Seasonal home buying patterns change in Metro Vancouver due to COVID-19
Real estate sales follow seasonal patterns. Homes sell well in the spring. Then the market slows down in summer as buyers and sellers, typically, go on vacation. Activity picks up in the fall, the second-busiest time of the year after spring. Things quiet down in winter.
The 2020 market looks a bit different due to COVID-19.
As seasoned realtor Wayne Ryan notes, the traditionally strong spring market did not happen because of the pandemic.
Ryan works as managing broker of two Vancouver West Side offices of RE/MAX Crest Realty. He supervises about 100 property agents.
He said that 2020 was off to a good start, from January to the first half of March.
“Then COVID hit and, overnight, the market just died,” Ryan told the Georgia Straight in a phone interview.
The market struck a low point in April. The Real Estate Board of Greater Vancouver (REBGV) reported that sales for the month were 62.7 percent below the 10-year April sales average. It was the lowest total for the month since 1982.
However, in early June, as pandemic restrictions were eased, things started to turn around. Compared to previous summers, Ryan said, this year is proving to be an exception.
“It’s much busier so far,” the manager said.
In its latest report, the REBGV noted that activity in July 2020 “exceeded historical levels”.
Last month’s sales were 9.4 percent above the 10-year July sales average. Sales were 22.3 percent higher than July 2019, and 28 percent over the number sold in June 2020.
The question now is whether or not this level of action will carry on through the autumn months.
Low interest rates drive sales
Last year, the REBGV reported increases in home sales in September and October before slowing down in November. Deals in October 2019 surpassed those in September by 22.5 percent. Because of this, the board noted that the market was “experiencing a fall pickup”.
The same could happen in autumn 2020.
According to Ryan, two things bode well for the market. One is unmet demand from the spring market weakened by COVID-19.
“You know the term ‘pent-up demand’, and that term gets overused, but I think it’s applicable here that you have a lot of buyers and sellers that want to get going,” the RE/MAX executive said.
The second is continued low interest rates. Ryan said that although rates were about 3.5 percent last year, current lending costs stand at about 2.25 percent.
The Straight asked Aimal Pamir, mortgage broker with Dominion Lending Centres, to illustrate what these rates mean in dollars. Pamir calculated that a mortgage of $900,000 with a 25-year amortization and a rate of 2.25 percent translates to a monthly payment of $3,920.51.
At 3.5 percent, the same loan results in $4,493.43 in payment per month. According to Pamir, the monthly difference totals $572.92.
In March 2020, the Bank of Canada slashed its trend-setting key rate three times as a response to the pandemic. From a rate of 1.75 percent at the start of that month, the central bank brought it down to 0.25 percent. That’s the lowest level that can be set.
“I don’t have a crystal ball, but I would say that we’re not going to be seeing a rate increase for, I would guess, between 12 and 18 months,” Ryan said.
In its July 2020 report, the REBGV also noted that prices were rising. The benchmark price for all residential properties in the Greater Vancouver area rose 4.5 percent over July 2019 and 0.6 percent above June 2020.
“When the market starts to turn around, we find that often it starts in Vancouver…and it just spreads out from there,” Ryan said.