The pandemic of the coronavirus has shifted the world and its economy. Businesses are closed and homes are being affected by this crisis everyday. The same can be said in one of Canada’s largest cities, Vancouver– and more specifically, Vancouver’s real estate.
How Vancouver is Affected
The coronavirus has significantly slowed real estate sales in Vancouver. What was once a hustling and bustling city, is now a quiet solitude with unattended houses. The housing market has seen nearly a 40% decrease as compared to Vancouver real estate in April 2019. Regardless, housing prices have not faltered. In fact, that average price of a Vancouver home has actually gone up by 2.5% since the pandemic. Any major change in the prices of these homes could really affect homeowners, as Vancounver has always been known for having overpriced housing. Homeowners expect the prices of their homes to rise. Those who were hoping to get a discounted home in Vancouver will be disappointed– prices seem to be on the rise all across Canada.
The Average Cost of Vancouver Housing
The pandemic can stand to deter the average cost of houses in Vancouver. While the average cost of a home in Canada sits at $400,000 Canadian dollars, the average home in Vancouver is about 1.3 million– even condos average around $800,000. As it stands, Vancouver is one of the most expensive places to live in North America, coming only second to San Francisco. The median income in Vancouvers is around $70,000. Vancouver’s citizens are struggling to pay their high mortgages during this troubling time. Because so few can work and housing/renting costs are so high, people are not able to make payments on time.
What Vancouver is Doing
Luckily, Vancouver is not leaving its citizens to fend for themselves. They are offering potential benefits and rental reliefs of up to $500 CAD/month. Some landlords will also see a mortgage relief, too. The government has also been working with banks to possibly defer mortgage payments.
The Major Concern
The major concern within Vancouver real estate is that if the coronavirus lasts longer than three months, prices will start to drop. Vancouver is able to maintain its strong prices and low interest rates for now, but if they continue to lose revenue due to a lack of tourists and immigrants, they will have to make up for it elsewhere. Housing tax prices will increase for “satellite families” (families who do business outside of the country from home). The Vancouver real estate market is doing well for now, but it may not last if the pandemic doesn’t soon end.
Overall, the coronavirus has made a tremendous impact on real estate all over the world. Vancouver is particularly susceptible to the issues regarding real estate because it costs so much to live there. The prices are still on the rise in Vancouver, but that will likely not be the case if the pandemic lasts past June.
Toronto Regional Real Estate Board Provides Input on Government Economic Recovery Initiatives, Recommends Caution With Real Estate Market Stimulus – GlobeNewswire
TORONTO, July 14, 2020 (GLOBE NEWSWIRE) — The Toronto Regional Real Estate Board (TRREB) has submitted formal input to all levels of government on options for economic recovery initiatives. While TRREB has set out a list of specific policy options, its key message is to use caution in implementing demand-side real estate market stimulus.
“Current real estate indicators are showing a substantial recovery in the GTA real estate market. Before the onset of the COVID-19 pandemic, there was a great deal of pent-up demand in the market. This pent-up demand arguably increased further over the past three months. We are still in the early days of recovery, but barring any setbacks, we should continue to see stronger market conditions in the second half of 2020 as households look to satisfy their ownership housing needs,” said Lisa Patel, TRREB President. “Housing affordability in the GTA should continue to be a priority for policy makers and the best way to address this is by ensuring adequate and appropriate housing supply, rather than demand-side initiatives,” added Patel.
TRREB’s recommendations are outlined in a detailed policy brief that was submitted to local, provincial, and federal governments. With regard to housing supply, TRREB’s key recommendation is for all governments to expedite the creation of “missing middle” housing, including expediting the City of Toronto’s consideration of expanding “yellow belt” housing opportunities. The “yellow belt” refers to the 35 per cent of City of Toronto land where 70 per cent is currently zoned for detached homes. A recent city report was released in response to a City Council direction to report on options to increase “missing middle” housing options.
