BoC rate announcement and what's up with housing demand???

New ways to say the same thing...

In an announcement that surprised absolutely no one, Bank of Canada Governor Tiff Macklem reiterated plans to hold the overnight rate steady for the foreseeable future. I will have to find new ways to dress up this message and make it a little more interesting as it's one that isn't likely to change any time soon. The Canadian economy will require low rates (overnight rate) and monetary stimulus (bond buying program) until the unemployment rate drops and the economy recovers. And that will take time. 

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There was only brief mention of something I have wanted to write about for some time now: the recent surge in housing demand. The BoC attributes the run up in housing sales to pent up demand which is absolutely true. Greater Vancouver Real Estate activity in early March was hot. Really hot. And then the brakes got put on and put on hard. So it's not surprising to see that demand start to come through again as the economy opens back up. But what if it's more than just pent up demand and we're in the first inning of a big shift for home buyers...?

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Changing the Relationship with our Homes

Have you noticed that you have spent more time at home since March? I'm not too proud to admit that there have been stretches where I've had to ask myself: "Did I leave the house today?!" After my office lease came due in June, I decided to work from home until we have some clarity on what things look like through this recovery. My home office got a bit of a makeover now that it's my primary workspace and my productivity hasn't suffered at all. But here's the thing: so many of us are in this camp right now. And it will change consumer behaviour and home buying patterns.

Most of us will find we're doing way more things at home than we used to: working, teaching our children and even cooking and eating (or maybe ordering from Skip the Dishes!). The issue here is when we bought our homes and planned out how to use the space, the rules of the game were very different. And so some will be faced with a choice: renovate and reorganize to tailor the space to our new normal, or, buy something different that fits our changed needs better.

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But where to buy....

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And that leads us to another potentially interesting effect of the remote workforce: without the need to commute to an office daily, the world becomes your oyster. As much as I wish it were practical for us all to work from some exotic, beachfront locale, that just isn't going to be realistic. But if you don't need to be close to an office, and your dollar can get you more space and value outside the core of a city, might we see more people moving into suburbs and smaller towns? I can tell you that I have many more of those conversations with clients in the last couple of months than I have over the last couple of years. And I think it's fair to expect that trend will be one that gains momentum.

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To make a long story longer, the pandemic has placed a premium on the space we are spending more time in and at the same time, removed a huge decision making factor for many home buyers: the work commute. So while I do think pent up demand accounts for a lot of the surge in home buying activity, I will be very interested to see how these patterns change with our "new normal".

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I would love to hear your feedback and chat more on this and, if you know anyone that might have some interest, please feel free to pass this newsletter on!

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All the best and looking forward to connecting soon!