We hope that you and your families are staying healthy physically and mentally in one of the most trying periods of our collective lives. The Coronavirus is proving to be the ultimate leveller.
Last week the B.C. Provincial Government declared that realtors were an essential service. While we consider it business as usual, it is with a totally revised protocol; it is our civic duty to make sure that our family, friends and clients are kept safe.
Sotheby’s has traditionally had an exceptional reach through various internet sites. This has now become integral in the way we do business. Kirsten and I are gearing up to do virtual open houses on some of our listings which we feel would be appropriate. Alternatively, we are offering buyers private virtual walkthroughs using video conferencing tools to ascertain the suitability of a property prior to a physical visit.
The first quarter of 2020 looked really good for the luxury market with 9 sales reported over $3M in the Victoria Real Estate Board region. The top 5 sales were Sotheby’s sales including a record sale at $7,680,000 on Beach Drive and another on Lands End Road at $7,563,000. Compared to 2019, January saw sales up 24.9% and February sales were up 33.7%. At the lower price point - up to $1M, we were seeing many multiple offers. It was looking like 2020 would be a really good year for sellers, and then the COVID-19 pandemic was declared. March saw sales drop 5% compared to the same month last year.
While showings have become extremely rare, we are seeing an uptick in on-line viewings on our listings. People have the time at home now to do some virtual exploring and there is the view that once self-isolation ends, the market will see a flurry of activity. There is also the belief that Canada’s handling of the virus will encourage foreigners to Canada and at 0.71 cents to the US$ (April 2, 2020), the exchange rate for Americans is extremely attractive.
The Bank of Canada announced two unscheduled rate cuts in March for a total of three rate cuts. The bank rate started the month at 1.75% and is now at a crisis-level of 0.25%. This is enabling some excellent rates for buyers confident to go forward with a purchase. Meanwhile, some of the banks are offering clients to skip a month’s mortgage payment without penalty during this challenging time.
Royal Bank of Canada is calling for a substantial pullback in home sales this year with a rebound next year. “Canada’s housing market will slow to a crawl this spring as Canadians follow social-distancing orders in order to combat the spread of COVID-19,” said bank analyst Robert Hogue in a report.
Hogue said home prices could stay stable in the near-term as both buyers and the new listings pull back, but expects the composite benchmark price to fall 2.9% in the second half of this year compared with last year. “In a matter of weeks or months, surging unemployment and the market’s illiquidity will compel a growing number of tight squeezed sellers to make price concessions.”
The trends could reverse next year as low interest rates, a strengthening job market and a bounce-back in immigration help sales to surge more than 40% in 2021 and price dynamics also return to favouring sellers, Hogue said.
We are only a phone call away and look forward to connecting with you.
With best wishes!
Glynis & Kirsten