Job losses in January far exceeded the predictions, with Canada’s economy shedding 213,000 jobs. Most of the jobs lost, however, were part time positions in sectors hardest hit by pandemic-related restrictions, indicating that they may be relatively quick to return when restrictions are lifted. Despite job losses, Canada’s real estate market remains hot, with industry insiders predicting that the current upward trajectory of sales and prices will continue into 2021. Yet, with increasing housing prices comes challenges to affordability, as saving for a down payment has never been harder while housing in some regions in BC has now been priced out of the reach of the local residents.
IN THE NEWS
Canada’s economy lost 213,000 jobs in January – five times more than economists were expecting. Almost all the job losses came from Ontario and Quebec which lost a combined total of 251,000 jobs mostly in the retail, accommodation, and food service industries. These losses were offset by slight gains in several other provinces while job numbers in BC remained steady. Leah Nord with the Canadian Chamber of Commerce is calling for new strategies to manage the pandemic, such as increased use of rapid testing, to try and bring back a sense of normalcy and allow employees to feel safe and protected when they go to work. Without new strategies, Nord worries that the pandemic may structurally alter the Canadian economy and labour market in ways that cannot easily be repaired. However, BMO economist Doug Porter sees some reason for optimism in the employment numbers; he reports that the majority of jobs lost were part time and heavily concentrated in restricted sectors which indicates that those jobs could quickly return as restrictions ease.
Despite the overall job losses in January, housing sales in BC are expected to continue to be strong in 2021. According to the BC Real Estate Association (BCREA), 2020 saw an increase in residential sales over 2019 by 21.5%. Sales in Metro Vancouver and the Fraser Valley broke records in the month of December, while housing prices in the Okanagan surged more than 37% over December 2019 prices. With housing supply in the province currently sitting at near-record lows, this upward trend in both sales and prices is expected to continue. The BCREA has forecasted that 2021 will see the highest number of sales since 2016 when sales and home prices in Metro Vancouver made international headlines for their stratospheric climbs.
https://vancouversun.com/news/local-news/2021-home-sales-will-rival-2016-boom-year-says-b-c-real-estate-association ; https://vancouversun.com/news/local-news/b-c-home-sales-up-more-than-20-per-cent-in-2020-bcrea-report
Unfortunately, surging real estate prices in the Okanagan have negatively impacted housing affordability in the region. According to a recent housing assessment conducted by the Regional District of the Central Okanagan (RDCO), the median income of a couple in Kelowna is no longer sufficient to allow them to purchase a townhouse or single detached home without spending more than 30% of their income on their mortgage. It is even worse for single parent or single person households who cannot afford any home options, including condos. In West Kelowna, the most affordable community in the Central Okanagan, a couple making the median income can afford to purchase a condo and stay within 30% of their gross income on mortgage payments, however townhomes and houses remain out of their reach. The City of Kelowna and RDCO have said they intend to use the information in the report to plan for the future, however the Okanagan is one of the fastest growing regions in the province and even with more housing units being built there is still a lack of affordable housing options to meet the current needs of the community.
In addition, the National Bank of Canada housing affordability monitor has reported that saving for a down payment has never been harder. With housing prices rising at the fastest pace in 11 years, at the national level it would take a median-earning household 60 months to save up a minimum down payment on a house – the longest it has been in 40 years of home-affordability records. Affordability is even worse in Vancouver, the country’s least accessible housing market, where at the median income it would take 58 months to save up a down payment for a condo, or 409 months – roughly 34 years – for a down payment on a detached house. In their calculations, National Bank has assumed a 10% savings rate and a 6% down payment. Housing forecasts are not predicting much relief for homebuyers soon, with Royal Bank of Canada predicting that the benchmark price of a house in Canada could rise another 8.9% in 2021.
BC UNEMPLOYMENT RATES
https://srv129.services.gc.ca/ei_regions/eng/rates_cur.aspx ; https://www.workbc.ca/labour-market-industry/b-c-s-economy/labour-market-snapshots.aspx (*actual unemployment rates for the regions)
|Regions||Rate from January 2021 to February 2021||Rate from December 2020 to January 2021|
(North Coast & Nechako 6.3%*)
(North Coast & Nechako 5.6%*)
(Vancouver Island/Coast 7.1%*)
(Vancouver Island/Coast 7.3%*)
REAL ESTATE ACTIVITY (RESIDENTIAL) BY REGION
Greater Vancouver (https://www.rebgv.org/market-watch/monthly-market-report/january-2021.html)
- Units sold: 52.1% increase from January 2020
- Active listings: 3.6% decrease from January 2020
- New listings: 15.7% increase from January 2020
- Benchmark price: $1,056,600.00 (5.5% increase from January 2020)*
- Units sold: 57.2% increase from January 2020
- Active listings: 32.5% decrease from January 2020
- Benchmark price: $932,000.00 (8.3% increase from January 2020 for detached homes)*
Fraser Valley (http://fvreb.bc.ca/statistics/Package202101.pdf)
- Units sold: 76.4% increase from January 2020
- Active listings: 18.1% decrease from January 2020
- New listings: 25.6% increase from January 2020
- Benchmark price: $1,106,500.00 (15.2% increase from January 2020 for detached homes)*
- Units sold: 66.91% increase from January 2020
- Active listings: 32.29% decrease from January 2020
- New listings: 10.53% increase from January 2020
- Average residential price: $528,894.00 (27.40% increase from January 2020)
Northern BC – (https://www.bcrea.bc.ca/economics/a-record-setting-start-to-2021/)
- Units sold: 51.1% increase from January 2020
- Active listings: N/A
- New listings: N/A
- Average residential price: $339,608.00 (12.6% increase from January 2020)
*price based on the Home Price Index