COVID-19 (novel coronavirus) hasn’t yet put a major dent in the Canadian commercial real estate or housing markets, but a great deal of uncertainty remains surrounding the potential impact of the global outbreak.

“We are already beginning to see the impact of the virus with international buyers,” Sotheby’s International Realty real estate agent Paul Maranger told RENX.

“Air Canada recently cancelled direct flights between Toronto and Hong Kong. With cancelled flights from Asia, and a possibility…Click here for full article.

Prices in February had an average sales price of $666,769. Signalling a 6^th month in a row of a 1% price range. Prices have held in correction territory with prices down 11% from the peak which occurred January 2018 with prices at $751,632. We still expect volatility to impact the condo market in the upcoming months. Up first will be a retest of the lower middle threshold of $635,000, which would bring the market down a further 5% from current levels. Once that level fails the next price level test would be $600,000. Ultimately we forecast the bottom of the Condo market to occur in the early part of 2021 with around $525,000 a 30% correction from the peak.

Eitel Insights has heard that some condos have been receiving multiple offers. We are not surprised by this short lived reality. We have been stating that there is a great opportunity to sell. With low inventory in the market, there is a lineup of potential purchasers that are eagerly awaiting property priced listings. When one such listing has come to the market those buyers have entered into minor bidding wars. A warning though, as each listing is purchase that has the forced effect of lessening the potential buyer’s pool.

After this imbalance between supply demand is corrected prices will again decline to previously established prices. In other words continue lower in the current market cycle.

There were 1064 sold properties in Feb mirroring the number from December just a few months ago. A large portion of purchasing occurred in the 3^rd and 4^th quarter of 2019 that is in large part due to popular areas around Greater Vancouver had dropped 20% – 30%, which in turn brought the sidelined buyers back into the purchasing game.

The trend is your friend, there are powerful downtrends in play with the sales totals. While the sharp rebound uptrend has been nullified. Eitel Insights does believe a higher low has been put in place, however, the market also seems to have found an artificial top that the sales cannot overcome.

The Inventory increased roughly 700 listings from January. Totalling 3700 Active listings in Greater Vancouver in February. With spring rapidly approaching we anticipate a rather substantial jump in listings over the next few months.

Throughout spring and summer the inventory regain the 5000 active listing level, we are confident. A repeat test of 6000 is a likely possibility as well.

The frenzied presale market of 2016 is beginning to rear its ugly head. Those pre sold properties are just beginning to hit the market. Some buildings are seeing 25% of the building for sale while an additional 25% of the building is for rent. Meaning 50% of the building is available in one way or another. This does not bode well for the overall market as this is just one early example.

Major losses in the Real Estate portfolio could have been mitigated by all-time high levels stock markets. The Dow Jones (DJIA) recent decrease from 29,500 to under 24,000 which has a major impact to the bank account.

Add it all up and you shouldn’t be surprised to see prices decrease a few levels lower than they are currently selling for in the not too distant future.

We have stated the past few months have been a great opportunity to sell. Here is some proof we were correct again. The Days on Market of sold properties dramatically decreased month over month from 43 days in Jan to only 31 in February. We anticipate this trend will continue for the next few months until the inventory levels surpass 5000 active listings. This opportunity to sell with less competition is rapidly closing. Eitel Insights urges those thinking of selling to act now before you become another casualty of this upcoming chaos.

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The Condo Market’s average sales price has not moved in the past 5 months. The initial portion of 2019 tested the middle threshold of the Condo market current market cycle. After a successful defense, property values rose in September for the first time in over a year. That resulted in the market average rising to $673,328 in September 2019. January 2020 prices came average came in at $665,190.

Lower highs, and higher lows in pricing since September 2019 have created a divergent trend that needs to be resolved. A market cannot sustain itself inside of a 1% range, expect some volatile movement upcoming to the condo market. The Condo Market has remained 11% off the peak in pricing since the September data point.

Inventory is inextricably linked to the sale prices. Since the September data point the inventory broke out of the uptrend, which had pushed inventory to 6000. Simultaneously instigated the divergent trend in the price chart. After Septembers break to the uptrend the inventory seemed to be in free fall. The inventory bottom occurred in December with only 3025 active properties while January came in with 3390 active.

Now would be an excellent time to take advantage of the nominal inventory level for sellers. Why wait until the market is again flooded with listings. Just as Eitel Insights guided sellers to take advantage of the stress test mitigation in the detached market. Which resulted in the detached average price increasing by $163,000.

The current opportunity to sell at higher prices will not last, as the completion of many newly built building begins. The market will flood with new units for sale that will debilitate the resale market. Take advantage of the calm before the upcoming storm.

Sales have broken out of the aggressive uptrend that had been prevalent in the latter half of 2019. In January 2020 the total for the Condo market came in at 815 sales. The sales numbers are quite higher on a year over year basis, and likely at the lower third of the newly forming market cycle in the Condo sales chart.

Eitel Insights suggests that buyers hold off until the inventory levels return. Once the inventory returns you will see the competition amongst sellers intensify. Resulting in more negotiating power and an abundance of listings to enjoy perusing during the weekends.

The Days on Market for sales in January was 43 signalling a lower DOM than December, which is to be expected. Eitel Insights believes that that DOM will continue to lower as we head into the spring market. Properly priced listings will be purchased. Again our advice to sellers is to take advantage of the current absence of competition before the wave of listings ensues.

Not all markets are created equal while some fall other rise. Become an Eitel Insights client and receive Actionable Intelligence on Real Estate across Canada, visit our website. www.eitelinsights.com

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