The Fifth Dimension: Metro Vancouver’s Summer 2020 Market Update
It appears real estate demand in the BC and the Metro Vancouver market has demonstrated its resilience once again and provided further evidence that our industry’s under supply arguments are not a conspiracy theory, but the truth.
Despite all this negative hearsay and the obvious slowdown in the first month and a half of the pandemic in BC including lock down conditions and a lack of open houses and Sales Centre’s being closed to the public, within weeks of the re-opening the Metro Vancouver experienced accelerated new homes sales activity for new and re-sale product. In fact, sales in June and July have outperformed in sales and pricing from the same time period in COVID-19 and flu conspiracy free 2019.
It appears real estate demand in the BC and the Metro Vancouver market has demonstrated its resilience once again and provided further evidence that our industry’s under supply arguments are not a conspiracy theory, but the truth. Clearly, we are now feeling the results of COVID related pent-up demand. Like the concerns about a second wave this fall, time will tell if this a short-term gain or a sustained market trend.
The last edition of Fifth Dimension, we purported metaphorically that the coronavirus market resembled a childhood game of snakes and ladders. The advance up the board in late 2019 and early 2020 severely thwarted by a sudden and dramatic downward slide. This transpired.
In April we forecasted a Second Quarter result of less than the average number of sales in any particular month. The outcome looked too optimistic when during the four to six period at the outset of the BC shutdown less than 300 units sold. That was arguably the lowest absorptions in such a timeframe in over a decade.
The “ups” and “downs” projected for 2020 nearly a year ago certainly are evident. They were, however, much more pronounced. This pronouncement was not so much unexpected in terms of the sudden downward decline but instead in terms of the abrupt flattening of demand followed relatively promptly release of suppressed consumer activity resulting in a surprisingly more familiar June market.
At that time, we did project a Second Quarter tally of approximately one third of the number of sales in a more typical market or 1,000 units sold. This did require that the virus be somewhat contained. That number, while seeming dismal would augur a moderate recovery in the Third and Fourth Quarter of 2020. Our forecast was generously exceeded by 583 sales and approximately two thirds of these sales occurred in the month of June.
A common industry response to COVID-19 was the deferral of numerous new project launches to either September 2020 or February 2021. This action, while prudent and consistent with our own actions, made the probability of our late 2019 projection of 10,000 to 12,000 sales for 2020 nearly impossible. This would have been a 25+ percent increase from last year.
The pre-cautionary release of new product in June and its market acceptance does, however, mean that an annual sales results of 10,000+ units sold may not entirely be out of the question. At the mid-point of the year nearly 4,000 sales have been generated. Thus, a more realistic prognostication would be 8,000 units sold. Of course, attainment of either of these marks will be tempered by what actually conspires in terms of the avoidance of a second wave of COVID-19 this Fall.
Finally, even in a global pandemic, we are reminded not to bet against the strength of the underlying fundamentals of this market area. Click Here to download your copy of the latest Fifth Dimension, A comprehensive analysis of the Multifamily Real Estate market in Metro Vancouver.