Well, it’s been a little while since I have posted a market update. It’s been a wild ride! As you can imagine, once the pandemic hit, the real estate market literally shut down for 4-6 weeks. It was shaping up to be one of my best spring markets with many buyers and sellers ready to make the move for 2020. It was the first time since 2014 that I felt the buyers and sellers expectations had been close in alignment.
The first month (mid March to mid April) we saw a drastic drop in sales to the tune of 60-70%. The people still buying at this point were more than likely people that had sold their homes and needed a place to buy. Even for the next month, sales were still down about 60%. The only thing that kept prices somewhat flat were the lack of listings. Inventory levels stayed about the same because as many buyers that were in a wait and see mode, so were the sellers. Everyone was in a holding pattern.
Around the end of April, since we were deemed an essential service, I got back to work. There were a decent number of buyers out there. I was working with 2 types of buyers – the ones who were planning to buy a home and wouldn’t be deterred by the global situation and the bargain hunters. The thing with the latter group is that most sellers weren’t interested in dropping their price just yet. Then when the announcement in early May to set plans in motion for a ‘phased’ opening up, that’s the signal people needed to move on with their plans. Ever since then, it has been insanely busy! The past 2 months I have done about ½ the business I usually do in a year. Add that on top of a move for me, a renovation and changing brokerages, I’ve barely kept my head above water.
June finally saw some numbers that were somewhat similar to last year. It did feel extremely busy relative to the first couple months of Covid, however, I have been tempering expectations as the sales we saw last year for the spring market were some of the slowest we have seen over the past 6 years. That shouldn’t take away from a busy market that attempted to kept prices somewhat in check. Sales were down city wide about 2% year over year while benchmark prices had dropped about 2.8%. The benchmark prices city wide have only dropped less than 1% since the mid March. The sales for June were also bolstered by CMHC’s announcement to tighten up their criteria for insuring mortgages. The announcement increased the credit score needed for insurability and decreased the debt ratio affecting buyer’s purchasing power by about 10%. The other 2 mortgage insurers did not follow suit though, so it gives people other options. As I have seen for a couple years now, that a good chunk of the buyers out there are first timers and therefore are primarily in the entry level of all product types. Single family detached is the most popular with prices in this range staying fairly flat over the past couple years. This trend should continue as interest rates continue to be favourable.
Moving in to the summer, I expect the spring market to carry on. We have been seeing an increase in listings over the past couple months to 6200 (up 7% since May), however, we are still down 18% year over year. My thoughts are that until the government assistance dries up, we are living with a false sense of security. Once that happens, we will see a few more distressed sellers. But what can they do? There are quite a few sellers that have been up against the wall for the past 5 years. That may force them in to foreclosure and we may see a few more of those this year and next. The banks certainly do not want to own a lot of homes though so I think they will do what they can to work with owners that are having trouble. Truly, it will take years to realize the full effect of shutting down the world economy for a few months.
If you are selling, there is still a decent amount of demand with buyers out there. Over the past 2 weeks, I have negotiated 3 offers that went competing offers! The buyers are as they have always been – very savvy and know the market well. They are waiting for good value to hit the market and they are ready to buy. On the flip side of the coin, the buyers are ready and able to get a good deal and capitalize on the smoking interest rates (near 2%). If you would like to chat more about the market or your real estate needs, get in touch with me. I’m happy to help you make the right decision for the market we are in.
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