Ryan Berlin: Market tailwinds drive a flurry of buying activity in July.
After a strong showing in June, the real estate market in the Vancouver Region surprised many In July as it tallied 5,150 MLS sales, the first time the 5,000-sale threshold had been crossed since June 2017 (a span of 37 months). This was 27% more sales than in June, 31% more than in July 2019, and 21% more than the past-decade average for July.
Within the Vancouver Region, the Greater Vancouver board area registered more than 3,000 sales for the first time since June 2017, and the Fraser Valley board area surpassed 2,000 sales for the first time since…you guessed it, June 2017. No matter how you cut it, July was a very active month for residential real estate throughout British Columbia’s southwest corner.
In some ways, the sheer number of transactions that have taken place over the past couple of months (including more than 4,000 in June) seems counterintuitive, if not unsustainable, given the current economic climate. Overall, employment in Metro Vancouver in July was down 10% from its pre-Great Suppression high in February, and 12% below its trend level for the month. The regional unemployment rate, at 11.6%, is almost three times its early-2020 level.
In addition to the economic pains being experienced by many in the here and now, there exists much uncertainty about the future path of economic recovery for the region, the province, and the country.
While all of the above is true, it is incomplete. Indeed, a more considered view of a few of the governing features of the Vancouver Region’s housing market reveals numerous tailwinds underpinning activity, including the following.
The availability of historically cheap money: borrowers can currently lock in at 2.14%–and in some cases even lower–for five years.
Resilient, if disconnected, stock market performance that has preserved accumulated wealth: the S&P 500 has re-attained its pre-pandemic high while the NASDAQ has surpassed it.
Local pent-up housing demand: as noted in previous columns, the equivalent of 11,000 unrealized sales accumulated in the first 6 months of 2020.
A jobs base that has been beaten, yes, but not broken: Metro Vancouver has re-gained almost 120,000 jobs in the past two months.
Together, these factors have stabilized the housing market in the face of a widespread, policy-driven economic downturn and are likely to continue to do so in the coming months.
Ryan Berlin is the Senior Economist with rennie intelligence.
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