TRREB’s Economic Recovery Initiatives brief also outlines recent market statistics, which show a significant rebound in the GTA real estate market since the start of the pandemic. It also outlines results of recent research conducted by Ipsos Public Affairs, which shows that home buying intentions remain stable and that the supply of homes listed for sale could continue to be outpaced by demand.
“Governments should approach with caution when considering any additional demand-side stimulus to the GTA real estate market. Current conditions suggest that there is adequate demand in the market; however, if there is a setback such as a sustained second wave of the pandemic or a prolonged recession, governments could consider additional measures, which we have noted in our submission,” said John DiMichele, TRREB CEO.
TRREB has outlined a number of initiatives that could be considered if economic conditions worsen, including:
- Municipal and Provincial Land Transfer Tax holidays/deferrals, rate adjustments, and expanded rebates for first-time buyers;
- Property Tax deferrals;
- Postponement of consideration of potential Vacancy Taxes;
- Adjustments to the Mortgage Stress Test;
- Allow 30-year amortizations for insured mortgages; and
- Adjustments and expansion of the RRSP Home Buyers’ Plan.
“TRREB has been working closely with all levels of government to provide up-to-date data on the state of the real estate market. We will continue to do so to help decision-makers respond to the current state of affairs in an informed way,” continued DiMichele.
Senior Manager, Public Affairs
The Toronto Regional Real Estate Board is Canada’s largest real estate board with more than 56,000 residential and commercial professionals connecting people, property and communities.
Real Estate Activity in Victoria, BC – RE/MAX Canada News – RE/MAX News
When the year started, nobody could have envisioned that a virus outbreak would shut down the global economy and lead to widespread devastation. Canada and its many industries were not immune from the coronavirus pandemic, forcing all three levels of government to impose unprecedented and extraordinary measures to shield the public from a financial collapse. The city of Victoria faced the same effects as other places across the country.
In the first half of March 2020, real estate activity in Victoria was typical: new listings, multiple offers, and a steady increase in sales. Then, as Victoria Real Estate Board (VREB) President Sandi-Jo Ayers told a local newspaper, “the world changed.” Like other Canadian housing markets, Victoria endured a severe rough patch in the immediate aftermath of the COVID-19 pandemic. In weeks after Ottawa announced the country would be shutting down, many local real estate experts were uncertain about the spring and summer in Victoria.
But that level of unpredictability might be fading as the expected housing downturn is waning across British Columbia. Is Victoria witnessing a V-shaped recovery, or is the provincial capital still lingering from the impacts of COVID-19?
Real Estate Activity in Victoria
In June, Victoria real estate sales rose 76.8 per cent more than the previous month, according to new VREB data. Compared to the same time a year ago, home sales advanced at a healthy clip of 9.2 per cent. Although the condo market witnessed a 3.2 per cent drop in properties sold year-over-year, single-family homes surged 16.8 per cent from June 2019.
The Home Price Index benchmark value for a single-family home in the Victoria core increased four per cent to $896,200 in June, up 1.2 per cent from the previous month. The HPI benchmark for a condominium edged up 1.3 per cent to $525,600, slightly down from the 1.6 per gain in May.
By the end of June, there were 2,698 active listings on VREB’s Multiple Listing Service®. This represents an 11.3 per cent decline from last year, but it is up 6.1 per cent month-over-month.
Victoria’s real estate market felt the impacts of the coronavirus crisis and fell off a cliff. In March and April, home sales were down five per cent and 59 per cent, respectively, from 2019. Single-family homes and condominium prices also slipped in both months. A couple of months later, it turns out that Victoria is experiencing a V-shaped recovery.
VREB President Sandi-Jo Ayers is pleased by the upward trend, but she urged the industry, as well as buyers and sellers, to practice caution.
“This June we saw competing factors from all different sides of the real estate equation,” said the head of the real estate association. “If all we do is look at numbers, we see a fairly normal June, in the midst of a very not normal world. The impact of COVID-19 on our entire economy continues. And while some buyers and sellers are slow to emerge from isolation, others have been highly active since the start of Phase 2 of BC’s Restart Plan. Because of the pandemic, an eviction order that prohibited a landlord from ending a tenancy was introduced. The order may have kept some homes from going to market. The portion of this order that prevented a seller from providing vacant possession of a tenanted home was lifted late this month, which may bring some listings to market that had been stalled. Due to the pandemic alone, we have multiple factors influencing the inventory and sales in our market.”
