Home sales in the Greater Vancouver area hit their lowest levels in nearly 40 years in April due to the COVID-19 pandemic, and experts say buyers can expect price declines to eventually follow.
The sales total of 1,109 homes was 62.7 per cent below the 10-year average for April and the lowest total for the month since 1982 after a full month of COVID-19 restrictions.
“Predictably, the number of home sales and listings declined in April given the physical distancing measures in place,” said Colette Gerber, president-elect of the Real Estate Board of Greater Vancouver, in a statement.
Realtors, designated an essential service, are relying more on technology to show houses and handle paperwork remotely, said Gerber.
New home listings also fell, down by 59.7 per cent to 2,313 in April compared with a year earlier, while the total number of active listings was down 34.6 per cent compared with April 2019.
The board says the sales-to-active listings ratio was 11.8 per cent for the month, just nudging into the level analysts consider as signalling potential for downward pressure on prices.
For April, prices held with the composite benchmark index price up 2.5 per cent from a year earlier, and up 0.2 per cent from March, at $1.04 million.
It could take months, however, for changes in the economy and housing market to start to reflect in home prices, said Steve Saretsky, a realtor at Oakwyn realty.
“Real estate’s really slow moving, it’s sticky. It’s especially hard to judge prices when you have volumes that are the lowest they’ve been in 35, 40 years.”
He said so far he’s only seen some marginal price discounting, but does expect pressure on prices as the confluence of higher unemployment, economic uncertainty, lower immigration and other consequences of the pandemic play out.
Supply could also eventually be affected as builders hold back, but the current level of record housing construction in the area will still have to be completed, said Saretsky.
“That supply’s coming online regardless of whether the demand’s there to meet it.”
Foreclosures could also add to supplies, said CIBC economists Benjamin Tal and Katherine Judge in a note Friday.
“Forced sales will add to supply, and probably outweigh the offsetting impact of reduced supply of new units.”
They predict large swings in both supply and demand in the coming quarters, and expect to see average prices down five to 10 per cent relative to 2019 levels when the market stabilizes.
“By 2021, as the economics of housing returns to fundamentals, we expect an array of factors to result in a weaker market with some downward pressure on prices.”
This report by The Canadian Press was first published May 4, 2020.