The Globe and Mail - 03.04.2020

B4| REPORT ON BUSINESS O THE GLOBE AND MAIL| FRIDAY, APRIL 3, 2020

DILBERT

Home sales in Toronto and Van-
couver soared in the first half of
March and then plummeted in
the second as the spread of CO-
VID-19 prompted provincial gov-
ernments to shut down activity,
according to the local real estate
boards.
“There was a clear break in
market activity,” said the Toronto
Regional Real Estate Board.
In the first half of March, 4,643
homes sold in the Toronto region,
a 49-per-cent increase over the
same period last year. In the sec-
ond half of the month, 3,369
homes sold, a 16-per-cent decline
over the same two weeks last
year.
Similarly in Vancouver, there
were an average of 138 daily resi-
dential sales in the Vancouver re-
gion in the earlier half of the
month. In the latter half, the daily
average fell to 93 sales, the Real
Estate Board of Greater Vancouv-
er said.
“The first two weeks of the
month were the busiest days of
the year for our region, with
heightened demand and multi-
ple offers becoming more com-
mon,” Ashley Smith, the board’s
president, said in a statement ac-
companying the results.
“This changed as concerns
over the COVID-19 situation in
our province grew.”
Over all, 2,525 homes sold in
the Vancouver region in March – a
46-per-cent increase over last
year, when buyers were still com-
ing to terms with tougher mort-

gage rules.

That’s the ninth consecutive

month of double-digit year-over-

year increases.

But Ms. Smith said many of the

sales were in process before the

provincialgovernment declared a

state of emergency and curtailed

non-essential activity.

In the Toronto region, 8,012

homes were sold last month, an

increase of 12 per cent over

March, 2019.

Although the majority of sales

occurred before the province

started shutting down non-essen-

tial services and Canadians were

told to stay at home, there were

still reports of properties receiv-

ing multiple offers in the last few

days of the month.

The average selling price for a

home was $902,680 in March, 15

per cent higher than last year. But

the average selling price in the

second half of the month was

lower than the first half.

Since last year, the Toronto and

Vancouver housing markets have

been rebounding from the slow-

down brought on by a tax on for-

eign buyers and stringent loan-

qualification rules.

By January, February and early

March, the market had become

highly competitive owing to the

shortage of homes for sale.

That competition was starting

to push home prices higher.

In the Vancouver region, the

benchmark price or the industry

calculation for all types of homes

was $1,033,700 last month. That is

a 2-per-cent increase over March,

2019.

Whistler and Squamish record-

ed the steepest increases, with

both areas up a minimum of 4 per

cent year over year.

With fewer sales and warnings

against holding open houses, re-

altors predicted that home prices

would remain flat.

“I don’t see how we can see an

increase in prices with the decline

in number of sales happening,”

said Richard Laurendeau, manag-

er of Re/Max Westcoast.

Although the Bank of Canada

cut interest rates three times in

March – they’re now at 0.25 per

cent – the mortgage rates on new

loans aren’t that much lower than

they were earlier this year. Gov-

ernment shutdowns have closed

most industries and led to scores

of job losses.

Realtors have been deemed an

essential service in British Co-

lumbia and Ontario, but many

buyers and sellers have put their

plans on hold.

“We’ll need more time to pass

to fully understand the impact

the pandemic is having on the

housing market,” Ms. Smith said.

HomesalesdiveinsecondhalfofMarch

RACHELLE YOUNGLAI

A message on a condo balcony urges people to stay home in Vancouver on Sunday. There were an average of

138 daily residential sales in the region in the first half of the month.DARRYL DYCK/THE CANADIAN PRESS

Canadian auto sales plummeted

in March, echoing the dramatic

slowdowns seen in overseas

markets that were first hit by the

novel coronavirus.

Total light-vehicle sales

plunged by 48 per cent in March

from a year earlier, according to

an estimate from DesRosiers Au-

tomotive Consultants, which

said “even greater sales declines”

are expected for April and May.

“With provinces declaring

states of emergency, Quebec

closing down front-end dealer-

ships and many dealerships

across the country voluntarily

shutting down, March sales fell

precipitously in the second half

of the month,” DesRosiers said in

a news release.

DesRosiers noted that “no

brand came out unscathed,”

with most seeing sales declines

of between 33 per cent and 66

per cent from the previous

March.

The auto-sales data are note-

worthy because they are one of

the earliest indications of how

consumers have pulled back on

spending during the pandemic,

and suggest other sectors are set

for a similarly brutal shock.

“March’s decline in vehicle

sales is eye-popping, providing

an early reading on the impact

that physical distancing mea-

sures, economic uncertainty and

store closures are having on con-

sumer demand,” Toronto-Do-

minion Bank economist Ksenia

Bushmeneva said in a client

note.

“While we won’t see March re-

tail sales numbers for some time

to come, they will likely show an

equally dramatic decline, with

only grocery stores and pharma-

cy sales likely to come out un-

scathed.”

Canada’s auto slowdown was

foreshadowed by grim statistics

out of Asia and Europe.

