The home office has shifted from a want to a need on most home buyers’ criteria.
I need a home office…now!
COVID-19 leaves no stone unturned, and Metro Vancouver’s housing market has felt the effects as well. After a near market shutdown, home buyers have shifted their demand towards larger homes and away from densified city dwellings. 2020 started off with robust market activity continuing the trend from the final quarter of 2019. With the onset of COVID-19 in North America, much like businesses everywhere, the real estate sector came to a near grinding halt in March and April which are traditionally two of the busiest months in real estate sales. As economic activity began to re-open, we also started seeing interest rates decline across the nation as the government pushed to stimulate spending. As the public adhered to new standards of property viewings, consumer confidence began growing, along with a new focus in housing demand. Buyers had begun to recognize that the pandemic was here to stay and that if they were going to be stuck at home, they needed more home.
Offices remained closed and the shift to ‘work-from-home’ became the new normal. Schools were closed and children were home more of the day. Homes became fuller and space became a commodity. Fast forward to today, and we can see that three main factors combined to impact Metro Vancouver real estate and drive action in 2020:
1. Low cost borrowing.
In a matter of months, home buyers went from locking in their mortgage rates in the range of 2.5% - 3% down to a range of 1.75% - 2.2%. This can amount to 10% - 15% less in actual dollars spent per month on the borrowed amount (i.e. paying $400/month for every $100,000 of mortgage debt as opposed to paying $440/month). The effect of this means that home buyers are capable of qualifying for a higher mortgage, and can also afford higher mortgages due to lower monthly payments. With more purchasing power, buyers are able to look at higher price bands which puts greater competition on listings with more space.
2. Work from home, school from home, play at home.
Most home owners purchased their home without factoring in space for a regular office set up or designated areas for children to learn. With skyscraper offices closed and schools adapting to online learning, suddenly families were spending most of their days at home. With the space in a condo or a townhouse now feeling cramped, buyers throughout Metro Vancouver have shown a strong interest in and taken action in buying larger homes. Demand has shifted towards detached houses, duplexes, and townhouses. Additionally, with community amenities being closed or offering limited access (e.g., gyms, swimming pools), families have shown an increased desire for private outdoor areas in the form of yard space, balconies, and rooftop decks.
The charge towards more space has also resulted in greater suburban sprawl. Home buyers have shown increased willingness to move away from centralized city hubs in order to avoid the density that comes with it. In other words, Downtown condos have seen less love than suburban communities that offer greater square footage.
3. A shifted Spring market.
Real estate sales activity is typically busiest in the Spring, from March to May. Having business activity largely shut down during those months meant that the typical schedule has shifted. We were left with a level of pent-up demand that has been let out through the rest of this year. Rather than having sales spread out throughout the 12 months, we saw buyers sit on the sidelines for a few months before seemingly all returning to the market over a condensed period.
So - what is the net result of all this?
Not unlike many years in the world of Metro Vancouver real estate, the prevailing story has become about rising prices. From September 2019 to September 2020, the benchmark price for homes has increased 5.8%, with detached houses leading the way at 7.8% growth.
Even in a global pandemic, one thing certainly remains normal: home prices in Metro Vancouver are on the rise.
If you are looking to learn a little more about 2020 real estate trends or are beginning your path towards home ownership, you can email me anytime at adil@adilkhimani.com.
Thank you for reading,
Adil