COVID-19 weighing on housing market
Thursday Apr 02nd, 2020Share
After a strong start to 2020, economic conditions have dramatically changed, as COVID-19 is impacting all aspects of society. The economic impact is starting to be felt across many industries. This includes the housing market. March sales activity started the month strong, but quickly changed, as concerns regarding the spread of COVID-19 brought about social distancing measures. This had a heavy impact on businesses and employment.
“This is an unprecedented time with a significant amount of uncertainty coming from both the wide impact of the pandemic and dramatic shift in the energy sector. It is not a surprise to see these concerns also weigh on the housing market,” said CREB® chief economist Ann-Marie Lurie.
By the end of March, sales activity had fallen 11 per cent compared to last year. This is 37 per cent lower than long-term averages. The drop in sales pushed March levels to the lowest recorded since 1995.
“The impact on the housing market will likely persist over the next several quarters,” said Lurie. “However, measures put in place by the government to help support homeowners through this time of job and income loss will help prevent more significant impacts in the housing market.”
New listings dropped by 19 per cent this month. This decline in new listings compared to sales caused supply levels to ease and helped prevent a larger increase in oversupply. Overall, the months of supply remain just below five months, similar to levels recorded last year.
Prices were already forecasted to ease this year due to oversupply in our market. In March, the citywide benchmark price was $417,400. This is nearly one per cent lower than last year’s levels. The reduction in both sales and new listings should help prevent significant price declines in our market.
However, price declines will likely be higher than originally expected due to the combined impact of the pandemic and energy sector crisis.
HOUSING MARKET FACTS
- Detached sales eased by 15 per cent this month, driven by pullbacks in all districts except the North, which remained flat compared to last year.
- The decline in sales was met with a larger decline in new listings, causing inventories to fall by 17 per cent and keeping the months of supply slightly lower than last year’s levels.
- Detached benchmark prices have remained relatively unchanged compared to last year at $480,800. Price declines this month continue to be the highest for the City Centre, North East and West districts.
- With 217 citywide apartment sales in March, this was the only category to record a year-over-year gain. Much of the gain was due to improving sales in the South, South East and North West districts.
- New listings this month did ease, helping support a small decline in inventory levels.
- Persistent oversupply has resulted in continued downward pressure on prices. In March, the citywide benchmark price eased by more than two per cent compared to last year for a total of $243,700.
- Both semi-detached and row sales declined this month compared to last year. Like the other property types, there was also a significant reduction in new listings.
- The decline in new listings helped push down inventory levels for both property types, but it was not enough to prevent a rise in the months of supply.
- However, this segment was oversupplied prior to the recent changes, impacting prices. As of March, prices remained nearly one per cent lower than last year’s levels for both semi-detached and row properties.