Local REALTORS® are warning that the buying and selling experience will be different today than pre-pandemic. The province has moved to phase three of reopening. Still, the real estate industry will continue to leverage technology for virtual tours and abide by the government’s health and safety guidelines during in-person open houses.
CMHC Outlook and Market Optimism
Before the public health crisis, the Canada Mortgage and Housing Corporation (CMHC) listed the Metro Victoria housing market as a high-risk market. In a report to the Parliamentary Standing Committee on Finance, CMHC CEO Evan Siddall delivered a pessimistic forecast of the nation’s real estate prospects, sounding the alarm of as much as an 18% slide in housing prices in the coming 12 months.
Is this a case of being overly pessimistic? Based on the outlook from real estate professionals on the ground in some of these cities, CMHC’s consternation might be overblown.
British Columbia Real Estate Association (BCREA) Chief Economist Brendan Ogmundson thinks there will likely be a decline of around 5% in the short-term. In a recent BCREA conference, Ogmundson likened prices and sales to the Nike swoosh: a quick decline and then a recovery over a longer period. That is, as long as the coronavirus pandemic is not prolonged.
The conference call panelists shared the view of Bank of Canada (BoC) Governor Tiff Macklem that the economic recovery will likely be gradual. These experts do not see the recovery completing until 2021.
With many COVID-19 restrictions being loosened across the province and borrowing costs never been lower, Victoria REALTORS® see more interest on the ground. This assessment is supported by the jump in new and active listings. Many Victoria REALTORS® are also seeing multiple offers on quality, single family home listings under $1,000,000 in the core area. Suffice it to say, more confidence is returning to the housing market and the Greater Victoria real estate market is projected to perform as well, or even better than other Canadian cities!
Canadian Real Estate Prices Grew Over 29x The Rate of US Home Prices – Better Dwelling
Canadians know real estate prices have grown very quickly, but most likely have no idea how fast. US Federal Reserve data shows when US home prices took a dive during the Great Recession, Canadian prices didn’t. Instead, Canada has flooded the market with a number of policies designed to increase the amount of debt households can carry. Consequently, Canadian home prices have seen prices grow not twice, or even ten times as fast as US home prices. They’ve grown a whopping 29x faster.
Canadian Home Prices See Accelerated Growth
Canadian real estate prices have been on a tear, even just this year during a pandemic. The price of a home in Q1 2020 is up 2.4% from the previous quarter. Compared to last year, prices are up 3.4% once adjusted for inflation. Over the 12 months period, all of the annual growth came from just the two most recent quarters.
Canadian Real Estate Prices
An inflation adjusted index of Canadian real estate prices, vs the US.
Source: US Federal Reserve, Better Dwelling.
To contrast, US home prices made a much slower climb in the quarter, but still saw roughly similar growth. The price of a home in Q1 2020 was up 0.5% from the previous quarter. Compared to last year, prices are up 3.3% once adjusted for inflation. This was the slowest annual rate of growth for US home prices since 2013. While Canadian price growth is accelerating, US home price growth is decelerating.
Canadian Real Estate Prices Grew 29x Faster Than US Prices
Recent acceleration while the global economy slows down isn’t just a new phenomenon – it’s been happening since the Great Recession. Canadian home prices have increased a whopping 88% since 2005, almost doubling in 15 years. To contrast, US home prices have increased just 2.9% over the same period. In other words, Canadian home prices have increased 29x faster than US home prices. That’s adjusted for inflation as well.
Canadian home prices have increased at a breakneck speed, along with household debt. This isn’t just in major cities either, this is a national index. Cities like Toronto and Vancouver… and even smaller markets like Niagara, have likely over performed this rate of growth. Locals may not understand just how much prices have increased from up close, but if zoomed out against the global economy – it’s astronomical growth.
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