April Market Update

“The first two weeks of the month were the busiest days of the year for our region with heightened demand and multiple offers becoming more common,” Ashley Smith, REBGV president said, “Like other aspects of our lives, this changed as concerns over the COVID-19 situation in our province grew.”

“Many of the sales recorded in March were in process before the provincial government declared a state of emergency. We’ll need more time to pass to fully understand the impact that the pandemic is having on the housing market,” Smith said.

“In recent weeks, REALTORS® have been working to help and guide their clients through this uncertain period. Many people have understandably chosen to put their home buying or selling plans on hold for now. Other people have more urgent housing needs and we’re trying to work with them to address these needs in the safest and most responsible way possible.”

“Realtors were named among the province’s list of essential services last week,” Smith said. “This means that we have a responsibility to do what we can to help residents meet their housing and shelter needs while strictly following the most up-to-date public health orders and physical distancing requirements from our health officials and government agencies.”

BCREA chief economist, Brendon Ogmundson, “All that demand is really still there. We just need to get past this current kind of unusual situation,” Ogmundson said, “A lot of those jobs hopefully will be coming back and we’ll be coming back into very low interest rates and a lot of pent up demand. We should see a pretty big bounce back once this does end.”

COVID-19 has caused businesses to close, many layoffs and terminations, essential services to chang the way they do businesses in a short period of time. We have had to change the way we handle listings and the way we view properties with buyers.

We spoke to Lorne MacInnes, Ferguson Moving & Storage recently, “We’re taking extraordinary precautions to keep our customers and workers safe. We offer virtual video quotes now too, if you prefer versus in person quotes. We’ve made about 4 months of changes in 2 weeks but safety trumps all changes. If you need anything our office is available. We’re very busy trying to move as many as we can because a lot of smaller companies couldn’t adjust and closed”.

Sabeena Bubber, Xeva Mortgage says, “I have many people calling me to renegotiate under the misconception that interest rates have dropped.  Prime Rate has been dropped by Canada.  For almost all lenders, prime is currently at 2.45% – this means that if you have a variable rate mortgage or a line of credit that fluctuates with prime that your interest rate and often your payments will drop as well. For clients wanting to renew their mortgages, refinance or purchase, the interest rates were all increased since March 13th when this crisis started to hit home. We have seen an increase of fixed and variable rates of ¾% on both fronts. So borrowers wanting new credit or think that they can lower their rates, likely are out of luck to do so. Why Are MORTGAGE RATES INCREASING when the prime rate has dropped? 1) LIQUIDITY – In short, banks don’t want to run out of money (or have a major shortage of money to be able to lend out)  We would have major problems if we were in that situation.  The government would need to bail them out so all of us can withdraw our money we have (more or less) and for businesses to continue to keep their doors open, assuming the government is in a position to do that.   Currently the government is dishing out massive funds to keep the economy rolling so hard to say if they could bail out the banks too. 2) Banks have not been passing on the decrease in rates, because they are BUILDING A BUFFER for losses (to avoid some of the carnage I mentioned in 1-above). 3) BONDS – fixed rate mortgage money is often sourced from bonds – as the demand for bonds goes up, so does the rate on that bond. Therefore the mortgage rates (flip side of the bond), increases at the same time”.

From a BIV article April 1, 2020, Richard Bell, Bell Alliance speaks about a buyer’s inability to get out of a purchase contract and the ramifications. He also “said he is seeing some collapsed home purchases at his law firm, but this is not currently his key concern in terms of real estate conveyancing. He pointed to rules of social distancing and quarantining making it virtually impossible to comply with legal requirements that home buyers and mortgage consumers be present in person to sign contracts, along with their government ID.”

“It’s a major roadblock to closing home purchases right now,” said Bell. “Different lenders require different things. But some are literally requiring that we go round to quarantined clients’ homes and have them show their ID to us through the window. It’s ridiculous. Hopefully it will change before long, so we can do it by video. We’re trying to get this up the chain of command.”

Lawyers are still working and preparing documents etc. Real Estate has been deemed an essential service in BC, so the lawyers, land title office, movers etc are all working, but it is definitely not business as usual. We have been advised to provide our clients lawyer information at the time of submitting subject removal documentation to our office. We are continuing to advise clients to use lawyers as opposed to notaries. We feel this is now more important than ever. The other thing we need to do is ensure the closing is not too fast to allow time for lenders and lawyers to prepare. We feel that closings can range between 45 to 90 days. With 60 to 90 days being more preferable.

One important consideration and a potential hiccup that can arise on closing is the possibility of cleaners cancelling or not being available. We have seen this happen. We are writing a clause in any contracts going forward that the seller must have the property professionally cleaned and have a holdback in place to protect our clients in the case the sellers’ cleaner cancels. We are also recommending to our clients that they have their own cleaners booked.

Rent day came and went. The Vancouver Sun reported on what has been happening on the rental front. We have seen some heart-warming stories and some sad stories where renters are concerned. Tenants already due to leave recently purchased properties, where the new owner intends to occupy the home, will still be evicted if notice was before March 30, says a Vancouver lawyer.

Lenders are checking if buyers are still employed before funding, even if clients have previously been given an approval. We haven’t seen anyone unable to complete on a purchase yet, but it is a possibility. Appraisers are asking that drapes and blinds be left open so they can peek inside the windows rather than enter the home. We have fielded calls from appraisers asking for guidance regarding value and information.

