B.C. home sales to fall by 40 per cent but comeback is likely, report says
Provincial economy expected to shrink by 4 per cent, economist says
B.C. is entering into a deep recession, characterized by falling housing sales and a shrinking economy, according to a new report from the BC Real Estate Association.
It finds that the strict social and physical distancing measures by public health are having an immediate impact on the province. However, based on past modelling of recessions in B.C., economists are hopeful the province will be able to stage a comeback once restrictions are gradually lifted.
"We think this is going to a fairly deep recession," said Brendon Ogmundson, chief economist for the BCREA.
He expects the province's economy to shrink by about four per cent in 2020.
The BCREA examined the impact of past recessions in B.C. to predict how the markets will react during the crisis, as well as its aftermath.
Ogmundson believes home sales will drop by up to 40 per cent in April compared to the same time last year and that it will carry into the summer as physical distancing measures continue.
Yet despite the grim outlook, Ogmundson says he expects home sales to bounce back following the pandemic.
"The one thing about recessions is that they end, and once this is over, we should, hopefully, see a pretty decent recovery, not only in the housing market but also in the economy," he said.
Compared to historical recessions in the province, home sales typically have made recoveries of up to 46 per cent.
"Interest rates are extremely low and we think there's going to be a lot of pent up demand," Ogmundson said.
But he says it all depends on whether the pandemic ends, before it causes too much long-term damage to the economy.