Home sales rally stalled by virus
April 11, 2020
Housing sales in major Canadian markets were in the midst of a rally in March, but that ended mid-month when the extent of the COVID-19 crisis hit home, according to real estate sales data.
In Metro Vancouver, the first two weeks of March saw the busiest sales of the year, but transactions cratered after March 15, reports the Real Estate Board of Greater Vancouver. An average of 138 home sales were seen daily during the first 10 business days of March, but in the final 10 business days sales fell to daily an average of 93.
Housing sales in the Greater Toronto Area (GTA) dropped 37 per cent in the last week of March when compared to a year earlier, according to Realosophy Realty. This cooled what had been a hot start to March after a sizzling February for new home sales.
Realosophy reports that 8,009 homes sold in the GTA in March, a 13 per cent increase over the same month last year. Homes were on the market for an average of 13 days and 60 per cent of the homes sold for over the asking price.
And the GTA registered its strongest February for new single-family home sales since 2004, according to the Building Industry and Land Development Association. This represented a 228 per cent annual increase, and outstripped the market’s 10-year average by 44 per cent. Overall, new home sales across the GTA for February totalled 4,665 transactions, up 211 per cent from a year earlier.
But the coronavirus has put a stop to that brisk pace.
“The market has definitely hit the brakes,” John Pasalis, president of Realosophy Realty, told BNN Bloomberg. Pasalis forecast the composite benchmark price in the GTA is expected to fall 2.9 per cent in the second half of this year, compared to a year earlier.
The Royal Bank of Canada (RBC) is forecasting housing sales across the country will decline 30 per cent this year to 350,000 units—a 20-year low.
“Canada’s housing market will slow to a crawl this spring as Canadians follow social distancing orders in order to combat the spread of COVID-19,” said RBC analyst Robert Hogue in a recent newsletter. “We think the recovery will come in stages, taking buyers up to a year to regroup and rebuild confidence amid high unemployment.”
On the bright side, the trend could quickly reverse next year thanks to low interest rates and a bounce-back in the Canadian job market and immigration, according to RBC, which predicts sales could surge by more than 40 per cent in 2021, with many markets favouring sellers.