April 2020 – Latest Market Update
Tony Iannetti
other
Home buyer demand continued to outpace supply up until halfway into March and then levelled off significantly since then. Inventory levels were and continue to be below the seasonal averages and home prices were on a steady rise. The impact on the demand from the COVID-19 was not a surprise but the bigger question now is what we can expect to experience in the coming months. The improvement in the number of virus cases being reported in BC and the so called flattening of the curve should help minimize the impact to the real estate market. I suspect prices will be resilient to any downward pressure.
The prime lending rate has fallen nearly 40% (1.5%) in the past month and currently stands at 2.45%. Fixed rates did fall significantly too but banks quickly adjusted these rates along with the spreads on variable rate mortgages. Fixed rates are now higher by nearly 30% and for the most part are being offered around 3%. Variable rate mortgages that were being offered as low as Prime -1% are now as high as Prime +0.20%. It has been reported that banks adjusted the rates as such to reflect higher risk in real estate lending as a result of the COVID-19. That being said, every major nation in the world will be challenged to stimulate their economies and there is little doubt that low rates will be required to help us recover from what is expected to be the worst recession ever faced by the world.
Latest stats for March 2020:
- Consumer prices fell 0.40%. The largest decline in over 5 years.
- Inflation cooled to 1.5% y/y.
- GDP fell 9%. The largest drop ever recorded.
- Canadian employment plummeted and the unemployment rate is nearly 8%.
- BC lost 132,000 jobs and the unemployment rate is just over 7%.
- Canadian housing starts decreased over 7%.
- Home sales in Greater Vancouver increased 46% y/y.
- Total number of homes listed for sale in Metro Vancouver decreased 25% y/y.
My thoughts are with you during these challenging times and many solutions are available to help you with financial matters. Whether you need your mortgage payments deferred, need short term financing, or assistance to navigate the Federal or Provincial support programs – I’m just a click away.
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