Due to the Covid-19 pandemic, sales will collapse to the lowest seen in decades and is roughly estimated to end somewhere in the 1200-1400 range. This will bring the SAL ratio to the balanced territory. As stated in my last edition, low transaction (low sales and low new listing) months don't lead to significant changes in prices particularly with SAL ratio in the Balanced territory. We see this every December which has no impact on the spring market. We will need to wait until social distancing rules are reduced to see which direction the market is headed. Given that BC is effectively flattening the Covid-19 curve thus far, we could see businesses re-open gradually starting in May as John Horgan, Adrian Dix and Dr. Bonnie Henry suggested today. Low sales are expected to extend into May due to Covid-19 before we start to see a slight month-to-month gain through the summer.
Total inventory will fail to increase month-to-month for the first time since 2009. This is due to unprecedented low new listings we are seeing this month due to Covid-19. We should see TI continue to struggle for May. As long as TI remains under 12,000, the hope of a massive decline in benchmark pricing in 2020 is out the door. Bears will want to see at least a 1,500 TI increase month-to-month to get to 12,000 or higher as fast as possible before the winter arrives.
We are seeing something here that we will likely never see again. New listings falling off the cliff like we have never imagined. The chart says it all right here and there is nothing more to be said.
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