What to do with the hot housing market? There’s probably not a whole lot that you can do right now. While we can attempt to reign in the abundance of liquidity sloshing around financial markets, that also risks derailing the economic recovery. The reality is a global pandemic has completely altered our daily lives, upending our work and living situation, with some people believing, right or wrong, that this is a permanent shift. As a result, people are moving. The past twelve months will go down as the Great Reshuffling.
What was once considered “pent-up demand” has clearly morphed into something entirely different. A housing bull market that is being driven not only by excess liquidity but also human emotions. People are spending an inordinate amount of time at home and thus are re-considering not only where they want to live, but how they want to live.
Look no further than the recent data coming out of Greater Vancouver. March home sales surged to all time record highs for the month. Despite little to no population growth and a weak labour market, home sales are ripping, surpassing even the 2016 foreign buying boom. Yes home sales are unbelievably high, but so too are new listings. New listings were up 86% year-over-year and also set record highs for the month. In other words, whether upsizing, downsizing, or simply relocating, people are on the move.
We are seeing this in the rental market as well, there is an incredible amount of turnover right now. While rents in Downtown Vancouver remain soft, the rental market for single family houses in the suburbs is booming.
However, with the rollout of the vaccines, will this trend reverse? And could it ultimately perpetuate another reshuffling?
In a recent survey of more than 350 CEOs and human resources and finance leaders, 70% said they plan to have employees back in the office by the fall of this year, according to a report by staffing firm LaSalle Network.
More recently, Google, the pioneer of work from home, announced plans to fast track its reopening plans. This will be accomplished on a voluntary basis, and it’s anticipated that people will start returning to work before the Sept. 1 return deadline. Adding, Google expects workers to “live within commuting distance” of offices. The company also communicated that “it may adjust employees’ salaries based on where they work.”
In a pushback to remote work, Google told employees that if they “want to work remotely after Sept. 1, for more than 14 days per year, they’ll have to formally apply for it.” They can also apply “for up to 12 months” in the “most exceptional circumstances.”
If a host of other companies follow Google’s lead, I suspect we could very well see a pivot in migration patterns, perhaps prolonging the recent housing boom. The Great Reshuffling story is far from over.
Three Things I’m Watching:
1. Greater Vancouver New Listings for March hit record highs. (Source: REBGV, Steve Saretsky)