Since the onset of the COVID-19 epidemic in the United States, the real estate marketplace has reacted in different ways based on geography. In the Pacific Northwest, the combination of rural/metropolitan properties, incidents of political and urban unrest in Portland and Seattle, natural disasters, and changing patterns in global feeder markets, as well as region-wide economic restrictions, have created a shift in activity, but the overall effect has been a surprising one, particularly in the luxury marketplace.
In a continuing series of market updates during the pandemic, Christie’s International Real Estate asked its exclusive Affiliates in the Pacific Northwest to discuss how their markets have performed over the past year, what trends have been observed, and how the outlook for 2021 is shaping up. This past fall, the states of Washington and Oregon suffered widespread, unprecedented damage from wildfires which temporarily affected some activity, and while some of the data in this report was compiled just prior to the September 2020 firestorms, it essentially remains accurate, specifically for the luxury marketplace.
Contributors to this report included:
- Nick Eckelman, Agent, LUXE Christie’s International Real Estate, Portland, Oregon, and southern Washington state
- Kendra Ratcliff Chief Operating Officer, Christie’s International Real Estate Seattle, Washington, and Vice President, LUXE Christie’s International Real Estate, Portland, Oregon
- Terry Sprague, Principal, LUXE Christie’s International Real Estate, Portland, Oregon
- Scott Wasner, Executive Vice President, Christie’s International Real Estate Seattle, Washington
- Faith Wilson, Principal, Faith Wilson Group, Vancouver, British Columbia
- Dirk VanderWal, Principal Broker, Newport Realty, Victoria, British Columbia
Top real estate professionals explore how this idyllic region weathered the throes of 2020 and reaped surprising results.
State of the Market: Oregon
Property estates with the room and flexibility are invaluable now” –Terry Sprague
Kendra Ratcliff reported that in the Oregon/Washington market, for the first time in decades, “the region’s housing industry as a whole with all of its many layers—from buying to selling, from designing to building, from financing to renting—is pulling our economy forward. Resiliency is what has defined our next steps,” she said, observing that one agent reported that his Oregon sales were up in the third quarter of 2020 by 227 percent compared with the same time the previous year, while another agent’s business had almost doubled compared with 2019.
“People really are living at home more these days,” explained Terry Sprague, owner and founder of LUXE Christie’s International Real Estate. “Pre-COVID-19, our buyers were working in downtown offices, playing at country clubs and dining out. Post-COVID-19, they are reintroducing these activities at home and looking for properties that can accommodate them.”
“Property estates with the room and flexibility are invaluable now,” Sprague said, as buyers seek out usable space inside for working, entertainment and at-home education, and outside space for activities such as swimming, gardening, sports, and relaxation. “It has been an interesting shift in priorities,” he observed.
Nick Eckelman, who represents Christie’s International Real Estate in both Oregon and Washington, has seen business booming across the board in both states. “In Oregon, I spend most of my time working with and selling for builders,” he said. “2020 has seen a much higher demand for new-construction homes, most dramatically in the suburbs and outside of the downtown or city center areas. What I am currently selling for builders is selling very, very quickly, at or above asking price. This has led to my volume of sales increasing in 2020 over last year.”
After receiving fourth-quarter 2020 results, Ratcliff summed up the year’s performance by noting that LUXE Christie’s International Real Estate set a new sales record with $214 million in closed transactions for 2020. “We proved that market predictions were far from accurate,” she said. “The sheer volume of transactions by our agents—coupled with record sale prices and low number of days on the market (as low as 24 hours)—is a positive indicator of our region’s economy as a whole.” Going into 2021, Ratcliff observed that Central Oregon is booming and that luxury real estate in the Portland metro area is a solid market that promises to endure in the long term.
State of the Market: Washington
While many of the buyers in Oregon and Washington are from in-state, brokers have seen a noticeable increase in out-of-state clients—particularly the East Coast, and New York state in particular.
In Washington, agents have seen significant regional movement occurring particularly from the Portland metro area and from California. In Washington, there is no state income tax, and property taxes are much lower than in Oregon. “This has made Washington a desirable place to be, especially as Oregon and California keep raising taxes higher and higher,” noted Eckelman.
