Strong B.C. home market bucks COVID-19 doldrums

B.C. home sales posted another staggeringly strong month in September as demand remained robust despite high unemployment and virus-related economic uncertainty.

Provincial multiple listing service sales rose 8% from August to a seasonally adjusted 10,586 units in September, marking the highest single-month performance since April 2016. Year-over-year, sales rose 47.7%.

After bottoming in May, the recovery has more than made up for the spring downturn. Undoubtedly, the lack of a spring market and pent-up demand was a significant contributor to the rebound, but rock-bottom mortgage rates continue to fuel purchasing. Adding to this is a change in buyer behaviour. Households have reallocated recreational spending to homes, and remote working has buyers clamouring for more space in the suburbs and less populated regions.

Supply remains an accelerant for pricing. New listings sank 15% from August.

This lack of inventory has driven blowout home-price gains. The average home value rose 2.4% to $816,843, marking a fourth straight monthly gain. Year-over-year, this was up 13.5%. 

B.C.’s manufacturing sector posted a strong gain in August sales to contrast with a drop in national activity. Dollar-volume factory sales in B.C. rose 5.1% from July to a seasonally adjusted $4.45 billion. Nationally, sales declined 2% from July. B.C. sales rose for four straight months following a 15% decline in April, lifting activity well above pre-COVID-19 numbers and reaching their highest level since April 2019.

The latest upward trend continues to reflect stronger activity in the forestry sector. Wood product manufacturing rose 11% from July to make up 45% of the net manufacturing increase.

Other key drivers included transportation equipment manufacturing (up 26% from July). Paper manufacturing rose 2.7% from July but fell 18% year-over-year.

That said, weak early-year activity continued to contribute to an 8% deficit from same-period 2019, with sharp declines in paper (23%), and wood product (6%). A weak global economy and low capital investment is constraining other resource-related production. A return to suppression measures in other countries will slow the global recovery and likely constrain the demand recovery for intermediate manufactured products and final goods. •

Bryan Yu is deputy chief economist at Central 1 Credit Union.