Residential Property Sales in Metro Vancouver
Metro Vancouver housing market sees steady summer activity
VANCOUVER, BC – September 2, 2020 – Home buyer and seller activity in Metro Vancouver exceeded historical levels in July.
The number of total residential home sales reported by The Real Estate Board of Greater Vancouver (REBGV) reports reached 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 rise 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.
The Real Estate Board of Greater Vancouver (REBGV) reports that the MLS® Home Price Index1 composite benchmark price for all residential properties in Metro Vancouver today is $1,031,400. This is virtually unchanged from June 2020, a 0.6 per cent increase over the last three months, and a 5 per cent increase compared to July 2019.
"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. Low interest rates and limited overall supply are also increasing competition across our market." said Colette Gerber, Chair of the REBGV Board of Directors.
“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.”
2020 July Metro Vancouver Market Highlights
Sales of detached homes reached 1,121. The benchmark price for a detached home is $1,477,800.
Sales of attached home reached 607. The benchmark price of an attached home is $797,700.
Sales of apartment homes reached 1,400. The benchmark price of an apartment property is $682,500.
The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 12,083, a 15.1 per cent decline compared to July 2019 (14,240) and a 5.8 per cent increase compared to June 2020 (9,389).
For all housing types, the sales-to-active listings ratio for July 2020 is 25.9 per cent. By housing type, the ratio is 25.1 per cent for detached homes, 31.1 per cent for attached homes, and 24.7 per cent for apartments.
Generally, analysts say that downward pressure on home prices occurs when the ratio drops below 12 per cent for a sustained period, while home prices often experience upward pressure when it exceeds 20 per cent over several months.
Commercial Insights in Metro Vancouver
COMMERCIAL ACTIVITY IMPACTED BY PANDEMIC IN 2020 Q2
The BCREA Commercial Leading Indicator (CLI) continued to drop in the second quarter of 2020 from 127.6 to 121.9, indicating the fourth consecutive quarterly decline. It was the second largest plunge in the indicator in over 20 years, showing the hardest hit months of the pandemic in April and May. Compared to the same time last year, the index was down by 9.8 per cent.
The second quarter of 2020 saw the full shutdown of key economic industries in BC, while unemployment rate continued to increase in manufacturing and in key real estate sectors. On the other hand, the financial sector had the largest positive impact on the CLI on record, as REIT prices increased and risk spreads narrowed from the previous quarter. The underlying trend in the CLI continued its descending trend into the second quarter of 2020. This implies that going forward, the environment for commercial real estate activity in BC will remain weak.
BC’s economy was slowed by the pandemic in the first quarter of 2020, and by the second quarter came to a stop. Manufacturing sales of both durable and nondurable goods dropped by magnitudes not seen since the great financial crisis in 2009. The decline in wholesale trade was led by lower sales in motor vehicles. In the meantime, April saw the largest monthly drop in retail sales on record, as brick-and-mortar stores were closed for most of the second quarter.
The CLI’s financial component was positive in the second quarter of 2020 as the market recovered from the full collapse in late February that pushed equity markets into free fall and government bond yields nosediving.
• Economic activity felt the complete force of the pandemic-induced shutdown of the economy, as considerable drops were reported in wholesale trade (-11%), manufacturing sales (-9.6%), and retail sales (-8.9%).
• Employment fell by 1,700 jobs in key commercial real estate sectors, but paled when compared to the 13,500 jobs lost in the first quarter. Meanwhile, manufacturing jobs decreased, for the fourth consecutive quarter, by 5,170 jobs.
• Financial markets bounced back from the full meltdown in late February that sent equity markets into free fall and government bond yields plummeting.
ECONOMICS Market Intelligence
Residential Sales in The Province Are Predicted to Increase
The recession driven 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 tough 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.
Multiple Listing Service® (MLS®) residential sales in the province are predicted to increase 6.5 per cent to 82,380 units this year, after recording 77,351 residential sales in 2019. MLS® residential sales are predicted to rise 17.6 per cent to 96,860 units in 2021.
"The outlook for the BC housing market is much brighter following a surprisingly strong recovery," said Brendon Ogmundson, BCREA Chief Economist. "We expect home sales will sustain this momentum into 2021, aided by record-low mortgage rates and a recovering economy."
The Third Quarter Housing Forecast Update explained:
“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 upsetting increase in COVID-19 cases, the unexpectedly rapid rebound in the market means that BC home sales will almost certainly finish 2020 higher than 2019. BCREA 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.BCREA are predicting the provincial MLS® average price to finish the year by increasing 7.7 per cent and to rise a further 3.7 per cent in 2021.