[People] are seeking properties, like never before, where they feel safe and secure.” – Scott Wasner
Wasner has made it a priority to further capitalize on his media contacts to create PR opportunities. “Having outside media showcasing our properties and the expertise of Christie’s Real Estate is invaluable these days. Keeping our listings front and center of the public has no doubt helped our sales performance.”
In fact, in the fourth quarter Wasner closed not one but two major transactions in downtown Seattle. These proved to be the year’s two highest sales in the city, both at the Four Seasons Hotel and Private Residences and both at a price exceeding $9 million. One of the properties had been owned by a Christie’s client, and Wasner represented both buyer and seller in each transaction. “These sales prove the commitment of buyers to the downtown core, even in these challenging times,” Wasner summed up. “This stability is also extremely good news for high-end condominium buyers.”
At the beginning of December, a stunning 21 percent of the homes listed in the Northwest MLS were priced at $1 million or higher, according to Wasner’s colleague Kendra Ratcliff. She pointed out that the technology, digital, and e-commerce companies based in the region have remained stable and even flourished, which benefited the area’s economy.
Also a boon to the market was the influx of out-of-state high-net-worth buyers, who have come to Washington looking to take advantage of Washington’s favorable tax structure and business-friendly environment. “While we can’t exactly predict what 2021 will bring, we’re confident that Washington’s high-end real estate market will continue to remain strong,” Ratcliff summed up.
State of the Market: Victoria, British Columbia
On Canada’s Vancouver Island, Christie’s International Real Estate Affiliate Newport Realty initially saw its quarterly numbers decrease a little more than 70 percent compared with the second quarter of 2019. April and May were particularly soft, as the Affiliate closed its offices to the public and saw many clients take a step back as the pandemic unfolded. June’s numbers crept back to typical volumes, and as Newport Realty headed into the third quarter the market remained strong, with July exceeding last year. “Our deal board for August filled rapidly and our associates and conveyance staff working overtime servicing what appeared to be a delayed spring market. The fourth quarter has been extremely busy as well,” noted Dirk VanderWal.
Looking at its luxury segment (listings and sales over $1 million that are part of the CIRE network), the third quarter of 2020 was the single largest quarter for sales ever recorded in Newport’s market area, with sales up more than 140 percent compared with 2019, and almost 150 percent higher than the preceding quarter. The firm’s analysis of the higher end of the luxury market ($2 million and above) saw four times more transaction volume at the upper end than a year prior.
2020 closed with a 25-year record low number of active listings, portending further price appreciation across all segments in 2021.” – Dirk VanderWal
VanderWal reported that Victoria reached a five-year high for listings of attached homes in June 2020, while sales of attached homes remained down 20-30 percent below average, shifting conditions out of ’seller’s market’ territory. As a result, detached homes are now the order of the day, and their sale has kept Newport agents busy throughout the second half of the 2020. Below are some highlights VanderWal provided Luxury Defined:
- Detached homes are under-supplied, with strong demand leading to an increase in multiple offer situations and creating upward pressure on pricing. Only 58 percent of detached homes under $1 million sold for less than list price in June 2020, with the average discount being only 1 percent.
- Detached homes have consistently remained at only 2-4 months of inventory throughout the pandemic so far and the average price of a detached home has now gone from $900 million to more than $1 million (Canadian).
- These numbers combined may be signaling a mass movement from urban condo dwellers toward larger detached properties, as many people are staying home and working from home, and expect to be doing so long term.
- June of 2020 also saw more sales over $2 million than ever recorded in a single month in Victoria’s market area, at an average price point of $3.1 million.
As Newport had headed into its fourth quarter, the trend has shown no sign of abating, VanderWal said. Total sales for October were up almost 60 percent from October 2019, and kept on pace with September’s sales, with available listing inventory down nearly 20 percent from 2019. Luxury sales remained strong through the fourth quarter. “As we saw in the third quarter, the fourth quarter saw the number of sales over $1 million more than double that of the previous year, at 120 percent,” said VanderWal.
With respect to 2020 overall, VanderWal reported that move-up buyers a were a major force in both 2020’s tightening market for detached homes and the oversupply of condominiums (which later corrected itself with a surge of first-time homebuyers in the second half of the year). At year-end, detached home MOI (months of inventory) was down to 2, and, all told, only 44 percent of detached homes sold for less than asking price.