Global auto sales dropped by

more than 20 per cent in Febru-

ary from a year earlier, with Chi-

na registering an 82-per-cent de-

cline.

Canadianautosalesplummet48%inMarch

MATT LUNDY

E

ONOMI

S REPORTER

Cars are seen at a Ford dealership in Toronto on Thursday.

CHRISTOPHER KATSAROV/THE GLOBE AND MAIL

Global financial regulators said

on Thursday they are in talks with

governments to allow key staff at

financial firms to work on site

during the coronavirus epidemic

to keep markets open.

The Financial Stability Board

(FSB) also said an end-of-2021

deadline for stopping the use of

Libor benchmarks in financial

contracts remained a priority.

There has been speculation that

the deadline might be put back in

response to COVID-19.

Many countries have intro-

duced lockdowns that curb non-

essential travel and force people

to work from home in a bid to

curb the spread of the virus.

The FSB co-ordinates financial

rules for the Group of 20 econo-

mies and on March 30 its mem-

bers reviewed action to keep mar-

kets working and maintain the

flow of credit to households and

businesses.

A key issue discussed was “the

critical nature of many financial

services and the importance of

ensuring their operation

throughout the pandemic,” the

FSB said in a statement.

“FSB members are actively en-

gaging with national and local au-

thorities to ensure that these es-

sential personnel are permitted

to work on site.”

Some countries, including the

United States and Britain, list fi-

nancial workers as key staff who

can still travel to their place of

work rather than having to work

from home.

The FSB wants to make sure

that if lockdowns become more

stringent, key financial workers

or any third-party providers they

use are not hampered in deliver-

ing core services. However, Bri-

tain’s markets watchdog has be-

gun cracking down on banks des-

ignating too many staff as key

workers as they are then entitled

not only to travel, but also to send

their children to school.

REUTERS

Globalfinancialregulatorsmovetokeep

marketsopenandcreditflowing

LONDON

S

hoppers are facing empty shelves at some stores owing
to unprecedented demand for food and other goods
even as grocers assure Canadians coping with the CO-
VID-19 outbreak that plenty of new items are on the
way and manufacturers say they have the raw materials they
need.
Temporary shortages are to be expected in spite of a supply
chain working in overdrive, experts say, because the system
isn’t built to predict extreme, large-scale changes in buyer be-
haviour.
Shoppers stockpile for a number of reasons, said Mike von
Massow, an associate professor at the University of Guelph.
Some fear stores may close amid the pandemic. Others buy in
bulk with the goal of shopping less frequently to avoid unnec-
essary exposure.
That means right now, “we are seeing demand-based short-
ages, not supply-based shortages,” he said.
Shelves keep getting restocked with goods still flowing to
the stores. Limited hours have been introduced in part to al-
low time to unpack and display replacement products.
Canada tends to operate with what’s knows as a “just-in-
time food system,” Mr. von Massow said. That means grocers
and other stores tend to receive food products just before they
are ready to put them in the store.
It’s more cost effective for companies than keeping a large
surplus that takes up unnecessary space. Some food, such as
fresh fruits and vegetables, can
spoil. Rotten food that can’t be
sold brings up the cost of the
product for customers.
For non-perishable items, such
as toilet paper or canned black
beans, too much so-called buffer
inventory ties up money other-
wise available for other things and
requires storage space, he said.
“By minimizing inventory, we
keep prices lower in the store.”
Companies determine the exact amount of inventory to or-
der and keep through “a bit of a science and also a bit of an
art,” said Mr. von Massow, who worked for about two decades
in the industry during which time he helped with forecasting.
Data helps companies make predictions. They’ll look at
historical and recent sales, special events (the Super Bowl, for
example, may boost demand for avocado as football fans
make guacamole for the big game), what influencers are say-
ing about the product and more, Mr. von Massow said.
Increasingly, computers crunch the data and make sug-
gestions. A human then looks at these figures and determines
if they need to be adjusted up or down.
Mr. von Massow said he teaches his students during a class
about forecasting that: “The numbers can help you make a
decision. They can’t make the decision for you,”
Both manufacturers and grocers will forecast demand and
the level of collaboration and information they share can
help make their guesses much more accurate.
This model doesn’t work as well during an unexpected and
widespread change in shopper behaviour. As the COVID-19
crisis took hold, Canadians purchased toilet paper, cleaning
products and other items in droves. Photos of empty store
shelves circulated online, further feeding the buying frenzy.
Canada’s major grocers have worked to reassure customers
there’s no food shortage on the horizon as they work with
suppliers to keep delivering essentials into their stores and
catch up to the demand.
About three-quarters of members of Food & Consumer
Products of Canada, a national association for manufacturers,
say they’re confident in raw materials supply for two to five
months or more, if current trends continue, according to a re-
cent survey of the association’s members.
A fifth projected no issues at any time, even with current
trends, while just 5 per cent foresaw possible supply issues
within one month.

THE CANADIAN PRESS

HowCanada’s

food-supplychain

iscopingwith

productshortages

ALEKSANDRA SAGAN

Temporary shortages

are to be expected

in spite of a supply

chain working

in overdrive,
experts say.