Houses in Langley are selling at a near-record pace, with sharp increases since the end of near-lockdown conditions in March and April, but why is that?
For years, the explanation for the steady rise in prices of homes in Metro Vancouver was twofold – the region had low unemployment, and steady population growth, largely due to immigration.
Neither of those factors are now true, with the coronavirus pandemic driving up unemployment while immigration has ground to a halt amid travel restrictions.
We asked Andy Yan, the director of Simon Fraser University’s City Program, about why housing sales in Langley and across the region have gone up and stayed high through the late spring and the whole summer.
“It’s one of those really interesting things to note about our housing market,” said Yan.
He said there are so many factors involved in the local housing market that determining causes can be like “3-D chess,” but there are a few factors that stand out.
READ MORE: Langley housing sales shoot up in August
First, he pointed to the fact that some sectors of employment were affected much more by COVID-19.
“It’s people who were more in service, lower paid types of industries,” Yan noted.
Those in higher-paid jobs, whether in construction and trades or white collar office work, kept right on working through the early phases of the pandemic, though some switched to working from home.
The people who were hurt the worst economically were the least likely to be able to afford a house in the first place.
Pent-up demand among those who couldn’t buy a home during March and April also likely plays some role.
Then there’s the changes to the work lives of those who do have the money to buy a new home – some of them are considering working from home long term.
“They’re not really commuting as much,” Yan said.
That can affect outer suburban communities like Langley in particular, making neighbourhoods here more attractive.
However, as economic impacts of the coronavirus pandemic and the recession start creeping up the income chain, more affluent workers could be affected, Yan said. It’s something to watch for, he said.
Another major factor was rock-bottom interest rates. Although rates had been historically low even before the pandemic, they dropped down even further as the Bank of Canada slashed the prime lending rate in March.
For those ready to buy, that made a mortgage more affordable, noted Yan.
So, can he say what might happen in the months to come in local real estate markets?
“I always tell people I’m very good at predicting the past,” Yan joked.
Factors that could impact housing sales and prices include the possibility of a second lockdown if there’s a major “second wave” of coronavirus in the fall, Yan said.
He also said it depends what happens in some employment sectors.
Some businesses that were initially hit hard have pivoted to new ways of doing business and are already recovering.
Yan also suggested that there is a “floor” underlying the price of housing in Langley and its neighbours because our local economies may, in some ways, be more resilient than that of downtown Vancouver.
For example, the loss of cruise ship business for an entire season will hit many businesses in downtown Vancouver hard. But Langley’s economy relies on other sectors, such as light manufacturing, warehousing, and agriculture, which were not as severely affected.
The rise of “sub-regional economies” in places like Langley, Surrey, and Abbotsford may mean there’s a minimum base housing demand here that doesn’t depend on what’s happening in Vancouver, Yan said.
Is there more to this story?