July had the highest sales numbers in Vancouver in over 3 years, and Canada-wide it was the highest single month for sales EVER. Last I checked we’re still in the middle of a global pandemic, unemployment is still around 11%, and there’s more global uncertainty than ever before, so what’s going on?

We’ll have to go back a few years to get to where we are now.

When the NDP was voted in in 2017 there was a lot of uncertainty about how it would affect the BC economy. They ran on a platform of reducing real estate investment and increasing taxes which scares investors, developers, and business owners in general. In 2018 Kennedy Stewart ran on a similar platform in his bid to become Vancouver’s Mayor, which doesn’t exactly help ease the minds of real estate investors, or homebuyers in general who understand that higher demand is likely to have a positive impact on their largest financial investment.

To the surprise of no one, Vancouver’s Empty Homes Tax and the province’s Speculation and Vacancy Tax were brought in to reign in demand and try and get housing prices under control.

We saw similar measures brought in in 2016 specifically aimed at foreign investors which we saw slow the market for a short period of time, before buyers realized that a ‘plunge’ in prices was not about to happen, and the market picked up substantially.

When the two new taxes were brought in, combined with the uncertainty of the new provincial and municipal governments, the market did slow down through much of 2018 and into 2019. Listings continued to increase while buyers sat on the sidelines waiting to see what would happen to prices, thinking that if they continued to wait they would get a better price later in the year.

At the start of 2019 inventory was still climbing quickly, but buyers had slowly started to reappear. The holidays had passed and their families had pressured them enough at the dinner table to stir them to action.

By summer, demand had finally caught up to supply and we saw total inventory start to fall (the sharpest drop in inventory in 4+years), and by October multiple offers were becoming more and more frequent, and this continued through to the holidays. January 2020 came and we had a relatively mild winter, so the market quickly picked up where it left off, and multiple offers became the norm by March, and we started to see 2016-like, rapid price increases. Subject free, way-over-asking offers. Even into mid-March when the news of COVID was already circulating, the market remained resilient.

Then on Wednesday March 12, the NHL announced the remainder of the season would be postponed. This was the moment where many Canadians really started to take note of what was going on in the rest of the world and how serious it was. The last time this happened was in 1919, 101 years before.

On Monday March 16, Trudeau announced that foreign nationals would no longer be allowed into Canada, and he urged Canadians abroad to come home while they still can.

The market petered off for the rest of of March, which was still surprisingly strong considering what had just begun. There was fear and uncertainty of what would happen in the short term and people stayed inside and worked on themselves (or played video games). Some predicted massive price decreases - which never materialized. Home sales fell but so did the number of listings and as long the two fall together, there’s no reason to expect price decreases. If there are only 10 properties listed but 20 buyers, there may only be 10 sales but prices will increase.

April set a record low for the number of sales, but by May, buyers started looking again, hoping to benefit from the reduced demand and avoid the multiple offers they would have been competing with two months prior. Buyers had to sign waivers and wear hazmat suits, but they were shopping. Interest rates had also been falling as Canada tried to restart the economy, with them now being at all-time lows. All of the buyers that were searching in March - forced to pause because of COVID - were back in full-force by June/July. They realized that for a long time, this is going to be the new normal, and they can’t put their lives on pause forever.

Bidding wars came back due to relatively low supply, which creates FOMO (fear of missing out) for buyers not already looking, believing that if they don’t buy now, the same property would be more expensive a month from now. With people now working from home more, many also realized that they need an office space now, or that they just don’t love their current home and decided it’s time to move.

There are a number of factors that came into play for July to be the busiest market in 3 years in Vancouver (or ever in Canada). Much of it was the pent up demand from the start of the year, but it was compounded by record-low interest rates. If COVID has taught us anything it’s how resilient Vancouver’s real estate market is; whether it’s new taxes, changes in government, or a global pandemic, all it seems to do is press the pause button before we return to business as usual. We can’t tell what the spring market would have looked like without COVID, but we do know that right now it is busy out there, and choosing the right realtor is more important than ever.