Are Real Estate Prices Dropping on Vancouver Island?
Spring in Vancouver Island is a hot time for the region’s real estate market. Unsurprisingly, things have looked a little different this year. With the hit of the COVID-19 pandemic in February, provinces across the country implemented protection measures to limit the fast and furious spread of this virus. Social distancing, business closures and quarantine measures have had deep impacts on economies and lifestyles across Canada, and the real estate industry has not been spared.
Deemed an “essential service” by the Provincial BC Government, real estate activity has been given the ‘green light’ to continue, however REALTORS® are operating with strict guidelines to ensure the safety of their clients and themselves. This pandemic has also pushed realtors to embrace technological tools such as virtual tours and electronic signing to further limit interaction within an industry so accustomed to face-to-face transactions.
On Vancouver Island, while the presence of the COVID-19 has impacted activity within this market, it took some time for the effects to surface. In fact, in March of this year, the Vancouver Island Real Estate Board (VIREB) reported that there had been little to no impact of the virus on the local housing market. The Board covers the communities of Campbell River, Comox Valley, Nanaimo, Parksville-Qualicum, and Post-Alberni – West Coast.
Sales numbers for these markets were up compared to March 2019, as well as inventory of single-family homes. On top of this, the benchmark price of a single-family home on Vancouver Island was 4% higher than the same month last year, as well as slightly higher than February 2020. While it was looking like this region was functioning within a bubble of its own, the impact of the public heath crisis did begin to reveal itself over the month of April.
The Impact of COVID-19 on the Vancouver Island Housing Market
Over April, Vancouver Island’s real estate market was exposed to some of the pandemic-related dips that were seen in local markets across the country as early as March. In May, however, the board’s numbers indicate that the market may already be recovering. Last month, 246 single-family homes sold on the Multiple Listing Service® (MLS®) System compared to 189 in April 2020 and 456 in May 2019. The inventory of single-family homes last month dipped by 14 per cent year over year (1,486 to 1,282).
Vancouver Island Home Prices: Staying Steady
As with many of BC’s local housing markets, prices have stayed relatively consistent for real estate on Vancouver Island, even despite depressed activity in April. The benchmark price of a single-family home in May increased slightly from April 2020 to $528,800, a 3% increase year-over-year and marginally higher than in April. In other categories, prices have in fact shown modest increases; the year-over-year benchmark price for apartments on Vancouver Island rose 3%, and the benchmark townhouse price climbed 3%.
In the most recent market intelligence report released by the British Columbia Real Estate Association (BRCREA), it is anticipated that while the economic impact of the COVID-19 outbreak will be deeply felt, the bounce-back will be faster than in previous recessions. As the protection measures are lifted, as we have already started to see in parts of the Province, the pent-up demand will return to local markets with buyers keen to take advantage of low interest rates.
For real estate markets like Vancouver Island, where price dips have not been pronounced, it is probable that as demand returns to the market, prices will be pushed up, rather than returning to a state of “balance”. Many of the markets within Vancouver Island were sellers’ markets before COVID-19 arrived, and it is looking like they will sustain this imbalance even after the virus has vacated.
RE/MAX is confident that like Vancouver Island, many of the country’s hot markets will be spared the price nosedives that have been projected by the Canada Mortgage and Housing Corp (CMHC) and some of Canada’s big banks. The BC Government has been extremely cautious when it comes to lifting lockdown measures, adopting a very gradual, phased approach which started this month.
Already, agents within BC, particularly within the hot market of Vancouver, have noted lots of new inventory and multiple offers on highly priced property. The high unemployment in the city as a result of the crisis seems to be disproportionately impacting lower income earners. Due to the region’s high property price-tags, homebuyers tend to be those within a high-income bracket, who may not have suffered as significant a financial fallout as a result of COVID-19 (and are eagerly diving back into the market). The markets of the Vancouver and Vancouver Island regions are proving that high unemployment can exist in tandem with a very strong, and very expensive real estate market.
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