Home sales to plummet in April with COVID-19 recession, but rebound next year: BCREA
VANCOUVER -- New projections from the British Columbia Real Estate Association suggest that while the dip in home sales because of COVID-19 doesn’t look good now, the market will recover.
The BCREA expects that the April sales figures could fall by as much at 40 per cent and remain depressed through the summer. But it’s predicting a robust recovery next year.
“Rising unemployment and a slowing economy are going to really take the wind out (of) the sails, but there's still going to be extremely low interest rates and a lot of just demographic demand,” says Brendon Ogmundson, chief economist with the BCREA. "We should see a vigorous rebound like we've seen following past recessions."
That’s the most optimistic prediction, provided employers and the government do what they can to have jobs for people to return to. But it also depends on how long it takes to get the economy up and running again after the unprecedented pandemic recedes.
The report says: “Our current forecast is for the Canadian economy to contract approximately four per cent in the first quarter of 2020, followed by a startling 21 per cent decline in the second quarter on a seasonally adjusted annualized basis.”
Ogmundson says this isn’t like the last three recessions that happened in the past 40 years, but the recovery will be similar.
"It's closer to actually a natural disaster than it is a real kind of recession. This didn't happen because of misadventures in financial engineering, like back in the financial crisis. It didn't happen because of bad loans or poor business decisions.”
The BCREA expects as physical distancing measures are lifted, the pent-up demand will translate to a “significant recovery in home sales and prices.”