“Summing up, at year end the total number of sales for the region was up 15 percent compared with 2019—with pent-up supply exhausted and demand fueled by low interest rates,” VanderWal added. “2020 closed with a 25-year record low number of active listings, portending further price appreciation across all segments in 2021.”
State of the Market: Vancouver, British Columbia
Despite the initial uncertainty at the beginning of the pandemic, pent-up demand, low interest rates, and somewhat favorable price points pushed Vancouver buyers off the fence, and with limited market supply, Faith Wilson Realty Group experienced an increase in sales of 19 percent by the end of the second quarter of 2020, according to brokerage principal Faith Wilson. “The momentum continued into the summer months with July and August realizing an uptick of 25 percent year over year for our firm,” she said.
“We continue to utilize our on-line tools such as Matterport, floor plans, and videos to engage potential purchasers to focus on our properties online, meaning moving them through the viewing/engagement process, to help them to the next decision.” One of the interesting statistics recently is that buyers spend about three-five seconds viewing a property- if it doesn’t grab them, they move on. We keep that in mind when showcasing a home, making sure there is lots of eye-candy at the forefront.
With respect to market activity, Wilson reported that Vancouver’s Westside, a hub for the upper mid luxury range “is really sticky—properties over $5 million to $8 million meaning this is somewhat of a move upmarket, and buyers are negotiating really hard, and sellers are feeling the pressure. There have been only a handful of sales over $6 million here.
She noted at midyear some six homes sold in the $10–$14 million range (as of July 7, 2020, out of 104 active listings) and that there has been healthy activity in the upper end of the market, although there have not been any sales in the $20 million range this year. “What this means is that there are lots of showings, there is money ready to put into the market, but buyers are kicking the tires and when they are negotiating, there isn’t enough of a win-win to have a meeting of the minds. This could change as the market continues to churn and buyers want alternatives to where and how they choose to live, given the world environment.”
Alternately, single-family homes under the $3 million mark have moved quickly, and homes on Vancouver’s Westside priced just under the $2 million mark are “super-hot,” Wilson said. “We are experiencing multiple offers on certain properties, in all housing-type categories. Also, given the pandemic, buyers have been reevaluating their purchasing decisions. This has prompted a flight to the suburbs where sales and price points have surged for single-family homes, given the low inventory and buyers’ enthusiasm. Another notable observation: Wilson’s brokerage lists a number of out-of-town, or “off-the-grid” properties, and the interest in this property-type greatly picked up in the late summer/early fall, “perhaps due to the desire for a safe haven now and in the future.” Wilson said.
As of July 2020, Greater Vancouver home sales were up 22.3 percent year over year and a 28 percent increase from June 2020. Benchmark price for a detached home is $1,031,400 with average days on market between 31–41 days. Vancouver Westside benchmark price is $1,477,800 with similar days on market. Generally, market prices have increased by about 4 percent year over year, so the double-digit jump has certainly been a dramatic one. “December nailed an explanation point on an amazing year as far as sales,” Wilson enthused, with Greater Vancouver sales surging 53 percent from the same month a year earlier—to the highest December level in history—with Fraser Valley transactions soaring by 67 percent.
She noted that when the official 2020 British Columbia assessments were released this January, it was discovered that total Lower Mainland residential properties had increased in value by $50 billion from a year earlier to an unprecedented high of 1.46 trillion dollars.
Just as in Victoria, it was detached houses, the most expensive property type, that led the Metro Vancouver sales and price increase. Greater Vancouver detached sales in December were up 70 percent and benchmark prices 10.1 percent higher than a year earlier. In the Fraser Valley, detached houses dominated the market, increasing 90 percent from December 2019, with benchmark prices up 13 percent year-over-year.
“We have no doubt this momentum will carry deep into 2021, providing further undeniable evidence of the resiliency of Canada’s most astute home buyers, and the unquenchable desire for homeownership,” Wilson added.
Summing up the phenomenon, Wilson offered this telling coda: “The pandemic focused attention of what is truly important in life: family and a home to call your own.” With pandemic vaccines now rolling out in Canada, “this, thankfully, should put COVID-19 in the rear-view mirror in 2021. But the effect of the pandemic –including the lowest mortgage rates in 100 years, an increase in residential listings, and the enhanced importance of a safe and comfortable home—point to a year like no other for Metro Vancouver’s housing market.”