Residential Market Commentary - Just delayed, not dormant
Canada's real estate market made a remarkable recovery in July and there are expectations it will continue for another couple of months.
Back in the spring real estate was heading into one of the tightest markets in the past 20 years. Then the coronavirus pandemic was declared, governments imposed lockdowns and the economy ground to a halt, hobbling home sales. April saw some of the lowest numbers ever recorded. But it roared back to life in July.
"Things may have gone quiet for a few months, but ultimately the market we’re seeing right now is mostly the same one we were heading into back in March," says Shaun Cathcart, CREA's Senior Economist.
July sales shot up more than 30% compared to a year ago and 26% compared to June. The average price for a home in Canada hit a new record high of $571,500 -- an increase of more than 14% over July of 2019.
“COVID-19 did not destroy this year’s spring market—it mostly delayed it,” says well known market watcher, economist Robert Hogue. He notes the busy spring market is now happening during the summer, as pent-up demand is released with the reopening of the economy.
“We expect further unwinding of pent-up demand to keep sales brisk in August and perhaps September before cooling later this year,” says Hogue.
The price increase is simple supply and demand. CREA's sales-to-new-listing ratio tightened to 73.9% in July, up more than 10 points from June and solidly in favour of sellers. A ratio between 40% and 60% is considered balanced.
CREA's Cathcart expects to see demand continuing to outpace supply.
"Some purchases will no doubt be delayed, but the new-found importance of home, lack of a daily commute for many, a desire for more outdoor and personal space, room for a home office, etc. will certainly also spur activity that otherwise would not have happened in a non-COVID-19 world,” he says.