July Market Update
Our market in Vancouver has come out of the Covid-19 measures swinging. Buyers are very active, and listings are moving quick. We are seeing multiple offers from entry level condos to detached houses. The interesting thing is that this goes against projections from both BCREA and CMHC, whose forecasters have called for a massive increase in inventory resulting in a price crash this summer.
Why have prices not dramatically fallen yet? The answer to this question might be two-fold:
1. Hurray! We are going out!
Vancouverites have been cocooning since mid-March when Dr. Bonnie Henry cancelled our Maui spring break plans with her announcement the day before our flights left. Good thing too, a day or two later and a large chunk of the population would have been out of the country. Everyone was watching the situation unsure and the decision was made for us. I think we can all agree, it was the right one. Kudos to Dr. Bonnie Henry for making this call in the nick of time, as far as i am concerned, she is a hero.
So back to my point. Since mid-March we have been avoiding people, staying home, bonding with family, becoming zoom experts, and adapting our business to serve in a virtual environment. Then, all of a sudden, the curve flattened, the sun came out, and we came outdoors smelling the fresh air and feeling alive again.
And when Vancouverites feel alive, they buy real estate! “Let’s buy a home honey!” So this post hibernation awakening, I believe, is the first reason for the current renaissance of activity.
2. We Don’t Need to Sell our Homes
The second reason we are not seeing plummeting prices – yet, is that what we all learned in Economics 100: Either the demand needs to drop, or the supply needs to increase, in order for prices to fall. The law of supply and demand. In today’s case, the demand is increasing (due to pent up demand above). On the supply of homes end; what was forecasted to happen is that everyone would list in a mass panic post-Covid, fearing a collapse in the market. In Vancouver, however, many sellers have opted not to sell in an uncertain market but rather wait for the opportune best time to sell. And this, was not planned for by any of the economists in the models used for forecasting. So, if the supply remains relatively low, then prices will not fall as predicted.
Time will tell, perhaps some dire economic news will spur a listing binge but at this point in time, it is not for sure that this will happen. In general, our Vancouver market is populated by educated opportunists able to wait out the storm, not by uneasy temperamental property owners listing “en masse”. This I believe, is the second reason prices have not fallen yet.
So, in summary, if our economy stabilizes as a result of all the drastic measures our government has in place, we may not see the collapse that we have all feared. Prices will likely still soften as forecasted, but instead of the 20%-30% we dreaded it will likely be a bit less, or even a lot less of a drop before things turn around, especially if the inventory stays low. There are indeed a lot of variables at play here. Time will tell, and of course much of this depends on how good or bad the coming economic news is. – Marty Pospischil, Managing Broker at Pospischil Realty Group
ATTITUDE OF GRATITUDE
While COVID-19 has affected everyone, our thoughts go first in empathy to those who have suffered personal or economic loss, and in gratitude to the front-line workers who continue to champion our battle against the invisible foe.
The challenges of this pandemic, unprecedented in our time, have in some ways also brought about positive change – the social distancing requirements keeping us apart have simultaneously unified us; shortages of medical and cleaning supplies have led to increased awareness and innovation; the environment has demonstrated its capacity to rebound if given the opportunity, and senior care is receiving long-overdue attention.
Critics of social and broadcast media coverage of the novel coronavirus will point to sensationalism and misreported statistics fuelling anxiety in an already nervous population, yet here in BC we are truly fortunate for the calm and consistent leadership of Dr. Bonnie Henry. Under her kind but firm guidance, our province has accomplished much to be proud of. Vancouver in particular has been recognized internationally in scientific journals for achieving substantially better medical outcomes, and the world is watching. With level and well-educated heads, we proceed together with cautious optimism based in respect rather than fear. Relatively speaking, we are in a good place.
Going forward, no one can predict the full impact of COVID-19 on our local, let alone global, economy, but there is reason to support the long view that Vancouver real estate will continue to benefit from its unique combination of geographical, political, and societal characteristics. Irrespective of possible short-term adjustments, demand remains strong and those of us with decades of experience in this market recognize the signs of a tide already turning from ebb to flow, its limiting factor currently being supply.
Deemed essential in BC, legal and real estate service providers have adapted quickly to the ever-changing environment in order to continue supporting their clients’ needs in a safe and comfortable manner. While this might look different from one practitioner to another, sensitivity to individual preferences and maintaining high standards with a flexible approach are key. Efficiencies may have to be sacrificed in favour of safety, proven systems enhanced to include more customization, but as each business rethinks its offerings, it evolves, and this crisis has created a global opportunity for self-reflection.
At Maguire & Company, we remain open and available to assist with your real property conveyancing matters while following recommended health and safety practices. For more information, you are welcome to contact me directly at notary@marpolenotary.com or visit us online at www.MarpoleNotary.com.
Let’s all stay healthy and “be excellent to each other!” – Carolynne R. Maguire, Notary Public
MORTGAGE RATES UPDATE
“In late March we had a steep increase in fixed and variable rates due to Covid 19 concerns, however, the fixed rates have essentially drop back to the early March rates.
The variable rate discounts went from prime less 1.1% in early March to prime +.1% in late March /early April. I am happy to report that the discounts are increasing resulting in lower variable rates as well with best rates being approximately prime less .47% = 1.98%.
The best 5 yr fixed rate without an insurance restriction on a transfer is 2.24% today. We feel that the rates are pretty stable at this time.” – Paula Siemens 604.351.7438
