According to CREA, the 199,000 units sold (seasonally-adjusted and annualized) in Canada in April were the smallest monthly total the country has seen since September 1984.
However, the generational low has yet to create unbalance in the market, as supply and demand fell in near-perfect tandem, keeping the sales-to-new listings ratio little changed at 0.62 (compared to 0.64 in March and 0.65 in February), according to senior RBC economist Robert Hogue. This ratio is at a level consistent to keep the current market, however, marred by COVID, in the sellers’ favour.
“The relationship between demand and supply has changed little since February both nationally and in most local markets. What was tight remains generally tight and the few soft markets didn’t get much softer. This explains why home prices haven’t cratered in the face of generational low levels of activity.”
The Canada Real Estate Association (CREA) released its latest figures on May 15, noting that national home sales dropped a record 56.8% month-over-month in April compared to an already “weakened” March, as the majority of sellers and buyers moved to the sidelines amid pandemic lockdown.
Canada’s largest markets were hit the hardest, with sales falling by 66.2% in the Greater Toronto Area (GTA), 64.4% in Montreal, 57.9% in Greater Vancouver, 54.8% in the Fraser Valley, 53.1% in Calgary, 46.6% in Edmonton, 42% in Winnipeg, 59.8% in Hamilton-Burlington, and 51.5% in Ottawa.
Despite the huge drop in sales, prices remained relatively flat, with CREA recording the actual (not seasonally adjusted) national average price for homes sold in April was just over $488,000, down 1.3% year-over-year. Also of note, the Aggregate Composite MLS Home Price Index — which CREA says is the most advanced and accurate tool to gauge home price levels and trends — declined by 0.6% in April month-over-month, marking the first decline since last May.
“While some downward pressure on prices is to be expected, the comparatively small change underscores the extent to which the bigger picture is one where so much activity on both the selling and buying side is currently on pause,” said the CREA.
RBC, for its part, believes that April was the country’s low point for any COVID-related housing activity: “The Canadian Real Estate Association said early results for the first half of May show small increases in both resales and new listings. This is in line with our view that April will be the cyclical low point in terms of activity.”
The big bank believes the biggest risk to prices remains with first-time homebuyers and current homeowners affected by COVID-19 job disruptions that could lead to forced sales. From this, RBC expects “demand-supply conditions to deteriorate and downward price pressure to build somewhat despite the economy and labour market being projected to improve gradually over the second half of 2020.”
Today marks Stage 1 in Ontario’s reopening of the economy, a hopeful sign that things around here will have the chance to get back toward (a new) normal soon.