Happy New Year everyone! Karl, Sydney, and I would like to wish you all the best in 2021.
For many of us, the value of our home or investment property has a lot to do with whether 2021 is going to be a good year or not. For others, they simply want to get into the market for the first time.
Will we find the new home that we are looking for in this hyper-competitive market? Should we buy an investment property? And what are prices projected to do in the coming months? These are questions that we receive each and every day. Although we cannot predict the future - we wish that we could – we can share with you what we do know to help you make the best real estate decisions in 2021.
2020 started with a very robust market. Volume in January and February was up nearly 30% compared to 2019. That all changed in March when it was clearly apparent that the pandemic was going to be a major issue. Many were predicting that property prices would plummet, and that the sales volume would collapse. Even in May 2020, CMHC predicted a 9-18% drop in property values. They couldn’t have been more wrong. Although the number of properties sold in April and May hovered at about half of normal, by June volume was skyrocketing, making up for lost time and more. Residential sales in December, normally a relatively quiet month, were up 54% compared to last year.
Overall, the number of homes sold in 2020 was up by over 18%. That increase in demand has pushed prices for single family homes in our region up by 10%. Condo prices, on the other hand, suffered, and ended 2020 where they started. The pandemic has clearly created a desire among buyers, who can afford it, to have their own front door. Moreover, the lowest mortgage interest rates in recent history have increased affordability and have thrown more gas on the fire.
As we start 2021, the brisk pace of sales has left the market crippled with an unsustainably low inventory of available homes. More than one in three single-family homes in the last month had to be fought for in a multiple offer situation. The lower the price range, the more frequent the multiple offer situation. Even the condo market which was at best “balanced” for most of the year, is now showing signs of increasing competition and insufficient inventory.
For buyers, the good news is that the spring market usually brings far more inventory to the market. High property prices could help increase inventory, as builders are incented to bring more homes to market and investors release other homes for sale. Buyers should expect competitive conditions to continue for the next quarter, at least.
Potential home sellers should give serious consideration to taking advantage of the current extremely low inventory of homes for sale. Although many buyers prefer to wait until the spring to list their home, it could be easily argued that now, when there is almost no competition, is going to be the best time to sell a home.