This Recession is going to be different for the BC housing market

This Recession is going to be different for the BC housing market

April 24, 2020

Within the past 40 years the Canadian economy has suffered three larger recessions. Using the data from these previous recessions the BCREA has concluded that, due to COVID-19, BC will go through another deep recession indefinitely. Assuming the recession started in February it is predicted that this one will be shorter than previous recessions, with the average being roughly 16 months. As COVID restrictions are slowly lifted, record low interest rates and pent-up demand should lead to strong recovery in the BC housing market.

In the first quarter of 2020 the Canadian economy is expected to contract 4% and an alarming 21% in the second quarter. There are a number of ways to reduce these numbers including; ensuring that workers are still getting paid even if quarantined, ensuring that firms are allowed easier borrowing terms, and reducing the duration of current restrictions.

Unlike past recessions that were caused by greed or collectively poor business decisions, this is largely self-induced for the greater good with humanity more in control of when to turn the taps back on.

In BC it is expected that home sales will decline 30-40 percent year-over-year in April. It is predicted to remain this way through the summer and then return to its unit annual pace by the beginning of 2021. BC has produced staggering numbers of increase in home sales in the year following each recession. In 1982 home sales increased 31% and in 1991 sales increased 46% and in 2009 home sales increased 24% leaving BC with an average of 33% increase in sales in the year following the recession. At this point in time it is not possible to avoid a recession but given the nature of this one it is expected to be much briefer compared to others.