VANCOUVER (NEWS 1130) – With bad news about the economy due to the COVID-19 crisis coming out on an almost-daily basis, many are wondering what this all means for the real estate values in Metro Vancouver.
The economic numbers coming in seem to get worse every time an update is provided, but given the low supply of homes on the market in the region, an industry expert expects prices won’t move much, despite sales slowing down to a trickle and the economy taking a big hit.
“There’s so much unpredictability here, but we just see the housing market in Vancouver not being as negatively affected,” says Elton Ash, Regional Executive Vice President of RE/MAX for Western Canada. “I don’t think it’s likely at all that we’re going to see prices increase…but we also don’t think that they’re going to decrease a great deal, either.”
Ash says a year ago, the Vancouver market — and much of the market across the province — was turning down due to provincial tax measures which had just been introduced. Later in the year, interest re-sparked in the market.
Then, earlier this year, he adds big market values were being re-achieved.
“Year-over-year unit sales for the first quarter of this year were nearly 47 per cent higher than the same time a year ago, and that we were starting to see price appreciation again,” Ash explains.
But then, the COVID-19 pandemic set in, “and the wheels pretty much stopped turning at that point.”
In the short term, economist Tsur Somerville with UBC says that may be true, but further out, he notes there’s a lot of uncertainty.
“If there’s changes in immigration and capital flows, tourism, those have a particular set of effects. All those things, I think, are really, really hard to figure out,” he tells NEWS 1130. “I think trying to figure out what’s going to happen is really, really hard. Anyone who has an opinion should be giving it with a huge amount of uncertainty about that.”
He says there’s a lot that depends on what we think is going to happen when things loosen up and when exactly that will happen — two factors that are very uncertain.
“I do think the industry is correct in that in the interim, where we are right now, it’s been really surprising to see prices adjust much one way or the other, just because if you’re a seller, and you don’t know where things are going to go, why is it that you’re going to cut the price?” he explains, adding people normally would bring the price of their home down when they’re forced to sell.
“Right now, there’s ways to sort of weigh out your mortgage and get deferrals, it’s not as though you’re hunting for a job right now, everything is just so uncertain that way, that one would expect prices to be relatively rigid on the downward side right now.”
The Canadian Real Estate Association announced on Wednesday that home sales in March were down 14.3 per cent compared with February across the country.
If there is any good news to come, Ash says RE/MAX expects the market will bounce back when the crisis is over.
“As we come out of the COVID-19 crisis, economically, the real estate market will pick up relatively quickly,” he projects. “Because the economic slowdown wasn’t based on real estate or true economic factors, this was health-related. So I mean, that is the big question mark. How quickly can the economy start to go again, but with the reduction of interest rates by the Bank of Canada, the pent up demand in the Greater Vancouver area is all pointing to a significant return to a strong market once things start to return to some kind of normal.”