Market Watch - Strong Demand for Home Ownership Continues Despite the Lockdown

Although the country was in a lockdown in both May 2020 and May 2021, the impact they had on the resale market was quite different – with this year’s number of transactions being well over the five-year average. Undoubtedly, enhanced safety measures and vaccine adoption rates have enabled potential Buyers and Sellers to feel more protected and comfortable in their home buying and selling process.

There has been strong demand for ownership housing in most parts of the country for both ground-oriented home types and condominium apartments. This was fueled by confidence in economic recovery and low borrowing costs. However, in the absence of a normal pace of population growth, we saw a pullback in sales over the past two months relative to the March peak.

The recent gains in prices have encouraged more homeowners to list their homes and take advantage of the current market situation.

Ontario - Strong Demand for Home Ownership Continues

Toronto, 02 June 2021 -- Residential transactions reported through TRREB’s MLS® System remained high in May 2021, but fell short of the 2016 record and were below this year’s March peak. Despite a slight ebb in sales over the last two months, market conditions remained tight enough to push the average selling price to an all-time record in May.

Greater Toronto Area REALTORS® reported 11,951 sales in May 2021 – more than double the result from May 2020, the second full month of the pandemic. May 2021 sales were below the May 2016 record of 12,789 but remained well above the average May sales of 10,336 for the 2010 through 2019 period. Often, May is the strongest sales month in any given year; however, 2021 results bucked this trend, with May sales below the 15,646 deals reported in March.

“There has been strong demand for ownership housing in all parts of the GTA for both ground-oriented home types and condominium apartments. This was fueled by confidence in economic recovery and low borrowing costs. However, in the absence of a normal pace of population growth, we saw a pullback in sales over the past two months relative to the March peak,” said TRREB President Lisa Patel.

The MLS® Home Price Index Composite Benchmark was up by close to 19% year-over-year in May 2021. The average selling price across all home types was up by 28.4% year-over-year, reaching a record $1,108,453. On a seasonally adjusted basis, the average price increased by 1.1% between April and May 2021.

“While sales have trended off the March 2021 peak, so too have new listings. This means that people actively looking to purchase a home continue to face a lot of competition from other buyers, which results in very strong upward pressure on selling prices. This competition is becoming more widespread with tighter market conditions in the condominium apartment segment as well,” said TRREB Chief Market Analyst Jason Mercer.

Residential Resale Market: A Tale of Two May Lockdowns

Ottawa, June 3, 2021 -- Members of the Ottawa Real Estate Board sold 2,296 residential properties in May through the Board’s Multiple Listing Service® System, compared with 1,342 in May 2020, an increase of 71%. May’s sales included 1,779 in the residential-property class, up 67% from a year ago, and 517 in the condominium-property category, an increase of 85% from May 2020. The five-year average for total unit sales in May is 2,123.

“Although Ontario was in a lockdown in both May 2020 and May 2021, the impact they had on Ottawa’s resale market was quite different – with this year’s number of transactions being well over the five-year average. Undoubtedly, enhanced safety measures and vaccine adoption rates have enabled potential Buyers and Sellers to feel more protected and comfortable in their home buying and selling process,” states Ottawa Real Estate Board President, Debra Wright.

“Additionally, twice the number of new listings entered the market in May 2021, compared to last year at this time, with 2,386 residential properties and 727 condos added to inventory. This is approximately 50 units more than the five-year average for new listings,” she adds.

May’s average sale price for a condominium-class property was $424,843, an increase of 24% from last year, while the average sale price for a residential-class property was $741,206, an increase of 35% from a year ago. With year-to-date average sale prices at $736,241 for residential and $420,074 for condominiums, these values represent a 35% and 21% increase over 2020, respectively.*

“With the number of condominium sales transactions having increased by 85% in May of 2021, over May of 2020, coupled with the 21% price increase in the same periods, it appears that the condo market has recovered from the declines experienced early in the pandemic.”

“For residential-class properties, price movement is still well above 2020, with 46% selling over $700K compared to 16% of properties last year at this time – these percentages are reflected in the sales data for both May and year-to-date. We observe that month-over-month average price increases for April and May are not as high as the jumps in value in the first quarter of 2021. While it is still too early to predict, this may be a sign that the rapid price acceleration we have been experiencing is easing in the market.”

“As we come out of this lockdown, we will closely monitor other market factors including the effects of the increased stress test measures combined with the average five-year fixed mortgage rates climbing back over two% since the beginning of 2021, and whether pent-up supply will decrease our supply shortage and eventually bring Ottawa’s real estate market to a more balanced state,” Wright concludes.

OREB Members also assisted clients with renting 1,837 properties since the beginning of the year compared to 1,207 at this time last year.

British Colombia - Near Record-breaking New Listings in the Fraser Valley Not Enough to Match Insatiable Buyer Demand  

June 2, 2021, SURREY, BC – Fraser Valley’s extraordinary pandemic real estate market continued to break sales records – for the ninth consecutive month – while at the same time, reaching near‐historic levels of new listings in May.    

In May, the Fraser Valley Real Estate Board (FVREB) processed 2,951 sales on its Multiple Listing Service® (MLS®), an increase of 267% compared to May 2020 and a 2% decrease compared to April. (Note that last year, the market was significantly restricted due to the lockdown.) The previous record high for sales in May for the Fraser Valley region was 2,911 in 2016. 

