GTA Home Sales Down 69% Mid-Way Through April

The Toronto Regional Real Estate Board says home sales were down 69% in the first 17 days of April compared with a year ago as the COVID-19 outbreak put a chill on market activity.  Board president Michael Collins says in an unusual mid-month update that uncertainty about jobs and the economy contributed to the decline, as did physical distancing measures that make homebuying more difficult.  Sales, totalling 1,654 homes, declined the most in the condo segment that attracts a high share of first-time buyers who have more flexibility on timing, while higher-end detached sales in the City of Toronto also saw elevated declines.

The board says new listings declined a similar 63.7% to 3,843, leaving market conditions tight enough to support the average selling price in line with 2019 levels.  It says the average selling price was down 1.5% to $819,665 as both general uncertainty and the types of homes being sold affected the average. The board says the market could see year-over-year average price declines through the second quarter, though it expects the average price for the year to likely remain near the 2019 level because of the overall lower volume of sales expected during the quarter.

Source: Globe & Mail

Royal Lepage Predicts Flattening of Toronto Home Prices

Royal LePage is predicting that Toronto area home prices could still rise this year, despite the COVID-19 crisis. In its first-quarter report, released April 14, the brokerage says that if the pandemic recedes by the end of second quarter, prices could jump up 1.5% year-over-year, to $856,263 by the end of 2020. However, if the lockdown continues to the end of August, the company expects house and condo prices will contract by 0.5% year-over-year to $851,982.

Although Toronto’s housing market had a strong first-quarter, with aggregate resale prices rising 7.5% year-over-year, that won’t be enough to compensate for the loss of eight to 12 weeks in the busy spring real estate season, said Royal LePage CEO Phil Soper. About 22% of sales typically occur in the first quarter of the year. “We’re not anticipating an immediate recovery,” he said. 

Even when the economy begins to move again, people will still be wary of each other and sellers will be more hesitant to allow strangers to tour their homes. But once consumers feel more comfortable, Soper said economic stimulus, such as low interest rates, competition among lenders and softer prices, will kick-start the market. 

The “swift and violent” impacts of COVID-19 have disproportionately hit younger and part-time workers across the province, groups less likely to be in the housing market, he said. That’s why the real estate sector will be one of the prime lifters of the economy when health protocols are relaxed, just as it was following the global downturn in 2008 and 2009, said Soper. “It was really the entry of the first-time buyer and the housing consumer that brought the Canadian economy back after the great recession,” he said.

Soper said it may appear as if real estate prices have plummeted when the country goes back to work. There will be headlines touting dramatically lower selling prices. But those will likely be a few distressed sellers accepting lower prices that lower the overall average. 

There will also be some opportunities for buyers who might otherwise have been faced with competitive offers  — something that was a growing concern in the heated market of the first part of the year. “One of the really challenging things we saw coming in 2020 before the health crisis, was the psychology of multiple defeats where you put an offer in and you lose and you lose and you lose. Eventually people either drop out (of the market) in frustration or they overpay. We should see a lot less of that,” he said.

The Toronto Regional Real Estate Board (TRREB) had been forecasting a 10% rise in GTA housing prices this year before the COVID-19 restrictions stopped showings and stalled all but necessary transactions. The board has suggested that it will have a better idea of where prices and sales are heading later this spring. 

Royal LePage’s report says that Toronto’s outlook is relatively optimistic compared to the national picture. It projects that Canadian home prices could grow 1% if the economy starts churning again by the end of June. But if business is locked down through the summer, housing will likely contract about 3%. 

Source: The Star

Canadian Home Sales Dropped 14% in March as COVID-19 Crisis Shuts Down Economy

Canadian real estate sales activity was predictably down in March, as buyers remained on the sidelines and social distancing led to fewer showings. National home sales fell 14.3% in March, compared to February, but were up 7.8% compared to the same period last year, according to the Canadian Real Estate Association.

