Not surprisingly, housing activity fell sharply across the province in April.
Demand was constrained by lower consumer confidence amid a plunge in the employment and increased economic uncertainty, while households heeded government recommendations to stay home and limit physical contact. Similarly, sellers retreated from listing their homes given the market shift and increased health risks of home showings.
Multiple Listing Service (MLS) home sales in B.C. declined 55.4% from February to a seasonally adjusted 2,763 units – the lowest going back to mid-1986. Sales fell 50.5% from same-month 2019. Adjusted for a rising population base, the latest sales were the lowest since the 1982 recession. Similarly, home sales across Canada fell 56.8% from February. Sales declines were similar across the province. April’s sales collapse cut year-to-date sales by 1.7% from same-period 2019, compared with a gain of 21.7% observed through March.
The plunge in sales was matched by a similar decline in the flow of new listings, which declined 52% during the month as prospective sellers paused. Sales-to-active listings declined to 9.4% provincially with declines across regions. This is not surprising because previous listings remain in the MLS system and take longer to adjust lower than sales and new listings.
The average MLS price fell 6.2% to $722,224, though this is likely statistical noise as prices rose 4.6% in March. That said, benchmark price indexes rolled over with seasonally adjusted declines of 0.4% in the Lower Mainland and Vancouver Island (excluding Victoria), and larger declines of 0.7% in Victoria and 1.5% in the Okanagan.
Restarts of the economy will lift employment and demand will improve, albeit at a lower pace than before COVID-19. Economic activity will not revert to previous levels until mid-2021 at the earliest, and population growth is likely to slow.
Nevertheless, housing demand will rise onward from the summer months, and price declines are expected to be around 5% before rebounding. A weaker-than-expected economic rebound or second wave of the virus is a realistic negative risk and would put downward pressure on sales and home prices, with the latter declining up to 15%.
B.C. manufacturing sales slipped in March as the effects of COVID-19 hammered the Canadian economy. Dollar-volume manufacturing sales in B.C. declined 0.6% from February to a seasonally adjusted $4.24 billion and fell 6.7% from same-month 2019. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
