{"id":15430,"date":"2020-04-24T11:11:00","date_gmt":"2020-04-24T18:11:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=15430"},"modified":"2020-04-10T10:00:50","modified_gmt":"2020-04-10T17:00:50","slug":"metro-vancouver-property-sales-trouble-ahead-slowly-infecting-various-industries","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2020\/04\/metro-vancouver-property-sales-trouble-ahead-slowly-infecting-various-industries\/","title":{"rendered":"Metro Vancouver Property Sales Trouble Ahead, Slowly Infecting Various Industries"},"content":{"rendered":"<p style=\"text-align: justify;\">As COVID-19 makes its way around the globe, it is also bulldozing its way though the economy, slowly infecting various industries.<\/p>\n<p style=\"text-align: justify;\">While airlines and event venues were the first to be poisoned, many are anxious about how the virus will affect other parts of the economy, including the real estate market \u2013 which made up 17.4% of BC\u2019s GDP in 2018.<\/p>\n<p style=\"text-align: justify;\">Earlier this month, Metro Vancouver real estate brokers cancelled all open houses. When houses aren\u2019t shown they become more difficult to sell, and when houses aren\u2019t selling the broader market suffers.<\/p>\n<p style=\"text-align: justify;\">While the outlook doesn\u2019t look good, it is still too soon to know what impact COVID-19 will have on real estate.<\/p>\n<p style=\"text-align: justify;\">\u201cWe\u2019re in early days still, and we\u2019ll see how this all evolves,\u201d said Brendon Ogmundson, chief economist at the BC Real EstateAssociation (BCREA). \u201cIt\u2019s pretty clear that the next few months are going to be pretty rough.\u201d<\/p>\n<p style=\"text-align: justify;\">Before COVID-19 struck home, March was expected to be a strong month, according to Ogmundson, but that could change.<\/p>\n<p style=\"text-align: justify;\">In its most recent analysis, the BCREA predicts a steep decline in home sales in the second quarter, followed by a slow recovery. Sales are not expected to reach pre-COVID 19 baseline expectations by the end of 2020. Housing prices, on the other hand, will likely experience only a modest temporary decline and should recover to baseline over the next year.<\/p>\n<p style=\"text-align: justify;\">The main reason home prices are expected to remain steady despite COVID-19 is that there isn\u2019t a large enough supply for people to take advantage of low prices.<\/p>\n<p style=\"text-align: justify;\">\u201cIt works both ways. If people aren\u2019t out there buying right now, they\u2019re probably not listing either,\u201d said Ogmundson.<\/p>\n<p style=\"text-align: justify;\">What usually drives real estate price down is a drop in sales activity coupled with a large increase in inventory, he said. People aren\u2019t likely to be trying to get out of the real estate market at this time, so there is unlikely to be an increase in inventory. Even if demand falls off more than expected, it will take some time for that to be evident in real estate prices.<\/p>\n<p style=\"text-align: justify;\">A slowdown in sales could also lead to pent up housing demand, Ogmundson said. This means that once fears surrounding COVID-19 have settled down, the housing market could come roaring back with a surge in sales and ultimately a spike in prices.<\/p>\n<p style=\"text-align: justify;\">While COVID-19 may not have a significant effect on housing prices, it is already making waves through the mortgage industry.<\/p>\n<p style=\"text-align: justify;\">The fear isn\u2019t that lenders are going to stop lending, but that essential functions required to support lending will be damaged by the pandemic, said Taylor Little, CEO of Neighbourhood Holdings.<\/p>\n<p style=\"text-align: justify;\">Not only are people avoiding open houses but appraisers are also staying home. Without needed appraisals, deals can\u2019t be closed, and companies like Neighbourhood Holdings are put in a sort of realestate limbo, Little said. Delaying the closing of these real estatedeals will add to the economic stress already broadly being felt.<\/p>\n<p style=\"text-align: justify;\">\u201cHow do you even complete a home refinance or purchase if an appraiser won\u2019t even come into your house?\u201d Little said.<\/p>\n<p style=\"text-align: justify;\">The mortgage industry, including big banks and credit unions such as Vancity, are also suspending the need for borrowers to make mortgage payments. While at first glance this may appear as a negative for lenders, Little said it is beneficial. During difficult economic times, lenders are generally concerned about high debt delinquency; the deferral of mortgage payments will help prevent that.<\/p>\n<p style=\"text-align: justify;\">In response to the COVID-19 pandemic, the Bank of Canada has slashed interest rates to 0.75%. Usually, lower interest rates would help spur housing sales, but with everything else going on, Little said, it\u2019s unknown whether demand will rise.<\/p>\n<p style=\"text-align: justify;\">While lower interest rates might not be enough of an incentive to persuade people to buy a home during the pandemic, it could prove to be critically important for mortgages holders.<\/p>\n<p style=\"text-align: justify;\">\u201cIf you\u2019re a candidate to refinance your mortgage today, there\u2019s no doubt [lower interest rates] are going to stimulate activity there,\u201d Little said.<\/p>\n<p style=\"text-align: justify;\">People looking to blend or extend mortgages will benefit from lower interest rates, and people who are looking to close real estatedeals will also get a better rate.<\/p>\n<p style=\"text-align: justify;\"><strong>Pandemic Response<\/strong><\/p>\n<p style=\"text-align: justify;\">\u2022 Bank of Canada has lowered interest rates to 0.75%<br \/>\n\u2022 Big banks and credit unions have deferred mortgage payments<br \/>\n\u2022 Metro Vancouver real estate brokers have postponed open houses<br \/>\n\u2022 Feds have raised Canada Mortgage and Housing Corp. limits by $150 billion each to guarantee securities and ensure mortgages<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/biv.com\/article\/2020\/04\/covid-19-infects-metro-vancouver-real-estate-market\" target=\"_blank\" rel=\"noopener noreferrer\">COVID-19 Infects Metro Vancouver Real Estate Market<\/a> by Albert Van Santvoort | BIV<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As COVID-19 makes its way around the globe, it is also bulldozing its way though the economy, slowly infecting various industries. While airlines and event venues were the first to &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2020\/04\/metro-vancouver-property-sales-trouble-ahead-slowly-infecting-various-industries\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-15430","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Metro Vancouver Property Sales Trouble Ahead, Slowly Infecting Various Industries &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2020\/04\/metro-vancouver-property-sales-trouble-ahead-slowly-infecting-various-industries\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Metro Vancouver Property Sales Trouble Ahead, Slowly Infecting Various Industries &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"As COVID-19 makes its way around the globe, it is also bulldozing its way though the economy, slowly infecting various industries. 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