The Vancouver region housing market achieved a solid sales boost in March, in what is being widely regarded as the last positive report on activity for at least a few months.
Home sales data gathered by Central 1 Credit Union from the Metro Vancouver and Abbotsford-Mission MLS found transactions in March were up 35 percent from the previous year to 3,927 units.
Despite hitting what Central 1 economist Bryan Yu called a “modest pace” of sales so far this year, the near term outlook for the region looks bleak as “the full force of the COVID-19 disruption to society and the economy freezes the market.”
In an economic briefing published late last week, Yu said sales activity will plunge as much as 40 percent in the short term in BC’s Lower Mainland as buyers who would ordinarily be house hunting in the typically busy spring market are confined to their homes. Economic uncertainty and credit risks also brought on by the COVID-19 pandemic will hamper home sales for months to come.
While the spring months will see plenty of attention-grabbing headlines about the state of the market as activity mostly grinds to a halt, Yu believes the market fundamentals that supported the Vancouver region’s gradual housing recovery through late 2019 and early 2020 will remain intact once the pandemic’s impact wanes.
“We anticipate a recovery in the housing market as the pandemic fades, although duration of current measures are unknown and household/business finances will be eroded in the interim,” he wrote.
“Nevertheless, low interest rates, an expected return to a tighter labour market, and pent up demand will support the market,” Yu continued.
In this belief, Yu joins RBC Senior Economist Robert Hogue in expressing guarded optimism that the housing market is equipped to handle a downturn as buyers move to the sidelines to weather the storm.
Yu stopped short of predicting a timeframe for when the housing market might begin to recover, but Hogue was slightly more bullish, writing that the RBC economics team was “pencilling in” an early “restart.”
Speaking about the national housing market, Hogue said, “[w]e think the recovery will come in stages — taking buyers up to a year to regroup and rebuild confidence amid high unemployment.”
