The thing we in the Real Estate industry hear the most these days is “wow you must be loving this red hot market” however, for the vast majority of us that is not the case. Realtors® who have made working in this field a full time career are struggling right now as they are not able to do what they feel is their best work. Working with Buyers is emotional at the best of times but couple that with prices rising on a weekly basis, writing sometimes as many as 5 offers until they get one accepted or seeing the Buyer being priced right out of the current market is heart breaking. While Sellers are getting record breaking prices for their homes, many are making some other form of purchase which suddenly sees them on the other side of the transaction with the stress of a Buyer. Oh – then there is the part where all of us are dealing with a global pandemic.
When we review sales data we tend to look back year over year, or the same month from the proceeding year to the current month, but given the lockdown began mid-March of 2020, the data is very skewed. While real estate remained an essential service, the uncertainty about how COVID-19 was being transmitted and how infectious it was, changed all of our day to day behaviours. Sellers took their homes off the market, provincial orders meant we could not access places with tenants, tenants could not be given notice to end tenancies and buyers were not prepared to enter properties. This continued until late June when things became a little clearer on how to stay safe and lockdown restrictions began to be lifted. As we moved into the summer, real estate activity began to ramp up and by the fall we saw the buyers flow into the market.
There are many reasons for this sudden surge. People wanting to leave the confides of urban settings, more space to work from home, more space to home school children, generational housing needs, family moving from other areas to be closer to loved ones, shift in lifestyle choices. For many in the Lower Mainland, Squamish is a logical choice, close to everything but a smaller community that sits on natures doorstep. Then in turn we saw long time Squamish locals wanting to move for many reasons, take this influx of buyers to achieve record sale prices for their properties. Coupled with needs of existing residents to move up or down in the housing continuum, the scramble began.
At this point we have still not achieved the record number of sales that occurred in 2016 but we are now on track in 2021 to see that record eclipsed. There are some differences in the current market that do vary from 2016, lower interest rates, more money flowing out of family wealth to assist in purchases, the major shift in lifestyle, and needs brought on by COVID-19.
While all the talk about the “hot market” started in January you can see by the numbers below that the last quarter of 2020 in total sales volume saw more transactions occur. The bigger problem in the first quarter of 2021 has been the increase (sometimes on a weekly basis) of prices. The inventory of listings is 18.9% below the 10 year average for March, and the same conditions applied in January and February. Low interest rates have allowed buyers more flexibility in purchasing decisions and many have more savings as they are not spending it on travel, entertainment or dining out. What has been very different in the beginning of the year is the number of multiple offers that have occurred on the vast majority of properties. While there have been markets in the past that this has happened, it has never been to the extent we have been experiencing. We have seen townhomes with as many as 18 offers, homes with 12, and when this happens, a pricing war begins which sets the new price point for the next property to the market.
So, what does this all mean? Good question. Low inventory, low interest rates and people who have little control over many aspects of their lives can control where they live and want to buy now. There is the potential the Federal Government might try to cool the market by imposing a new stress test for mortgage qualification which may or may not help? It may cause the current panic to accelerate as buyers will need to get into a mortgage before the rules change? In the long term, the under supply of product is the biggest issue facing the housing market and until that problem starts to change, we should expect prices to remain high and we will see more buyers than there are homes.
Information deemed to be accurate, all information taken from the MLS Database, April 2021