My top 3 predictions as to what we should expect in 2021 in the Vancouver real estate market.
But before I share with you.. I do want to let you know that as someone who is still very much actively trading in real estate, boots on the ground. I am a huge proponent of knowing my numbers, being that knowledge broker, so my predictions are very much rooted in what I have seen and what I’ve experienced in 2020 and the years of analyzing the real estate market that I have so much love for.
So, let’s into the top three predictions…. Home prices are expected to go up anywhere between 6% to 8%.
And this number is pretty conservative. I truly believe that we are going to see an increase in 2021.
And many of you are going to say Teresa where’d you come up with such a crazy prediction?
If you look all the way back in the early 80’s, yes almost 4 decades, you’ll notice that we’ve actually averaged a 7% growth year over year, again. …the average property in Vancouver was trading for …. and the average property encompasses all housing types, detached, duplexes, townhomes, condos, etc.
The average property in Vancouver in 2019 was trading for …. and the average property encompasses all housing types, detached, duplexes, townhomes, condos, etc.. for $993,738…. fast forward to 2020 that average property was now trading at $1047,400. So, that is a 5.4% increase year over year.
So when I predict an increase… I have a pretty good feeling that that’s what we’re about to see in the freehold market.
With the vaccine being released, historically low-interest rates, which is here to stay through most of 2021 and the high levels of immigration targeted by the federal government in 2021, and still the lack of inventory of homes for sale, this will only continue to fuel the multiple offer landscape aka “the bidding war” and thus driving prices up.
Interesting to note that although there was a sharp increase in multiple offer situations in Q4 of 2020, I saw that most buyers who are throwing their hat in the ring, were not blowing other offers right out of the water.
This should give buyers a lot of confidence in those other buyers who are interested in purchasing the homes are doing so more in line with their budget and affordability at the forefront of their decisions. I think that this has a lot to do with COVID and how a lot of people saw either their employment change quickly due to the shift in the economy and or people became much more conscious of their spending habits.
Thus people have been forced to live within their means and thus not blowing their budgets to get into the housing market.
Prediction 2 - The condo market will begin to slowly climb back up but I don’t think to the pre-pandemic levels of early 2020 and should see a 5% increase year over year for an average condo in Vancouver.
Now the condo market, especially downtown, was obviously impacted greatly due to COVID, as we all know how heavily this market is influenced by net immigration so how quickly it will rebound will largely be due to how readily the vaccine is for those looking to take it, how quickly and safely the economy begins to open up and the rate in which people come back to Vancouver and lastly what the landscape for in-person learning will look like for all of the incredible post-secondary institutions in Vancouver. These factors should absolutely be the ones you keep an eye on, especially if you’ve been relegated to the sidelines of Vancouver real estate market because of the soaring condo prices and are looking to get in.
Now, how quickly this immigration happens will most certainly impact prices and as more inventory gets sold, we will begin to see a tightening of supply which you all know puts upward pressure on the price. Now, if we see a massive influx of net immigration this year we will absolutely see the condo market much hotter.
I am not saying that it's going to happen overnight but if the net immigration comes in, the borders are open and everyone starts to flood into the market it could be quite a quick increase in pricing.
Prediction number 3 is that the bank of Canada’s overnight rate will remain at .25% for 2021.
And as such the variable rates for mortgages will largely stay put or untouched however there is a good chance that the fixed rates for mortgages will slightly begin to increase by the end of 2021.
We’ve seen various fixed rates hover in and around the range of 1.5% and we have seen variable rates come in under 1% for the first time ever and that was from HSBC in December. Now, that rate was only given to those who required an insured mortgage who had less than 20% down. Fixed rates are going up and you’re going to That prediction is really based on confidence levels going up. so if the confidence levels go up, the economy begins to open up, Vancouverites become vaccinated.
This type of confidence will only strengthen the economy and have more people come into Vancouver. With this strengthening of the economy, there will be a gentle nudge upward of the bond yields. Although there are many factors that impact mortgage rates, the single greatest factor that impacts mortgage rates in Canada is the government of Canada bond yields. We know that with mortgage rates and as mortgages carry more risk, they’ll also ultimately be priced higher to compensate for this risk. So, if we see the bond yields go up we most certainly will see the mortgage rates go up as well.