In March 2020, the full effects of the Covid-19 pandemic became evident. Lockdowns and various restrictions were implemented to minimize the adverse health effects of the virus. It was widely anticipated that the global economy would enter into a major recession with an associated negative impact on the real estate market, namely a “bust.”
After the initial shock of the impact of the Covid-19 virus on the economy in early spring, the real estate market in Victoria rebounded quickly in the summer and the momentum carried through the remainder of 2020 and into 2021.
The real estate market was one of the few bright spots in the Canadian economy for 2020. The real estate market was soft in 2018 with year-over-year sales down nearly -5% and the average sale price of a residential property down -4.1%. The decline in housing prices, lower mortgage rates, continued population and economic growth, led many prospective buyers to return to the real estate market in the latter part of 2019 and early 2020. Some areas of the country experienced positive gains in prices and sales. After the initial shock
of the Covid-19 pandemic and associated restrictions and lock-downs in March and April, the real estate market found its footing and went on a record-setting pace for the remainder of 2020.
Dr. Bonnie Henry, the Provincial Health Officer for BC, has encouraged people to get out and enjoy the outdoors. There are a number of places in the Greater Victoria area where one can escape the hustle and bustle of urban life and reconnect with nature.
After two dismal months in March and April, the real estate market in Victoria continued a dramatic rebound in the 3rd Qtr of 2020. On the supply side, the number of listings was up from last year. However, even this increase did not meet the strong demand as sales activity reached levels well beyond last year.
In the wake of the economic impact of Covid-19, the performance of the housing market in Canada in 2020 has surprised many. Despite the rather dire forecasts of a number of market analysts, sales have not collapsed; in fact, prices have shown strong increases in many areas of the country.
Real estate services were identified as essential services by the Minister of Public Safety and Solicitor General in March 2020. They were encouraged to remain open and to follow public health orders to reduce the spread of the virus. WorkSafeBC, in consultation with the real estate industry, subsequently formalized safety guidelines in the form of a six page set of protocols in May 2020. They were designed to mitigate the risk of contracting COVID-19 in the conduct of real estate services. The following is extracted from this document and outlines some of the key measures directed to Realtors®, which have direct implications to buyers and to sellers, The full document can be found at https://www.worksafebc.com.
The real estate market in Victoria started out strong in the 1st Qtr of 2020. Demand (i.e., the number of sales) was up dramatically, although it should be recalled that sales in the 1st Qtr of 2019 were the lowest recorded in the past decade. The inventory (i.e., the number of homes on the market) tightened. Sale prices continued to climb in the 1st Qtr. In summary, the market edged into seller’s market territory. However, the impact of the COVID-9 virus
outbreak on the economy became clear towards the middle of March 2020. There remains a lot of uncertainty going forward. Many people have plans to either buy or sell real estate this year. Realtors have been given guidelines to minimize the risk to both buyers and sellers.
In times of uncertainty, it is perhaps useful for buyers and sellers to pause and take stock of the recent state of the real estate market in the region of Greater Victoria.
The recent weakness in the real estate market in Victoria is perhaps best viewed as a part of the normal real estate cycle. Victoria has enjoyed one of the strongest and most stable real estate markets in the country. The average sale price of a single family dwelling has increased from $8,795 in 1960 to $878,767 in 2019. Chart 5 shows: (i) the annual percentage change and (ii) the change in the average sale price from 1960 to 2019. The average sale price increased in forty-five of the fifty-nine year period and decreased in fourteen. In fact, there were only five years that experienced a decrease in the average sale price of greater than -2%: 1982 (-20%), 1984 (-6%), 1995 (-5.5%), 2011 (-2.6%) and 2019 (-3.1%). The average sale price of a single family dwelling has increased an average of about +9.1% per annum during this 59-year period, about +5.6% above the annual increase in the Consumer Price Index. Chart 5 also illustrates the cyclical nature of the real estate market in Victoria. There is an historic pattern of a sustained period of rising prices (i.e., 1961 - 1969, 1971 - 1981, 1986 - 1994, 2001 - 2007 and 2014 - 2018) that is followed by a period of flat or falling prices (i.e., 1970, 1982 - 1985, 1996 - 2000, 2008 - 2013 and 2019)