- Mortgage rates increase as economic growth expectations revised higher
- Growth in the Canadian economy set to take-off in 2021
- Bank of Canada remains on hold but may be tested by increased inflation
“As BC households and the real estate sector adhered to physical distancing measures during the early part of the pandemic, home sales and new listings dropped dramatically. Since then, pent-up demand, record-low borrowing rates and the desire for more space have pushed up homes sales to levels not seen since 2017.”
Vancouver, BC – March 11, 2021. The British Columbia Real Estate Association (BCREA) reports that a total of 10,918 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in February 2021, an increase of 89.1 per cent over February 2020 and over a thousand sales higher than the previous February record, set in 2016. The average MLS® residential price in BC was $889,584, a 17.3 per cent increase from $758,382 recorded in February 2020. Total sales dollar volume was $9.7 billion, a 121.8 per cent increase from last year.
“Near-record sales in Metro Vancouver, combined with unprecedented housing demand outside of Metro Vancouver, continues to drive a blistering pace of home sales in BC,” said BCREA Chief Economist Brendon Ogmundson.
Total active residential listings were down 28.7 per cent to 20,185 units in February, the lowest level of provincial active listings on record, going back to 2000. Fortunately, new listings have increased considerably, but given the pace of sales, total inventory of homes for sale remains severely depleted.
“There is a drought of resale inventory across the province,” added Ogmundson. “With so few listings, and with so much demand for single-detached homes, average prices have increased dramatically.”
“The Canadian economy expanded at a 9.6 per cent annual rate in the fourth quarter of 2020. Growth was led by increased government spending, business investment and investment in new home construction and renovations as well as a large change in business inventories as large drawdowns of inventory from previous quarters reversed. For 2020 as a whole, the Canadian economy shrank 5.4 per cent, the steepest decline since quarterly GDP data were first recorded in 1961. Interestingly, the households savings rate registered 12.7 per cent, the third consecutive quarter of double digit saving rate. Remarkably, total household savings in 2020 matched the cumulative savings of the previous seven years combined. That accumulated savings, and how it gets spent over the next year, will be a key component of what we expect to be a robust economic recovery in 2021.
Following an unprecedented 2020, we expect the Canadian economy will enjoy two years of very strong growth with the economy expanding by 5 per cent this year and a 4.3 per cent in 2022. An expected acceleration of vaccinations appears to be on the immediate horizon. As that roll-out progresses, we expect pent-up spending throughout the economy to be unleashed, driving a strong economic recovery. While the Bank of Canada has not changed its commitment to keeping its overnight rate unchanged until 2023, there has been substantial upward pressure on long-term Canadian interest rates as markets price in a faster than expected recovery along with the impact of the $1.9 trillion US COVID-19 relief package. As 5-year government bond yields move higher, 5-year fixed mortgage rates have also started to rise from a record low average of 1.8 per cent to a still very low level of 1.95 per cent. For context, the average 5-year fixed rate prior to the onset of the COVID-19 pandemic was about 2.9 per cent.”
March 2, 2021
“Home buyer competition intensifies across Metro Vancouver’s housing market
Competition amongst home buyers is putting upward pressure on home prices across Metro Vancouver’s* housing market.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 3,727 in February 2021, a 73.3 per cent increase from the 2,150 sales recorded in February 2020, and a 56 per cent increase from the 2,389 homes sold in January 2021.
Last month’s sales were 42.8 per cent above the 10-year February sales average.
“Metro Vancouver’s housing market is experiencing seller’s market conditions. The supply of listings for sale isn’t keeping up with the demand we’re seeing,” Colette Gerber, REBGV Chair said. “Competition amongst home buyers is causing multiple offer situations and upward pressure on prices.
“This is particularly true in the townhome market where demand is outstripping the available supply. Conditions differ depending on location and property type so it’s important to work with your local REALTOR® to develop strategies to meet your needs.”
There were 5,048 detached, attached and apartment homes newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in February 2021. This represents a 26.1 per cent increase compared to the 4,002 homes listed in February 2020 and a 12.7 per cent increase compared to January 2021 when 4,480 homes were listed.
The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 8,358, a 9.1 per cent decrease compared to February 2020 (9,195) and a 0.6 per cent increase compared to January 2021 (8,306). This is 21.2 per cent below the February 10-year average for new listings.
For all property types, the sales-to-active listings ratio for February 2021 is 44.6 per cent. By property type, the ratio is 41.8 per cent for detached homes, 61.8 per cent for townhomes, and 41.7 per cent for apartments.
Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
“Low interest rates remain a key driver in today’s market. We’re seeing steady numbers of first-time home buyers and move-up buyers entering the market,” Gerber said.
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,084,000. This represents a 6.8 per cent increase over February 2020 and a 2.6 per cent increase compared to January 2021. “
Less populated communities within the region continue to experience the largest year-over-year price increases across all property types. Examples, according to the MLS HPI®. include Bowen Island (34.4 per cent increase), the Sunshine Coast (32.7 per cent increase), West Vancouver (16.1 per cent increase) Maple Ridge (14.8 per cent increase) and Ladner (13.7 per cent increase).
Sales of detached homes in Metro Vancouver reached 1,231 in February 2021, a 79.7 per cent increase from the 685 detached sales recorded in February 2020. The benchmark price for a detached home is $1,621,200. This represents a 13.7 per cent increase from February 2020 and a 2.8 per cent increase compared to January 2021.
Sales of apartment homes reached 1,759 in February 2021, a 65.8 per cent increase compared to the 1,061 sales in February 2020. The benchmark price of an apartment is $697,500. This represents a 2.5 per cent increase from February 2020 and a 2.5 per cent increase compared to January 2021.
Attached home sales in February 2021 totalled 737, an 82.4 per cent increase compared to the 404 sales in February 2020. The benchmark price of an attached home is $839,800. This represents a 7.2 per cent increase from February 2020 and a 2.9 per cent increase compared to January 2021.