The COVID-19 pandemic has primed the Canadian housing market for a particularly busy October, pushing sales to a monthly record in the off-season despite cooling weather and a second wave of infections.
“(This year) continues to be a highly unusual year with high home sales volumes in the fall — a time that we typically see more moderate activity,” said Phil Soper, chief executive of Royal LePage.
Home sales in October gained 32.1 per cent compared with October last year, setting a record for the month, even as they fell 0.7 per cent from the all-time monthly high set in September, the Canadian Real Estate Association said on Monday.
Soper said that year-over-year jump is particularly significant as October 2019 was also a busy month for real estate, which usually peaks in the spring months.
“We won’t see actual month-over-month sales start to pick up until February,” said Soper. “That’s just the reality of Canadian winter housing sales.”
CREA's report said the national average home price also set another October record at $607,250, up 15.2 per cent from the same month last year. Excluding sales in Greater Vancouver and the Greater Toronto Area, two of the most active and expensive housing markets, lowers the national average price by more than $127,000, CREA said.
The housing market has been playing catch up this summer and fall from COVID-19 shutdowns that dampened the spring buying season. Soper said that despite a second wave of COVID-19 infections, the housing market is not shutting down the same way this fall as it did in the spring.
“We knew so much less about the disease, and how to live life safely,” said Soper of March and April, pointing to shortages of Lysol wipes and hand sanitizer that made home viewings difficult. While open houses have locked back down in many jurisdictions, Soper said homebuyers and sellers have figured now out how to view homes more safely through Zoom or private, distanced viewings.
Not everyone is so sure. Rishi Sondhi, an economist at TD Economics, wrote that it will be hard to keep up these levels in the housing market for much longer.
“(We) look for activity to continue to cool in coming months,” wrote Sondhi in a note to clients on Monday morning, responding to CREA’s report.
“And, the possibility of more widespread lockdowns could add further downward pressure to sales moving forward.”
But Soper said that he expects millennials and baby boomers to continue to be interested in moving to larger spaces outside the city, a trend that was in place even before the pandemic. The current stay-at-home lifestyle, which he dubbed “puppies, Peletons and property,” is likely to continue to play a role, Soper said.
Shaun Cathcart, CREA's senior economist, also said that realtors may also be seeing a lot of moves, or “churn in the market,” that would not have happened if not for COVID-19. The association noted that some 461,818 homes were sold over Canadian MLS systems in the first 10 months of the year, up 8.6 per cent from the same period in 2019.
“It is possible that 2020 could prove itself to be a record year for housing activity — certainly in opposition to what many thought when the pandemic hit in March,” wrote Sherry Cooper, chief economist at Dominion Lending Centres, in a note to clients. Cooper noted that people hardest hit by the pandemic tended to be lower wage workers who were not homeowners.
“There is no doubt that COVID-19 has caused many households to uproot and change homes based on their altered lifestyle and working situation. Much of this activity would not have happened had the pandemic not struck.”
Two areas with big price surges during October were the Quinte and District area — including Prince Edward County and Belleville, Ont. — and the Woodstock and Ingersoll region in southwestern Ontario.
Close behind were markets such as Ottawa, London, Barrie, Hamilton, Niagara, Guelph, and Kitchener, as well as Ontario's cottage country.
Canadian housing markets with slower price growth in October included Victoria and elsewhere on Vancouver Island, St. John's, Calgary and Edmonton, CREA said.
The number of new listings rose 2.9 per cent in October to a new record for the month, but still fell short of the pace of sales growth. CREA said the housing market remains “very tight” in many parts of the country, with a new low of 2.5 months of housing inventory now on the market.
Soper noted that single-family homes are in higher demand than condos, particularly in Toronto.
“Pent-up demand might be running its course now, but there’s still a fundamental shift in preferences toward larger properties outside of core urban areas, greased by record-low mortgage rates,” wrote Robert Kavcic, senior economist at BMO Capital Markets Economic Research, in a note to clients.
“And, when there’s not much to choose from, prices lurch higher.”
This report by The Canadian Press was first published Nov. 16, 2020.
Anita Balakrishnan, The Canadian Press