Should You Sell Your Home During the Second Wave of COVID-19?
The outbreak of the novel coronavirus early this spring dealt some staggering blows to Canadian real estate; with declarations of states of emergency and the implementations of lockdown procedures, the industry all but stopped in its tracks.
At least, for a brief moment.
In the months that followed, all of Canada’s major markets experienced impressive rebounds, and many are still enjoying strong seller’s markets as a result of pent-up buyer demand.
But now that the nation is staring down the second wave of the pandemic – with four provinces already firmly in it – what should home sellers expect? To help answer that, we’re taking a look at how the national real estate market was affected by the COVID-19 outbreak, how the industry reacted, and what this could mean for the (near) future of real estate in Canada.
Sharp declines in early spring
After Canada’s leaders began declaring states of emergency and implementing lockdowns during the latter half of March, the real estate industry saw almost immediate effects. By the end of April – typically one of the busiest months for real estate in this country – national sales had fallen 57% from the previous month, the number of newly listed properties plummeted 56% in the same period, and the national average sale price fell 1.3% from the average in April 2019.1
Of course, it was the early days of the pandemic and experts were still scrambling to understand its transmission, symptoms, and mortality rate. Amidst health officials’ ordinances to stay at home, reports of climbing confirmed cases, shortages of personal protective equipment (PPE), and rumours of fines being handed out for non-essential social activity, people were understandably scared to house hunt or have buyers inside their homes.
Adaption within the industry
Having been deemed an essential service by provincial governments in late March, real estate professionals made quick industry pivots to be able to safely meet the needs of clients. Thankfully, much of the technology that allowed them to continue showing homes and communicating with clients was already in place – albeit somewhat on the periphery of traditional real estate practice – such as virtual showings, e-signatures, 3D tours, and so on. In-person showings were reserved for only the most serious buyers, and in those cases, REALTORS® were behooved to manage their interactions respecting Public Health's guidelines.
Booming market reactions
By the end of May, the national market was making a strong rebound, with average sales rising 57% from April and new listings up 69% in the same period.2 By the end of June, home sales were “returning to normal levels for the month,” according to the Canadian Real Estate Association (CREA), with home sales rising 63% month over month, listings up 50% month over month, and the national average price rising 6.5% over June of 2019.3
Purplebricks.ca and REALTOR.ca also reported skyrocketing online visits in June, which CREA’s Vice President Patrick Pichette suggests may have been due to “Canadians simply having delayed their home buying journey while continuing their search” in addition to “how quickly CREA adapted to promoting a virtual, contactless transaction process.”4
July and August heralded more record-breaking months for many of Canada’s major markets, particularly in Ontario, though the national averages still showed impressive figures. July saw the highest national sales of any month in history with a growth of 31% year over year, and August’s national average sale price increased 18.5% over the same month last year.5
While the numbers are remarkable – especially in the Ontario markets where shortages of inventory have been driving home prices up – it’s worth noting that the home sales to date (that is, how many homes have been sold all year), have only just caught up to August 2019’s sales; according to Shaun Cathcart, CREA’s senior economist, “that is somewhat of a low bar as the first half of 2019 wasn’t really anything to write home about.” Costa Poulopoulos, Chair of CREA, also notes, “REALTORS® and their clients [are playing] catch up following the loss of so much of the 2020 spring market,”6 suggesting that the dizzying month-over-month increases in sales are more indicative of the shifted spring market than of overall market strength.
What’s next for second-wave sellers?
As we look ahead to Q4 in the context of the second wave of COVID-19, it’s important to note how far we’ve come in only half a year:
The novel coronavirus: Health organizations now have a much better understanding of how the virus spreads and presents, scientists have better data supporting the use of PPE, and the Canadian government is more prepared to impose measures to protect the public safety. At the time of publishing, some municipalities in Ontario and Quebec have reissued lockdown policies, while the rest of the country stands prepared to do so, if necessary. So too, the public has largely adopted social distancing behaviours and the regular use of PPE.
The real estate industry: Practically overnight, an industry that has traditionally relied on trusting handshakes and seeing homes up-close and personal became largely virtual, as REALTORS®, brokerages, and their associations espoused easy-to-use technologies which the public has also embraced. By the end of August, REALTORS® had facilitated the sale of 341,463 houses over the Canadian MLS® Systems,7 proving that the industry could rise to meet the challenges it faced.
So, what should home sellers take from all this? In a nutshell, the outlook is more positive than it was in March and April. The real estate world has become much safer in terms of preventing the spread of the virus, and the numbers between April and August suggest that there is almost as much seasonal demand for homes during the pandemic as there is under normal circumstances. Therefore, we can be hopeful that if a future lockdown pauses real estate transactions, the market will, for the most part, correct itself in due time. If you're thinking of selling your home during these uncertain times, the best thing to do is consult with a local Purplebricks REALTOR® who can look at the specifics in your market, guide you toward the best decision for you and your family, and help you stay as safe as possible.
1. CREA: Canadian home sales and listings post record declines in April 2020.
2. CREA: Canadian home sales and new listings on the rise in May.
3. CREA: Canadian home sales and new listings up again in June.
4. CREA: Canadian home sales and new listings up again in June.
5. CREA: August 2020 another record-setting month for many Canadian housing markets.
6. CREA: August 2020 another record-setting month for many Canadian housing markets.
7. CREA: August 2020 another record-setting month for many Canadian housing markets.