Real estate markets have been affected across Canada with COVID-19 and it is interesting to see how this has parlayed into the Cranbrook Market. We look at unit sales for the year with comparisons against the previous two years, but more importantly we examine single family unit sales in the months of April and May.
2020 year-to-date we have seen 88 single family dwelling sales on MLS within the City of Cranbrook. A drop of 10% in demand compared to the 98 single family sales in the same reporting period for 2019. Average sale price in 2020 is currently $362,660 compared to $352,429 in 2019 or roughly 3% higher in 2020. Average days on market were 49 days in 2020 compared to 62 days in 2019.
The first quarter performed statistically well for 2020. COVID-19 began impacting the local markets in late March and will show its effect in the 2nd
quarter. The full impact of the stay at home isolation order was felt in the month of April with unit volume down 65% as there were only 12 single family sales compared to 30 in April 2019. May improved slightly with 18 unit sales compared to 24 in the previous year, or a 25% drop in demand. May had two weeks of Phase 2 with the re-opening of BC’s economy.
Real estate prices are always determined by supply and demand, and forces within the market. COVID-19 is definitely a force that has reduced demand in housing, but for how long we don’t know.
Supply is the other side of the equation that controls house prices. Currently, there are 79 single-family dwellings listed within the city of Cranbrook. May saw a total of 91 homes marketed. Supply is 30% lower in 2020 than during the same period in 2019.
Many consumers have put plans on hold, including sellers. As BC eases into Phase 2, we should see the supply increase. In fact, in the past week we have had 18 new single-family dwellings come on the market. Based on 79 homes on the market and absorption rates of 17.5 homes per month we currently have approximately 4.5 months of inventory. This reflects a balanced market, and after nearly four years of price appreciations, has moved the local market into balance.
Moving forward, and as the pandemic continues, the local market needs to be monitored carefully for supply and demand.
CMHC has predicted 9% to 18% declines in Canadian House prices over the next 12 months https://globalnews.ca/news/6992275/homes-prices-drop-canada-covid-19-cmhc/
with prices set to recover in mid 2021. According to CMHC, “The Agency emphasizes the high degree of uncertainty going forward, including the potential for a more severe and sustained recession if the pandemic is not contained.”
The next 6 to 12 months will be interesting as the world works together to find a vaccine or build a herd immunity to the Corona virus. We will publish monthly updates to our Facebook site to keep our clients informed of how the Cranbrook market is performing. A market correction is always a typical part of the real estate cycle, and Cranbrook will have a correction! The last real estate corrections occurred after the 2008 global crisis where Cranbrook saw its average sale price decline approximately 13% over a 4 year period from the 2008 highs.
Jason Wheeldon is a 27-year veteran in the local real estate industry and has studied the local markets since 1994. Jason is also a designated CRA appraiser with the Appraisal Institute of Canada for the past 14 years. His experience, credentials, dedication and knowledge of the local markets have been sought out by developers, local businesses, municipal and provincial governments and of course, his clients.