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TRENDS IN HOUSING

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The immediate effects of the Covid-19 pandemic on the housing market in Canada had many surprises. Sales and prices climbed to record levels, even in the face of a major economic downturn. Moreover, there was a significant increase in the sale of Single Family Dwellings (SFDs) in many areas of the country. It has been argued that during the beginning of the pandemic, given the new “remote” or “work from home” provisions, there was a shift in buyer preference toward acquiring extra living space. Homes had suddenly become a workplace, a school, an entertainment centre and a refuge. In the fall of 2017, this blog examined trends in the composition of real estate sales by property type between 1997 and 2017 in Greater Victoria. At that time, there were two discernable trends. First, sales of SFDs had fallen from 63.3% of all residential sales in 1997 to 49.2% in 2017. Second, sales of condos had risen from 22.3% in 1997 to 36.1% in 2017. Moreover, 2017 marked the first time that the percentage of sales of “strata” properties (i.e., strata duplexes, townhouses and condominiums), surpassed sales of SFDs. The two noted trends continued through the years 2018 and 2019. However, in 2020 there was a spike in the sale of SFDs: 3715 up 19.3% from 3114 in 2019, which accounted for some 50.3% of all residential sales. At the same time, condo sales were up a modest 9.4% and accounted for 32.7% of sales. The increase in the sale of SFDs turned out to be short lived and SFDs fell to only 45.8% of sales in 2021 y-t-d, in in line with the longer term trend. And, condo sales jumped to 37.7% of sales. Another line of argument to account for the increase in the sale of SFDs during the start of the pandemic, and one that is supported by the foregoing analysis, is that high income households were able to quickly adjust to the pandemic. They felt their income was secure and would be able to benefit from a high level of household savings and low mortgage interest rates. These factors helped to keep this segment of the population optimistic about purchasing a home. In contrast, those employed in lower-paid industries with less secure jobs were less able to quickly adapt to pandemic conditions. This combined with a sharp decline in new migrants to Canada, resulted in decreased demand for less expensive housing types such as condos.