BCREA Market Intelligence: Housing Supply and Demand During the Pandemic
This Market Intelligence Housing report was created by BCREA in October 2021. You can find the full report here.
During the COVID-19 pandemic, the demand for housing surged across BC despite a severe recession and closed borders. As a result of the crisis and lockdowns, homebuyers prioritized square footage over characteristics such as proximity to the urban core. This preference shift generated considerable relocation demand as square footage could be more easily purchased in smaller, less densely populated regions. Home prices rose in smaller markets, which did not have adequate housing supply to absorb the large and sudden increase in demand.
In this Market Intelligence, we use a novel modelling approach to estimate the total number of interested buyers over the course of the pandemic and highlight which regions suffered the most severe imbalances of supply and demand.
The unusual circumstances of the COVID-19 pandemic produced an unexpected and substantial increase in housing demand while the supply of listings fell.
As a result, buyers outnumbered sellers by as much as 2.5 to 1 in some months with markets in Victoria and the Fraser Valley seeing more than 7 potential buyers for every seller.
While demand has normalized somewhat, most provincial markets remain severely under-supplied and therefore far from balanced.
A major theme observed during the pandemic was the relocation of buyers into less densely populated areas of the province. That trend is evident in our estimates for demand in BC’s Interior. Like all of BC, the buyer-toseller ratio in the Interior trended at a lower level prior to the pandemic following the introduction of the B20 mortgage stress test in 2018. During the pandemic the ratio briefly fell before surging to record levels. It then receded as frenetic market activity, rapidly rising prices, and dwindling supply may have discouraged potential buyers.
Interestingly, markets in the Okanagan and Kamloops are estimated to have had a much more acute imbalance of supply and demand during the pandemic compared to the Kootenay. In those markets, we estimated that during the peak months of market activity, buyers outnumbered sellers by as much as 3 to 1.
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