Canada’s largest markets saw sales plunge as the coronavirus lockdown took hold, with transactions in the Greater Toronto Area down 28%, Montreal contracting 13.3% and Greater Vancouver edging 2.9% lower. Calgary (-26.3%), Edmonton (-13.2%), Winnipeg (-7.3%), Hamilton-Burlington (-24.9%) and Ottawa (-7.9% ) also saw some considerable declines.

“March 2020 will be remembered around the planet for a long time. Canadian home sales and listings were increasing heading into what was expected to be a busy spring for Canadian realtors,” said Jason Stephen, president of CREA. “After Friday the 13th, everything went sideways.”

But amid buckling sales, home prices managed to inch up from last month. CREA’s home price index rose 0.8% in March compared to February, marking its 10th consecutive monthly gain. Over the past 12 months, average Canadian home prices have risen just under 7%. Bank of Montreal senior economist Robert Kavcic believes the reason prices have held up lies in the 12.5% decline in the number of newly listed homes during March. That suggests the federal government’s income and wage subsidy programs have kicked in and homeowners are not forced to sell their houses — just yet.

“Contrast that to 2008/09, when sales fell by almost 40% from the end of 2007 to the 2009 lows, but new listings rose by 15% through the early stages of that period — that’s how you get a quick and meaningful decline in prices.”

While there is little room for complacency, CREA senior economist Shaun Cathcart notes that preliminary data from the first week of April suggest new listings were only about half of what would be normal for that time of year. 

Based on a comparison of the sales-to-new listings ratio with the long-term average, two-thirds of all domestic markets remained in balanced market territory in March 2020, said CREA. “Virtually all of the remainder continued to favour sellers,” the association said in a statement. 

We may get a clearer picture with April figures, as CREA notes that both home price and sales figures may be skewed in March given that activity in the first half was relatively stable before the complete freeze witnessed in the second half of the month. “The numbers that matter most for understanding what follows are those from mid-March on, and things didn’t really start to ratchet down until week four,” Cathcart said in a statement.

While prices have held up, a protracted shutdown could lead to price weakness eventually. “The longer the shutdown (and potential persistent economic damage) lasts, the more likely prices are to start falling,” Kavcic said. “But, for now, the market looks to be effectively on hold as listings are falling too, and support measures aim to prevent forced selling.”

CREA, has held off on any revisions to its 2020 outlook, which in December called for an 8.9% rise in sales to 530,000 homes, because there is too much still unknown, said spokesman Pierre Leduc.“There isn’t enough data and way too much uncertainty to determine any trends moving forward. It will be near impossible to do so until containment measures are relaxed.”

Source: Globe & Mail
Source: Financial Post
Source: The Star

Home Prices Climb in March, Paced by Ottawa-Gatineau

Canadian home prices rose at a brisk pace in March, led by the capital region of Ottawa-Gatineau, data showed on April 20, even as measures taken to contain the coronavirus outbreak pummelled economic activity. 

The Teranet-National Bank Composite House Price Index, which measures changes for repeat sales of single-family homes, showed prices were up 0.6% in March from February. The price gain was double the average rise for March over the past 10 years, said Marc Pinsonneault, a senior economist at National Bank of Canada.

Prices rose in seven of the 11 metropolitan areas in the index, with Ottawa-Gatineau up 1.1% and Vancouver climbing by 1%. Compared with the same month a year ago, the index climbed by 3.8%, its strongest pace since June, 2018. It was the eighth consecutive month that the year-over-year gain accelerated.

The Bank of Canada has slashed interest rates by 150 basis points since the start of March to ease the economic impact of the coronavirus pandemic, but mortgage rates have not fallen as much due to strains in financial markets. (One hundred basis points equal one percentage point.) Data from the Canadian Real Estate Association showed that buyers and sellers in the housing market moved to the sidelines over the second half of March.

Source: Globe & Mail