B.C.’s housing market will take an initial dive due to the coronavirus-driven recession, but it is expected to recover next year, says the industry’s association.
Sales throughout B.C. are predicted to slide by 30 to 40 per cent this month compared to April 2019, as people follow social distancing protocols, Brendon Ogmundson, chief economist for the B.C. Real Estate Association, said Monday.
He anticipates the situation in the capital region housing market will be similar and, like elsewhere in B.C., sales will be lower than usual through the summer.
However, he said, “as measures implemented to mitigate the spread of COVID-19 are gradually lifted, we expect that low interest rates and pent-up demand will translate to a significant recovery in home sales and prices.”
Ogmundson expects B.C. will see the pace pick up and a return to its baseline number of sales of 85,000 units per year by early 2021.
Greater Victoria’s economy may be hit a little harder in the next few month by the recession given the importance of tourism in this region, he said.
Ogmundson analyzed the impacts and recoveries of three recessions in Canada in the past 40 years. “One of the things we find is that the shape of recovery is pretty similar. All of these recessions have different causes, different durations.”
“As measures to mitigate the spread of COVID-19 are gradually lifted, we expect that pent-up demand and low interest rates will entice buyers back into the market,” he said in the association’s market intelligence report, released Monday.
In a typical recession, not all parts of the economy would necessarily be affected at the same time by the same thing. The current situation is closer to a natural disaster, he said.
This recession was not human-made and may not last as long as others, he said.
When it comes to home sales, much of the business is normally carried out face-to-face. Real estate agents have set up ways to continue, offering virtual open houses and electronic documents, for example.
“Still, a lot of that transaction activity is about being out. And across every market we are expecting to see a pretty big decline in April as the real estate industry and families across B.C. adhere to what they are supposed to be doing.”
All markets in B.C. can expect a “pretty big decline” in sales this month, Ogmundson said.