Better late than never, here is the market update for March. It has been delayed to the current climate of Covid-19 and thus this will be a slightly different market update… February saw another month of supply and demand play out. Buyer demand went up and seller supply went down, traditionally buyers demand picks up as we spool up for another busy spring market in the Greater Vancouver region. Due to this supply and demand counter position we have seen modest increases in prices across the board (with most being in the apartment category)
Detached homes in Greater Vancouver saw a 1.9% increase over the past 6 months with attached (townhouse/duplex/etc.) following close behind at 1.7%; however apartments saw a strong increase of 3.6% over the past 6 months. In many places anything on the lower end and investor friendly had quite fierce competition with many multiple offer situations occurring (on a personal note, one of the units a client of mine was looking at had EIGHT offers on it).
Overall the market WAS getting gradually more expensive as more buyers were coming into it and supply was not keeping up with the demand, which would have made for a likely increasingly competitive market for buyers to purchase in… You might have noticed I am speaking in the past tense and thus why this market update will be slightly different…
As most of us have noticed (other than some numskulls in Florida celebrating Spring Break still) that there is the Covid-19 pandemic that is currently causing a ruckus around the planet. Aside from the obvious health issues that it has caused, it has also caused a large economic issue and this in turn has an effect on the real estate market. Stock markets have taken a massive dive and this has caused a lot of people involved in that to circle the carts and protect their funds as best they can. There have been large drops in the interest rates, which has caused a many would-be buyers to get pre-approved and many current home owners to renew their mortgages with some even breaking their current as even with the penalty they end up ahead in the long run.
With the fear of Covid-19 spreading this has caused the entire real estate market in Vancouver to come to basically a grinding halt. People do not want to open their homes to strangers, buyers do not want to go out and put themselves at higher risk and the same sentiments are match by any realtors with half a mind. The real estate board has finally got on side and has banned open houses as of Monday March 23rd. This of course will cause a large slowing effect in the real estate market and may cause prices to lower or essentially freeze… This is an unprecedented global pandemic so no one really knows exactly how the market will react. One school of thought is that the real estate market will mimic what happened during the “Great Depression”. There are changes in what is happening almost daily, so it is hard to calculate the future with any solid accuracy as far as prices (more to come on that later).
The “Big 6” banks have offered up to 6 months of mortgage deferment for those that are carrying mortgages on a “case by case” basis. While this is better than missing a payment it is of note that in most cases the bank is taking the interest that would have been paid and tacking that onto the principle that is still owed, which will be subject to interest of course (banks ALWAYS have to take the money even in time of global crisis). This is still of use to those that have tenants as there will be a large wave expected in May of tenants not being able to pay rent due to the closures of many businesses due to the viral outbreak.
It is speculated that with all these pre-approvals and massive slowing of the market this will wind up with a lot of racers at the start line. When this situation of the global pandemic eventually passes and thing return to more of a norm, one can expect that there will be a sudden unleashing of buyers looking in a market that already had a low inventory to begin with. One could reasonably expect that we will see a large uptick in prices as there will suddenly be a lot of buyers all starting at the same time trying to buy homes with the pent up demand, thus causing multiple offers and in turn causing the prices to rise… The take away from all this is in a point:
Buyers: Get pre-approved ASAP as your rate freeze will last for 3 months and we can assume the banks will want to raise their interest rate as soon as they read it feasible. Make sure to have your realtor scan the market even if you cannot go see the units as it will be better to know where you are going when the time comes as speed will be a factor.
Sellers: Now is the time to prepare you home for sale, tidy up, oil those squeaky hinges, and touch up the paint on your walls. You may want to speak with your realtor to let them know and help you get your ducks in a row so that when the pandemic passes you will be ready to hit the market and take advantage of the pent up desire to purchase. **Most important in this time right now has nothing to do with homes. We need to all follow the rules, social distance (will be most used word of 2020 for sure), WASH YOUR HANDS and try to be as safe as possible. This time is exhausting and we are not at the peak of it yet, while we are all restricted, call people, email, whatever you can do, try to help each other.
We are all in this together and need to help one another.