COVID-19 and the effect on the real estate market.
The effects of COVID-19 on the real estate market are just unfolding. Real estate boards have made changes due to the virus however, market statistics are not yet showing a negative effect to the virus. The short-term forecast for the real estate market is very uncertain however, the virus will eventually be contained and the economy will eventually get back on track.
The Effects of COVID-19
The Bank of Canada has dropped the overnight rate twice in the past two weeks as a means to stimulate the economy. The banks have yet to lower mortgage rates.
Lawyers and notaries are making changes to reduce exposure to the virus which in turn will reduce the number of files they deal with at one time. Legislation requires buyers and sellers to sign documents in person so that may hamper some closings.
The planned change to the mortgage stress test has been put on hold. Due to the COVID-19 crisis, the benchmark rate as currently published by the Bank of Canada will remain in effect until further notice.
The Fraser Valley Real Estate Board, along with the Greater Vancouver and Chilliwack boards, have temporarily removed the rule requiring that properties listed on MLS® be made available for showings. This change will remain in place until at least, April 30. Whether a property is available for showings will be entirely up to the discretion of the seller.
The CMHC announced that it would be working with lenders to defer mortgage payments by up to six months if needed.
BC Real Estate Association
Market Intelligence Report, March 17, 2020
Fraser Valley Stats
As of February 29, active listings were down in most areas of the Fraser Valley and sales were up compared to last year. This has created sellers markets throughout the Fraser Valley, with the exception of the detached market in South Surrey which is now a balanced market. Cloverdale and Langley are currently the hottest, sellers markets for all property types, in the Fraser Valley.
As of March 17, 2020, sales in the Fraser Valley are up 30% compared to the same time last year. New listings are also up about 6% compared to this time last year. The effects of COVID-19 on the real estate market are not yet apparent in the available statistics.
Prices for all property types in the Fraser Valley have increased over the past couple of months. This is the first time in at least 18 months that all property types have shown price increases year-over-year and month-over-month.
MLS® HPI Benchmark Price Activity
Single Family Detached: At $971,300, the Benchmark price for a single‐family detached home in the Fraser Valley increased 1.1 per cent compared to January and, also increased 1.3 per cent compared to February 2019.
Townhomes: At $523,200*, the Benchmark price for a townhome in the Fraser Valley increased 1.0 per cent compared to January and increased 1.4 per cent compared to February 2019. *Preliminary number pending further review
Apartments: At $414,500, the Benchmark price for apartments/condos in the Fraser Valley increased 1.5 per cent compared to January and increased 1.2 per cent compared to February 2019.
Greater Vancouver Stats
Sales in February were up 45% in the Greater Vancouver areas compared with sales in February 2019 but still 15% below the 10-year sales average. Active listings, however, were 20% lower than February 2019. Increased sales and decreased listings have put many areas in Vancouver into sellers markets.
All Vancouver areas, with the exception of West Vancouver and Tsawwassen, were in strong sellers markets for attached properties. The sales of attached properties, which include condos and townhouses, accounted for 68% of sales in February 2020.
Vancouver, west side, Richmond, and West Vancouver are the only Vancouver areas that are still experiencing buyer markets for detached properties. Many areas have moved into seller markets because of increased sales and decreased listings.