The ways we are viewing and showing homes has changed. The REBGV has prohibited open houses. The expectation now is that buyers have viewed all available information on a prospective property very thoroughly before asking for an appointment. Buyers need to view photos, videos, floorplans, title documents etc and then drive by first. If after that, they still wish to view, we are asking for a questionnaire to be signed and acknowledged. The questionnaire is intended to limit the number of visitors, confirm buyers are not ill, haven’t travelled, agree not to touch anything, nor sit on furniture etc. This is our new normal. In the interest of everyone’s safety and good health, it’s important to be very selective about allowing buyers inside a home.

Since January, we have seen a flurry of activity in the market that resulted in some price increases. This was not across the board and tended to be below the $1,500,000 threshold. While we are in a temporary slowdown at this time, we feel that there will be limited inventory given the COVID crisis. Buyers out looking will also be limited, yet serious. Properties are still selling but the sales have slowed significantly. 9 homes sold in North Vancouver in the last 2 week period since March 15th, compared to 38 homes sold from March 1 to March 15.  In the month of February, 80 homes sold.

North Vancouver detached market was a seller’s market in March with a sales ratio of 25%. On average, most homes are selling for 97 per cent of list price. Sellers in Upper Lonsdale, Lynn Valley and Canyon Heights did well last month while buyers found good opportunities between $2,750,000 and $3,000,000 and in Upper Delbrook, Edgemont and Forest Hills. On average, it took 22 days to sell a home in March that was much faster than the 65 days it took in January but on par with the 23 days it took in February. The sweet spot for sales was between $1,500,000 and $1,750,000 with good activity between $1,250,000 to $1,500,000 (63%), $1,500,000 to $1,750,000 (59%) and $2,500,000 to $2,750,000 (36%).

The REBGV stated that, “The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,033,700. This represents a 2.1 per cent increase over March 2019, and a 1.3 per cent increase compared to February 2020.”

Inventory in February was low and we saw buyers out in force at opens and the offer table prior to the state of emergency was announced. The low supply levels coupled with increased demand caused entry-level homes to sell in competition and over asking. The low levels of inventory, state of emergency and COVID-19 concerns will limit buyers. The good news is buyers will be serious. The current market environment is definitely cutting out the “hobby” home viewers. This is a good thing.

We are passionate about real estate and driven to do the best for you – our clients, family and friends. We love your referrals. Referrals keep our business thriving. Referrals and repeat clients are the core of our business. Thank you for your referrals and phone calls so far this month.

Now, lets get to the numbers…

The MLS® Home Price Index composite benchmark price for all residential properties in North Vancouver is currently $1,073,200. This represents an increase of 2.9 per cent from the MLS® HPI over the last year and up 6.7 per cent over the last 3 years, up 45.9 per cent over the last 5 years and up 68.8 per cent over the last 10 years. The numbers indicate that prices are improving. We need a few months more of consistent data to prove prices are improving and to get an indication of the COVID-19 impact.

There were 69 detached sales in March 2020, on par with the 71 detached sales recorded in February 2020 and 70 sales in March 2019. The benchmark price for detached properties was $1,551,400. This represents an increase of 2.5 per cent over the last year and a decline of 3.1 per cent over the last 3 years, an increase of 37.7 per cent over the last 5 years and an increase of 71.1 per cent over the last 10 years.

The detached market is a seller’s market with a sales ratio of 25 per cent and a build up of nearly 4 months worth of inventory. This tells us that 2.5 out of 10 homes were priced properly while 7.5 homes out of 10 were not priced properly and did not sell. The average detached listing sat on the market for 22. Homes are selling on average for 97 per cent of list price. The detached inventory peaked in May 2019 at 475 and has been declining since. Inventory was at 275 listings last month. Regardless of the COVID-19 crisis, we are still seeing homes listed and sold. The process has changed. Many homes were sold in the first few months of the year. Those sellers need to find homes to buy.

North Vancouver saw 99 apartment sales in March 2020 that is up from 73 sales in March 2019. The benchmark price of an apartment property is $582,800 (up from February 2020), a 3.3 per cent increase from March 2019. This represents an increase of 6.6 per cent over the last 6 months and an increase of 20.1 per cent over the last 3 years, an increase of 56.7 per cent over the last 5 years and an increase of 66.5 per cent over the last 10 years.

The condo market is a sellers market with a sales ratio of 36 per cent and a build up of over 2.75 months worth of inventory. The average condo listing sat on the market for 29 days less than the 35 days in March 2019 and on par with February 2020. Condos are selling on average for 98 per cent of list price. Nearly 4 out of 10 sellers priced their condos correctly while 6 out of 10 sellers did not.

Attached property sales in February 2020 totalled 26, on par with the 24 sales in February 2019. The benchmark price of a North Vancouver townhome property is $967,200, which represents an 1.5 per cent increase from March 2019. This represents an inecrease of 3.2 per cent over the last 6 months, an increase of 6.5 per cent over the last 3 years, an increase of 52.5 per cent over the last 5 years and an increase of 63.8 per cent over the last 10 years.

The attached market is in a seller’s market position with a sales ratio of 42 per cent and a build up of over 2.3 months worth of inventory. The average attached listing sat on the market for 23 days consistent with March 2019 and February 2020. Attached properties are selling for 99.1 per cent of list and nearly 4 townhome sellers out of 10 priced their homes appropriately for the market while 6 did not.

Looking for more info? Call us, we are always happy to help.

Data courtesy of the BCREA, REBGV, REALTOR® Report and SnapStats®