Two of the biggest burning questions in Real Estate come from both Buyers and Sellers. The Buyers want to know “will prices go down?” The Sellers want to know “will prices continue to rise?” Of course, these two situations keep each party trying to time the market and often their interests are in conflict. In the Real Estate industry, while being able to answer those two questions would be great, it is not something that we can do. We can only give information that will allow the clients the best chance at making an informed decision.
Looking back, historical information can be used as a good indicator of trends. There are lots of factors that can figure into why the housing market may move in one direction or another. Supply of product (too much or too little), mortgage rates, cost of construction, a major financial crisis as we experienced in 2008, or in this circumstance; a global pandemic. When you view the graph of home prices over time you will see that if there is a downturn in the market over the preceding 5-year period, prices not only rebound but they are more likely to greatly surpass the previous high. See the attached graph from the Real Estate Board of Greater Vancouver back to 2000 showing house price variation over a 20-year period. The extended graph back to 1977 is also available if requested. Even when the housing market was hit by a major unexpected crisis as in 2008 and 2020, the market responded promptly to return to growth in a relatively short time.
Normally when I do a market review, I would look back year to year to gather information on how the market has been behaving. However, there was little in the way of any meaningful transactions to report in the second quarter of 2020, while we were in the first lockdown. Then as we came out of the lockdown, pent-up demand, changes in living requirements, and the general feeling to get out to the urban environment took the market in directions that were unexpected and unprecedented. The last half of 2020 saw record sales numbers along with a slight increase in median prices.
January of 2021 started with a flurry of interest in the real estate market or perhaps just a continuation of the last half of 2020. When comparing sales between the last six months of 2020 and the first six months of 2021 in single-family and townhomes, the sales were down 7% and 5% respectively. While apartments saw 150 sales in the back half of 2020 and 152 in the first part of 2021, which far exceeds the average number of properties sold in a normal six month period.
The biggest takeaway so far this year is the increase in prices. This has been fueled in most part by the low amount of inventory that is available in a small market like Squamish. Single-family has seen the largest price increase at 20% in median price. The policy of the current municipal government has been to discourage or outright refuse to see this as an option for development in Squamish. This interesting approach may be short-sighted as the continued push of development towards more apartments and townhomes may backfire. When this group would like to move to different housing options, they may not be available, this could see people leave the community or cause an oversupply in the future marketplace.
Median price increase for townhomes from January to June is 18% and apartments are up 17.5% for this same period. Listings of townhouses increased by 21% but the sales to listing ratio remained the same at 76%. Apartments saw an increase of 8% in inventory but a sales to listings ratio of 93% which may be attributed in large to the affordability factor. The development projects at Sea and Sky townhomes and the Redbridge apartments both just off Highway 99 continue a steady pace of presales.
The simple answer to the two biggest questions is not simple. The market cooled off in June from the frantic pace of May in single-family homes, townhomes stayed the same, and apartment activity also dropped. This would suggest that while inventory remains low buyers may have an opportunity to take a little more time to make a buying decision. As people are taking the summer to visit family/friends or perhaps take a long overdue vacation, the activity for the summer market will remain a little slower. This of course does not mean that the fall will be as quiet but may take off once again when the focus becomes more on personal housing needs again. We do not sense that prices will moderate with this lull but hold steady to see what the fall could bring. Sellers if they have the desire to make a move this summer should be price conscious to catch the eye of the buyer who is somewhat distracted for the summer. The bottom line based on the current market is that prices will stay where they are, and sellers can take solace in those numbers if now is the time for them to move.
Information deemed to be accurate, all information taken from the MLS Database, April 2021