The year that felt like a decade is behind us and February 2020 seems as though it were a lifetime ago. The image of "Persistence of Memory" by Salvador Dali seems fitting. A scientific theory for why time occasionally feels like it decelerates is that time perception is driven by the number of memories formed in a given period and memories are created by experiences that are often new and surprising. This is perhaps why the monotony of driving to work for 20 years passes without you noticing, yet for my kids, summers at the lake seem to pass in a flash because there are an endless collection of new experiences and activities.
The fewer surprises and experiences that accumulated in 2020 made it feel like a much longer than normal year. Learning new ways of doing business, including many people transitioning to working from home, the development of new technologies and witnessing how an economy can stop almost overnight, have all contributed to this phenomena. As we start 2021, a vaccine in hand and we see the light at the end of the tunnel, I want to share the things I have noticed and the prospects for 2021.
Studying the trends in supply and demand, interest rates, unemployment and immigration all aid in forecasting what the coming months and year will bring. The 2020 year was a huge reminder that the biggest economic risks are the “no one’s talking about”, because if no one’s talking about it, no one’s prepared!
One of my favorite authors Nassim Taleb wrote a book “Fooled By Randomness” which seems more relevant now then ever before. He writes “No matter how sophisticated our choices, how good we are at dominating the odds, randomness will have the last word.So it takes bravery to remain skeptical; it takes inordinate courage to introspect”
It is becoming increasingly difficult to predict market behavior, but one thing we know is that 2021 will shape itself much differently, and that effects of the previous year on our economy will continue to be felt in the coming months. In the ‘Innovators Dilemma’ Clayton Christensen describes “The Long Tale of Innovation” and how the most significant process in technological advancements were not the result of planning and preparation, but resulted out of necessity as a reaction to unpredictable events.
Canadian Real Estate market overview
Home sales recorded over Canadian MLS® Systems jumped by 7.2% between November and December to set another new all-time record.
Seasonally adjusted activity was running at an annualized pace of 714,516 units in December 2020 – the first time on record that monthly sales at seasonally adjusted annual rates have ever topped the 700,000 mark.
The month-over-month increase in national sales activity from November to December was driven by gains of more than 20% in the Greater Toronto Area (GTA) and Greater Vancouver.
Actual (not seasonally adjusted) sales activity posted a 47.2% y-o-y gain in December – the largest year-over-year increase in monthly sales in 11 years. It was a new record for the month of December by a margin of more than 12,000 transactions. For the sixth straight month, sales activity was up in almost all Canadian housing markets compared to the same month in 2019.
Vancouver Island Market update
NANAIMO, BC –Sales of single-family homes in December increased by 34 per cent from one year ago and were 28 per cent lower than in November. Last month, 302 single-family detached properties (excluding acreage and waterfront) sold on the MLS® System compared to 226 in December 2019 and 422 in November 2020. In the condo apartment category, sales rose by 94 per cent year over year and 16 per cent from November. Row/townhouse sales increased by 61 per cent from the previous year but dropped by 41 per cent from November. Active listings of single-family detached properties were 421 in December compared to 541 in November, a 22 per cent decrease and the lowest number on record. There were 232 condo apartments and 119 row/townhouses for sale last month, down 24 per cent and 17 per cent, respectively, from November. As reported in previous media releases, low inventory continues to be the primary reason behind the weaker sales posted in November and December. The buyers are there, but the listings are not.
Moving on to pricing, the benchmark price of a single-family home hit $546,900 in December, a five per cent increase from the previous year. The benchmark price of an apartment reached $312,000, an increase of four per cent, while the benchmark price of a townhouse rose by 10 per cent year over year, climbing to $450,100.
Employment Trends and Consumer Confidence in Canada
The unemployment rate in Canada was 8.7% at the end of December 2020, down 0.1% from the previous month. The national unemployment rate has declined by 4.3% from its peak in June 2020.
The number of full-time jobs was up from the end of the previous month. Full-time employment has recovered close to 955,000 jobs since bottoming out in June.
There were 68,300 more full-time jobs in December 2020 compared to a month earlier. A loss of 40,600 part-time positions led to an increase of 27,700 total jobs in December.
Full-time job gains were based heavily in British Columbia, Alberta, Ontario and Quebec, making up for losses in Saskatchewan and Manitoba.
Full-time job gains occurred mainly in natural resources, trade services, transportation & warehousing, the financial sector, prof., sci. & tech. services, education, healthcare, information & culture services, and public administration.
National consumer confidence was up in December 2020, according to the Conference Board of Canada’s survey-based index of consumer confidence.
Overall sentiment moved higher across all regions of the country except for Quebec in December.
Concerning job prospects over the next six months, the number of respondents expressing pessimism moved even lower in favour of another increase in the number of respondents expecting stability or improvement in job levels over the next six months.
Regarding expectations for their household budget over the next six months, the number of respondents expecting stability remained near record highs. There were fewer respondents expressing pessimism in their household finances and a rise in the number expecting an improvement.
Nanaimo Market Statistics
Nanaimo’s benchmark price rose to $569,400.
Our current market conditions can be confusing and chaotic so let me know if you have any questions, I can help streamline the process and hopefully we will get a better sense of the overall trend in our local market in the next few months.
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