73.9% in July compared to 63.1% posted in June. It was one of the highest levels on record for this measure, behind just a few months back in late 2001 and early 2002.


Based on a comparison of sales-to-new listings ratios with long-term averages, only about a third of all local markets were in balanced market territory, measured as being within one standard deviation of their long-term average, in July 2020. The other two-thirds of markets were all above long-term norms, in many cases well above.


The number of months of inventory is another important measure of the balance between sales and the supply of listings. It represents how long it would take to liquidate current inventories at the current rate of sales activity.

There were just 2.8 months of inventory on a national basis at the end of July 2020 – the lowest reading on record for this measure. At the local market level, a number of Ontario markets shifted from months of inventory to weeks of inventory in July.


The Aggregate Composite MLS® Home Price Index (MLS® HPI) jumped by 2.3% m-o-m in July 2020 – the second largest increase on record (after March 2017) going back 15 years.


Of the 20 markets currently tracked by the index, every one posted a m-o-m increase in July.


The biggest m-o-m gains, in the range of 3%, were recorded in the GTA, Guelph, Ottawa and Montreal; although, generally speaking most markets east of Saskatchewan are seeing prices accelerate in line with strong sales numbers. Price gains were more modestly positive in B.C. and Alberta.


The non-seasonally adjusted Aggregate Composite MLS® HPI was up 7.4% on a y-o-y basis in July – the biggest gain since late 2017.


The MLS® HPI provides the best way to gauge price trends because averages are strongly distorted by changes in the mix of sales activity from one month to the next.


The actual (not seasonally adjusted) national average price for homes sold in July 2020 was a record $571,500, up 14.3% from the same month last year.


The national average price is heavily influenced by sales in the Greater Vancouver and the GTA, two of Canada’s most active and expensive housing markets. Excluding these two markets from calculations cuts around $117,000 from the national average price. The extent to which sales continue to fluctuate in these two markets relative to others could have further compositional effects on the national average price, both up and down.


Provided by: CREA

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Strong Recovery Continues for BC Housing Markets


The British Columbia Real Estate Association (BCREA) reports that a total of 10,090 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in July 2020, an increase of 26.6 per cent from July 2019. The average MLS® residential price in BC was $770,810, a 12.9 per cent increase from $682,702 recorded the previous year. Total sales dollar volume in July was $7.8 billion, a 43 per cent increase over 2019.


“The strong recovery in sales activity continued in July,” said BCREA Chief Economist Brendon Ogmundson. “Increased demand for more living space combined with an undersupplied market is producing significant upward pressure on home prices, particularly in the market for single-family homes.”


Active listings remain down significantly year-over-year, creating upward pressure on prices, though increased demand for single-family homes has somewhat skewed average prices in some markets.


Year-to-date, BC residential sales dollar volume was up 8.4 per cent to $32.5 billion, compared with the same period in 2019. Residential unit sales were down 1.4 per cent to 43,718 units, while the average MLS® residential price was up 10 per cent to $754,842.


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Provided by: BCREA

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Metro Vancouver housing market sees steady summer activity


Home buyer and seller activity in Metro Vancouver* exceeded historical levels in July.


The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 3,128 in July 2020, a 22.3 per cent increase from the 2,557 sales recorded in July 2019, and a 28 per cent increase from the 2,443 homes sold in June 2020.


Last month’s sales were 9.4 per cent above the 10-year July sales average.


“We're seeing the results today of pent up activity, from both home buyers and sellers, that had been accumulating in our market throughout the year,” Colette Gerber, REBGV Chair said. “Low interest rates and limited overall supply are also increasing competition across our market.


There were 5,948 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in July 2020. This represents a 28.9 per cent increase compared to the 4,613 homes listed in July 2019 and a 2.8 per cent increase compared to June 2020 when 5,787 homes were listed.


The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 12,083, a 15.1 per cent decrease compared to July 2019 (14,240) and a 5.8 per cent increase compared to June 2020 (11,424).


“Safety remains the top priority for our REALTOR® community,” Gerber said. “We continue to limit in-person interactions with clients and employ different technology solutions to ensure home buyers and sellers can get as much information as possible in a virtual setting.”


For all property types, the sales-to-active listings ratio for July 2020 is 25.9 per cent. By property type, the ratio is 25.1 per cent for detached homes, 31.1 per cent for townhomes, and 24.7 per cent for apartments.


Generally, analysts say that downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.


The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,031,400. This represents a 4.5 per cent increase over July 2019 and a 0.6 per cent increase compared to June 2020.


Sales of detached homes in July 2020 reached 1,121, a 33.3 per cent increase from the 841 detached sales recorded in July 2019. The benchmark price for a detached home is $1,477,800. This represents a five per cent increase from July 2019 and a 0.9 per cent increase compared to June 2020.


Sales of apartment homes reached 1,400 in July 2020, a 12.6 per cent increase compared to the 1,243 sales in July 2019. The benchmark price of an apartment property is $682,500. This represents a 4.2 per cent increase from July 2019 and a 0.3 per cent increase compared to June 2020.


Attached home sales in July 2020 totalled 607, a 28.3 per cent increase compared to the 473 sales in July 2019. The benchmark price of an attached home is $797,700. This represents a 3.7 per cent increase from July 2019 and a 0.9 per cent increase compared to June 2020.


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Provided by: REBGV


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Reciprocity Logo The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Greater Vancouver REALTORS® (GVR), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the GVR, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the GVR, the FVREB or the CADREB.