Are We Experiencing a Real Estate Mini-Boom? Early Predictions vs. What We’re Seeing Now
June of 2020 feels like a lifetime ago: it was still fairly early days of the coronavirus pandemic in Canada, and we were just starting to get the hang of restrictions like social distancing and lining up outside of grocery stores. At the same time, real estate markets across the country were beginning to show renewed signs of life after sales figures were dealt some devastating blows through March and April.
As provincial states of emergency were modified and/or lifted following what are normally the busiest months for real estate transactions in Canada, we voiced some suspicions that the early upward trend in sales might be the harbinger of a real estate mini-boom.
So, were our predictions correct? According to the numbers from summer and fall, we were definitely onto something back in June, but one thing we didn’t anticipate was how the pandemic might not just be the catalyst, but the fuel that contributed to the wild seller’s markets ahead.
Early indications of hope for the housing market
Though sales dropped sharply in mid-March after the economy effectively shut down, the May markets were already seeing month-over-month improvements: Ontario and Alberta regained 10-20% of the 50-60% drop in sales seen in April, while Manitoba’s sales edged their way up from a 30% decrease in April to a 19% decrease in May.1
Market activity was still significantly down, but, as we noted at the time, not all buyers had the luxury of postponing their search for a new home, perhaps because they needed to relocate, because their homes had already sold pre-pandemic, or for any number of pressing reasons.
Having discovered that web traffic on the Purplebricks.ca listings page was way up during the lockdowns, we predicted that many buyers whose plans to purchase a home had been put on hold in March and April would make their move as restrictions were lifted, creating a “bottleneck” of market activity.
The spring was released
As cities across the country eased restrictions and REATORS® adopted technologies and practices promoting their clients’ safety, buyers were regaining confidence. By the end of June, month-over-month sales were breaking records in most Canadian markets, inventory was down almost across the board, and from the tension between these two factors, prices were being pushed upwards. The news of strong seller’s markets at the end of spring became the refrain for the rest of the summer.
But, was it a mini-boom? Well, that all depends on your definition of the word, but we’d say, yes, it sure was!
In Ontario, year-over-year sales numbers for June through August were up roughly 20-45% across all major markets,2 while September ushered in another flurry of activity that led to increases ranging from 20-74%.3 By late summer, prices in some markets had risen by as much as 31%, while others were reassured by modest-but-steady price gains.
In Western Canada, Manitoba’s capital saw year-over-year sales increases of 24-47% between June and September, with prices topping the previous year’s monthly averages by roughly 10%.4
Alberta, on the other hand, saw more mixed results. Where Edmonton’s sales growth kept pace with Ontario’s, Calgary had to wait a little longer for their numbers to gain momentum: July brought a 12% year-over-year increase5 while August remained on par with the previous year. But, by September, Calgary, too, enjoyed a massive 25% sales growth6 that put a dent in high inventory levels and restored some balance to the market. Despite their differences, both Alberta cities saw prices remain fairly stable throughout the summer.
With so much activity across these provinces for nearly four consecutive months, it would definitely appear that our predictions were on point.
Buyer demand meets low inventory
Something we weren’t able to hypothesise on back in June was how the pandemic could be actively contributing to market conditions marked by intense buyer demand and low inventory of available homes, rather than simply creating the initial bottleneck effect.
More buyers are reporting that they’re looking for bigger homes and more outdoor space as a result of concerns over the spread of COVID-19; this could mean that the number of buyers actively searching for homes has gone up as people attempt to leave the closer quarters of apartment buildings, multi-family homes, and denser urban areas in general. Although many markets are seeing double-digit increases in new listings year over year, the strong buyer demand is keeping inventory levels at historic lows in many parts of the country.
As we anxiously await the official reports for October’s markets, it’s worth noting that, prior to the pandemic, 2020 was expected to be a good year for sales. As Shaun Cathcart, the Canadian Real Estate Association’s Senior Economist, notes, “sales were almost setting records and markets were almost this tight back in February.” Furthermore, if we look at national year-to-date sales, we’re already 5.8% ahead of sales for the first nine months of 2019.7
Though there’s no crystal ball to tell us how things will pan out for the last quarter of this unusual year, the insights provided by a REALTOR® will be your best guide. Local Purplebricks REALTORS® know your market and can help you get the best price for your home, all while adhering to the latest safety recommendations. And, with our low fixed fee, you’ll save thousands in commission! Last year, we saved Canadian home sellers an average of $13,500.† And if buying is on your horizon, our dedicated REALTORS® can help you navigate these competitive markets. We’ll find your dream home and give you $2,000 cash back* when you make your purchase! In any market, Purplebricks is here for you. Call 1-855-999-9740 to start your real estate journey.
1. Purplebricks May 2020 State of the Market Report
2. Purplebricks June 2020 State of the Market Report; Purplebricks July 2020 State of the Market Report; Purplebricks August 2020 State of the Market Report
3. Purplebricks September 2020 State of the Market Report
4. Purplebricks June 2020 State of the Market Report; Purplebricks July 2020 State of the Market Report; Purplebricks August 2020 State of the Market Report; Purplebricks September 2020 State of the Market Report
5. Purplebricks July 2020 State of the Market Report
6. Purplebricks September 2020 State of the Market Report
7. CREA September 2020 National Statistics