With all the uncertainty that COVID-19 brings, there will certainly be new housing-related trends in our lives: health and personal safety precautions, new spending or activity patterns and likely an invigorated work-from-home culture. Once the crisis resolves—which, hopefully will be soon—many businesses, including those that were perhaps reluctant in the past, may see that home-based employees are productive workers, and we may see this trend persist. In the long term, it should be easier than ever to work from smaller communities that offer amazing amenities, lifestyle and a lower cost of living.
Although present indications show a slowdown in the real estate market, the average home price in smaller B.C. communities is already so much lower than the Vancouver market that our regional contacts are anticipating that they should not see as much of an adjustment. Fortunately housing markets have been fairly frothy over the past few months, though waning consumer confidence and the many variable and unknown factors confronting us all will likely slow the real estate market.
The British Columbia Real Estate Association (BCREA) released their findings on March 17, 2020, stating, “While it’s unknown how the unfolding COVID-19 outbreak will impact the economy in the long-term, B.C. is facing a sudden stop in economic activity with little guidance to when things may return to normal.
Based on our scenario analysis, B.C. home sales and prices will likely face declines in the spring and early summer but should recover along with the wider economy in the second half of the year, contingent on the outbreak resolving.
The postponed change to the mortgage stress test rate, originally slated for April 6, 2020, will mute the impact of falling interest rates for the B.C. housing market.”
An interview in the Financial Post with RBC Capital Markets gave interesting insights on March 13, 2020: “’We are coming to the view now that because of the virus and the meltdown in financial markets, we will most likely see a decline in buying activity through at least parts of the spring market, and maybe even going into the summer market,’ said Robert Hogue, senior economist at RBC Capital Markets.”
Even though the Bank of Canada has lowered interest rates by 50 basis points last week (a rate which is expected to be cut again), borrowing cost will decrease; however with the threat of a recession, buyers are more reluctant to take on more debt. Also, as many investors have taken loses in the financial market, the so-called Bank of Mom and Dad is going to be harder to access for down payment for new home buyers.
That said, we have heard of some investors within the stock markets that have taken significant losses, and who continue to doubt the financial markets, have now made the move to put their money in real estate instead. Others will no doubt be driven to panic selling. We are here for you during this unpredictable time, and have gathered some relevant real estate market news here: