Vancouver, BC – June 15, 2020.
The British Columbia Real Estate Association (BCREA) reports that a total of 4,518 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in May 2020, a decline of 45.2 per cent from May 2019.
With many markets across the country heading into 2020 with gusto, the COVID-19-pandemic has had an abrupt cooling effect upon real estate Canada-wide. Sales volume, listings, and demand are all showing obvious month-over-month dips; impacts of precautionary social distancing measures, and a national economy on pause.
Yet, not all hope is lost. There is a great deal of optimism that, should events unfold according to the predictions of the country’s public health officials, we may witness a slow crawl back to normalcy by the summer. If Canadians are able to return to work and re-coop economic losses, the Canadian real estate market should experience a bounce-back, and sales surge, by early 2021.
The average MLS® residential price in BC was $728,898, a 3.2 per cent increase from $706,394 recorded the previous year. Total sales dollar volume in May was $3.3 billion, a 43.5 per cent decrease over 2019.
“There were encouraging signs of recovery in May,” said BCREA Chief Economist Brendon Ogmundson. “While activity is still far below normal, both sales and listings are up significantly from April’s lows.”
New listings activity started to normalize around the first week of May, reversing a slide in total active listings. However, active listings are still down close to 24 per cent year-over-year and are more than 10,000 listings below where they would normally be in the spring months.
May 2020 Residential Average Price, Active Listings and Sales-to-Active-Listings Data by Board
May 2020 BC Residential Multiple Listing Service® Data by Board
May 2020 Year-to-Date BC Residential Multiple Listing Service® Data by Board
Trends are playing out very differently from coast to coast; below we take a peek into Canada’s top regional markets to better understand how the Canadian real estate market is doing right now, and where it is heading in the months to come.
With citizens abiding by social distancing measures to help slow the spread of the coronavirus, sales activity across the province of Ontario is 78% lower than 2019 levels for this time of year. These dips have been consistent within Toronto, within a 69% decline in home sale activity in early April compared to this same period last year. According to the Toronto Region Real Estate Board (TRREB), the number of new listings over this period has also fallen by 63.7% in comparison to levels for 2019.
Home prices however, within the city of Toronto, haven’t showed much movement. Over the first half of April, the overage selling price of $819,665 was only a small 1.5% drop from this period in 2019. This is a strong indication that panic selling hasn’t plagued the city yet, and that sellers are willing to hold out until normal demand returns, and they are able to get the full asking price of their property. Hopeful buyers scouting out COVID-19-real-estate deals will be hard pressed to find one in this market.
In a news release issued by TRREB President Michael Collins, he confirmed that average sales price mark for 2020 is likely to remain close to the 2019 average, despite any depressed market activity from the pandemic. He projects that under present circumstances, sales activity will be lowest for Q2, but as social distancing measures are lifted in the months ahead, we will likely start to see an improvement through late summer and fall as economic activity reaccelerates and home buyers take advantage of record-low interest rates.
Jason Mercer, TRREB’s Chief Market Analyst echoes this sentiment: “As we recover from this temporary downturn, potentially later this year, home buyers will move off the sidelines in increasing numbers as they satisfy pent-up demand for ownership housing. Increasingly, these buyers will be faced with the persistent lack of listings inventory that was a serious problem before the onset of COVID-19.”
According to the latest report from the B.C. Real Estate Association, while the impact of COVID-19 upon the BC Housing Market will be significant, the bounce-back could come sooner than in past Canadian economic downturns.
In the Metro Vancouver region, sales were notably strong coming into March, the makings of a red-hot spring market. As social distancing measures and business closures persisted, the sales dropped sharply coming into April, with local Vancouver Realtors estimating that volumes have been down by 70% for this month.
Much like fellow hot-market, Toronto, Vancouver’s prices have remained consistent and high, so far. Economist Tom Davidoff at UBC’s Sauder School of Business confirmed that buyers and sellers have been disappearing at the same rate, so the dynamics between the two have not shifted: Vancouver remains a seller’s market with hefty price tags and very limited inventory.
With Vancouver’s exceptionally high demand currently waiting out the storm, many experts are predicting that the pent-up demand will flood back to the housing market post-crisis to take advantage of low interest rates within an expensive market. If listings don’t skyrocket as quickly, there is potential for the Vancouver market to end up even more unbalanced than before the pandemic.
Montreal was primed for a record-breaking spring market, with sales volumes in March higher than ever, and the city experiencing the 61st consecutive month of sales growth. By the start of April, numbers within Montreal’s real estate market were starting to reflect the impact of COVID-19. In a report released by the Quebec Professional Association of Real Estate Brokers (QPAREB) at the beginning of the month, Charles Brant, Director of the Association’s Market Analysis Department, commented that sales activity for April and May are projected to be the lowest recorded levels since the start of the millennium.
Despite depressed sales growth, prices within the city have in fact continued to climb. The median price for a single-family home in Montreal jumped by 10% to $365,000 in March, with the median condo price jumping by 16%.
Julie Saucier, president and chief executive of the QPAREB, commented on these price jumps in their recent real estate report for the Montreal Census Metropolitan Area (CMA):
“While activity on the resale market slowed somewhat in the Montreal CMA in March, price growth acceleration continued in a market that is still extremely tight, and was accompanied by a significant drop in interest rates. The context we are going through will at least have the advantage of protecting Montreal from runaway price increases, as was the case in other Canadian markets. It will also guarantee greater price stability over the medium term as we emerge from the crisis.”
The country’s oil-producing regions have been hit hard by COVID-19, as they were already dealing with the sting from depressed oil prices which dealt a blow to many of these local markets in 2019. In sharp contrast to many of the country’s large markets, Calgary has dealt with an overstocked housing market far before the pandemic hit. While activity within the city’s markets picked up heading into March, by the second half of the month sales had dropped by 9% and new listings by 15%, in comparison to last year’s levels for this same time period.
The Alberta Real Estate Association (AREA) suggests that this drop in inventory may take some pressure off a market with excess supply and steadily declining prices. Neighbouring city, Edmonton, has shown only modest declines in sales activity, with the levels in March dropping less than 2% from the same month last year, but according to AREA, this in only confirmation that depressed market conditions within Alberta, came far before COVID-19. March 2019 was one of the weakest months for real estate in 15 years for Edmonton, as well as many other oil and gas communities.
While the rebound for the economic and real estate markets of the Prairies is expected to be slower than other regions across the country, there is however, a glimmer of hope on the horizon for many of these communities. Prime Minister Trudeau announced on April 17th that $1.7B in aid will be dedicated to the struggling oil sector, to clean up orphan wells in Alberta, Saskatchewan and BC. This money will help maintain and provide jobs for thousands across these prairie provinces.
This much needed-employment boost, coupled with record-low interest rates, may help to reinvigorate demand within these communities post-crisis, and may help to level out falling prices in local real estate markets.