Larry Anderson, President of the Board, said, “Demand hasn’t changed. What’s changed is supply. In the last three months, buyers have 40% more inventory to look at in the Fraser Valley and it’s allowed them to take back a little control.   

“We’re seeing resistance to multiple offers and buyers adjusting their offers, or even waiting because they have more selection. We’re a long way from a balanced market, but supply is helping us to head in the right direction.”

In May, the Board received the second‐highest volume of new listings ever; approaching May 2018 levels. The Board received 3,926 new listings in May, an increase of 78% compared to last year, and a decrease of 22% compared to April 2021. The month ended with total active inventory sitting at 5,868, a 3% decrease compared to April, and 9% less than May of last year.    

Baldev Gill, Chief Executive Officer of the Board, added, “In the context of BC’s Restart Plan, it’s important to remind consumers that for now, when it comes to working with a real estate professional or booking a private showing, it’s status quo. Currently, there is no easing of pandemic restrictions in the real estate sector and our Board does not anticipate new guidelines for several weeks. Your REALTOR® will continue to guide you safely through the buying and selling process, following all public safety protocols, for as long as necessary.”

Across Fraser Valley, in May, the average number of days to sell a single‐family detached home was 14 and a townhome was 12 days. Apartments took, on average, 20 days to sell.  

MLS® HPI Benchmark Price Activity

Single Family Detached: At $1,323,300, the Benchmark price for an FVREB single‐family detached home increased 2.3% compared to April 2021 and increased 33.6% compared to May 2020.

Townhomes: At $670,000, the Benchmark price for an FVREB townhome increased 2.7% compared to April 2021 and increased 20.7% compared to May 2020.

Apartments: At $488,500, the Benchmark price for an FVREB apartment/condo increased 2.0% compared to April 2021 and increased 12.6% compared to May 2020.

Alberta - Inventory Rises, But sellers' Market Conditions Persist

Calgary, June 1, 2021 – With 2,989 sales, housing market activity hit a new May record.

Despite strong levels of sales, they did trend down relative to last month. Additionally, there were 4,562 new listings, causing seasonally adjusted inventory levels to increase over the last month.

"The recent gains in prices have encouraged more homeowners to list their homes and take advantage of the current market situation," said CREB® chief economist Ann-Marie Lurie.

"However, the inventory gains are still not enough to offset the demand growth and the market continues to favour the seller. Prices are rising, but they are still recovering in our market from previous highs in 2014. Only detached and semi-detached home prices in certain districts and communities have recovered to the level of previous monthly highs."

The months of supply did trend up slightly this month to just over two months, but it was not enough to halt the upward pressure on prices. The unadjusted benchmark price in May reached $455,200. This is one% higher than last month and nearly 11% higher than prices recorded last year. 

Sales have been rising across all product types, but homes priced above $600,000 represent a larger-than-usual share of all sales. The upper end of the market only reflected 16% of city sales last May, compared with this year where it now reflects nearly 26% of all sales.   

HOUSING MARKET FACTS

Detached - Seasonally adjusted figures show detached home sales trending down slightly from last month, but levels remained the best recorded for May.

Due to relatively strong new listings, inventories are trending up relative to both the previous month and the previous year. This caused the months of supply to increase to 1.7 months and reflects some easing of the extremely tight market conditions seen over the past several months. However, the detached market continues to favour the seller and prices continue to rise.

Detached home prices rose across each district, with the largest year-over-year gains occurring in the North, North West and South East districts. 

The gains in prices have been supporting price recovery for detached homes. As of May, only the City Centre and North East districts have seen prices remain below previous highs.

Semi-Detached - Year-to-date sales totalled 1,169 units, which is the strongest five-month total on record for this product type. Despite some adjustments in new listings, the sales-to-new-listings ratio rose to nearly 75%.

Overall, the months of supply remained below two months for semi-detached housing, supporting further price gains on a monthly and year-over-year basis.

Benchmark prices have seen double-digit price gains compared to last year's levels in all districts except the City Centre.

The highest gains have occurred in the South East, South and North districts. While the city total is showing a recovery in price based on monthly levels, there are several districts where prices continue to remain below their previous highs.

Row Houses - Inventory levels trended up compared to last month and levels seen last year. This is due to further gains in new listings relative to sales and caused the months of supply to rise to 2.5 months.

However, conditions continue to favour the seller, which is causing further price gains this month. The unadjusted benchmark citywide price totalled $296,400. This is a one% increase over last month and nearly eight% higher than last year.

Prices continue to improve across most districts, but they remain well below previous highs. Depending on the location, prices remain anywhere from five to 20% below previous highs.

Apartment Condominium - Year-to-date condominium sales totalled 1,659 units.

This is the highest number of sales seen since 2014. Despite the improvements, seasonally adjusted sales did trend down relative to last month.

Recent price increases are likely supporting some of the strength in new listings. While levels have been trending down compared to a few months ago, they do remain elevated based on what we typically see in May. As the sales-to-new-listings ratio eased to 48%, we saw inventories trend up this month, pushing the months of supply to over five months.

Slightly higher supply levels compared to sales did impact the pace of monthly gains in the benchmark price. However, May prices remain nearly five% higher than last year's levels. Price movements also varied depending on location, but no district has seen prices recover to previous highs.

Currently, the citywide price remains nearly 16% below 2014 levels.