Oi vey.
What a week. What a year. Obviously, Covid-19 has had a dramatic affect on how we all interact and changes in normal protocol seem to be finally hitting the Vancouver Real Estate Market. This blog features my own thoughts and insights from those in my circle during this strange time. In addition to conversations with my contacts in the financial world, I’ve been studying real estate stats and the recession in 2008 for some insight into what might happen over the next few months.
Though most units are still receiving significant interest and multiple offers, Agents are starting to have discussions with their Buyers and Sellers as to their short term plans. As with everything during this pandemic, we are re-evaluating plans on a daily basis. This scenario is unprecedented – I find people are reacting in a way similar to a decline in the market. Some fear the worst and want to act immediately, while others would rather wait it out. If you were looking to make a move before this situation hit, what you should do is your decision. Life will return to some semblance of normal, so it’s a matter your personal and financial position, as well as how long you want to wait to make a move.
Here are a few thoughts:
- The general consensus is for everyone to self quarantine as much as possible over the next 2 to 3 weeks to stop the spread of the virus, so I expect the next few months to be slower than normal.
- Although no one knows what will happen in the future, the turnaround in Asia is a positive development for everyone, as well as the news reports that a variety of vaccines are in development and that Canada and the US are taking this situation very seriously.
- The economy has been through similar drops in recent decades and history has shown that recovery, if not a stronger economy, will happen in time. The Government has done a great job thus far of supporting individuals and businesses, and we are lucky to live in a strong economy that will weather the storm. There will be hardship, especially if society is all but shutdown for a few weeks, but we have recovered from similar scenarios in the past. Certain industries will be more affected than others, but as the recession in 2008 proves, we will steadily recover.
- In order to stimulate the economy, our Government and the Bank of Canada will likely keep interest rates on the lower end of the scale for the time being. I wouldn’t be surprised to see some changes in the rate, but it should stay fairly low. I can’t see the Government making any negative changes to policies (as in, changing any policies to make it harder to purchase property) anytime soon. If anything, there’s a chance they will relax lending policies to help folks recover quicker, but I wouldn’t rely on it.
- There was a lot of pent up demand for Real Estate this year after the recent slow market that saw a lot of Buyers take the “wait and see” approach, and this pandemic will likely increase the amount of future pent up demand as Buyers do it again. Housing is such an important part of everyone’s life, and Real Estate is an investment into yourself, so even if things do slow down for a few months, it never stays down. Buyers will adjust their ideal price range, but the market will keep moving, albeit, slower.
- There are going to be Sellers who continue with their plans to sell in order to take advantage of the current competitive Buyer activity while it’s still happening. I would imagine if this coming weekend’s open houses are abnormally slow, some Sellers will pull their listings and wait until things improve. Those who are really keen to sell will keep their listing up.
- There are also Sellers out there who need to sell. Perhaps they just bought their next place, and have to sell in order to complete their next purchase, perhaps they have an investment property and want an influx of money given other losses, perhaps they’ve lost their job and need to re-configure their finances and perhaps they’re the doomsday type that feel it’s better to sell now, regardless of the situation, than to wait until things return to normal.
- Properties have been getting multiple offers, so there are still a lot of Buyers looking to make some moves and I can’t imagine everyone will step back for the next couple of weeks. Some Buyers view these uncertain scenarios as an opportunity to take advantage of a slow weekend, especially since just about everything this year has gone into multiple offers. If a Buyer has been looking for a particular property for awhile now, and it finally hits the market, those Buyers will likely pursue it.
- As for prices.… the drop in the stock market will affect high net worth individuals the most, so we may see a decline in the upper end of the market. These individuals may re-focus their energy on investment properties, which is often seen as a more stable long term investment compared to the stock market. However, the focus of any investor will be specific to homes that can be rented so anything that allows rentals will have a lot more interest than buildings that do not allow rentals. First Time Buyers are always the most nervous about buying, and they have the ability to stall the market (if they don’t buy the 1 bedrooms, then the people who own 1 bedrooms can’t buy the 2 bedrooms, and those 2 bedroom owners can’t move up, etc) so once this pandemic proves to be on the upswing, I think we’ll see the market pick up again. This lack of activity will likely lead to some minor prices decreases and an overall stalling of the market – BUT – if you happen to be looking to buy a good unit in the most active Vancouver markets (the entry level detached market, entry level two bedroom, or rentable 1 bed condo market) then I would expect the activity to remain fairly steady. These units were often getting 5+, 10+, 20+ offers recently, so there are still a lot of Buyers out there even if many choose to step away from their search for the time being. I believe we’ll be in a strong, active market once this passes, so it’s a good time to take advantage of the opportunities now. Remember, if you’re buying a home to live in for 3+ years, you’ll ride out any short term changes in the market.
- Some people are postponing listings and their searches until there is more certainty and confidence in the health of our community. For obvious reasons, this applies to those who are ill, immunocompromised or older, in addition to people who aren’t comfortable knowing who they are interacting with during viewings.
- I’m hearing a lot of Agents talk about cancelling Open Houses and only allowing private showings. This will help to ensure some distance between Buyers as well as the chance to sanitize appropriately. UPDATE: The Real Estate Board will not be allowing Open Houses after the weekend of March 21/22nd though private showings are allowed.
- I’ve had a few Buyers postpone their search for the time being mostly due to social responsibility, but a couple have cited declines in their investment portfolio (and thus down payment) and wanting to wait to see what happens. Similar to any slow market (which we just went through in 2019) a lot of Buyers step out of the market for fear of what might happen, only to miss the opportunities and realize this when the market picks up again. If you’re buying a unit to live in for the next 3+ years, you’ll ride out any short term market changes. Here’s my post about How to Navigate a Slow Market.
- Overall, I don’t anticipate any major and long lasting, changes to the Real Estate Market. I bet that we’ll see strong activity in the market in the late Spring, throughout the Summer and into Fall (without the typical Summer slow down) to account for a few slower weeks now while everyone is trying to “stay the F home”.
The Real Estate Board has released statements to Realtors indicating that it is the decision of us and our clients as to continue, adapt or cancel any short term plans given the pandemic. UPDATE: The Real Estate Board is not allowing any Open Houses after the weekend of March 21/22nd for the time being. Any sales already under contract are still obligated to proceed and properties are still allowed to be listed and sold, though Agents and their clients need to understand the potential issues we might face during this time period, which could include unexpected and required quarantines and lockdowns, unexpected changes to the financial market and possible illnesses.
In the meantime, remember to continue to support local businesses and workers, when possible, during these times. Order take out and tip your delivery drivers. Treat workers and fellow residents kindly. Get outside for fresh air and exercise. Don’t forget the fun in puzzles, music, games and books. Call your friends and family. Follow protocol if required. And stay positive! We live in a strong and prosperous economy, and everything will be okay.
I wish everyone health and happiness. I’m here if you need me and happy to chat about any of your questions with regards to real estate, now and in the future: kristi@realestatevancity.ca or 778-387-7371.