Richmond’s housing market after the Covid-19 pandemic hit Canada in January, 2020 was able to remain resilient due to high demand from home buyers, very low inventory and low interest rates. After the initial lock down the Canadian implemented social distancing through a phased relaxation on all large social activities. And, quick financial help from the government in the form of mortgage payment deferment and the CERB program injected huge liquidity to the working population in Canada.
The strong home sales the past 6 months will likely change over the next 18 months. The are many reasons for a big pull back in housing sales, and very likely home prices. A change in market sentiment can very quickly scare off home buyers, and quicken home sellers to sell their homes. Rental rates are already falling some 5% to 12% over the past months due to much higher vacancies as a result of many students not able to return to Canada for their studies. In addition, the pandemic also caused a large pull back in immigration due to health risks and significantly low number of flights immigrants can book to come to Canada. Selling pressure is also expected from presale new condo owners who are in taking possession of their newly completed condos, or soon to be completed condos.
The supply of new listings the past 3 months, and new listings in the coming months if not absorbed as quickly as they are listed for sale on the market, a build up in supply will lead to sellers more motivated to sell their homes. The current low interest rate at 2% and below may not help to bring more buyers into the market as the market uncertainties will deter them from making such financial decisions to take on large debts.
As of October 2020, Richmond have around 300 townhouses for sale. At current average price around $950,000 compared to around $70,000 a year average household income, the price to income multiples at 13.6 times, is highly unaffordable. Although older townhouses over 10 years have an average price of $870,000, such lofty prices are not affordable to the average household.