Were you one of those people trying to buy or sell a home this crazy Covid year?
If you were you likely discovered it has been nothing short of highly volatile compared to previous years with big swings from price drops to record highs. Let’s take a look at 2020 to see what has brought us to where we are today.
Prior to the official government declaration in April that the country is under a viral pandemic and will be officially shutting down, the market was beginning to awaken from a 3 year slumber and housing sales were beginning to boom once again...
At the beginning of 2020 we saw a spike in prices as the market began the return to a seller’s market, something we hadn’t seen in the real estate industry for a few years.
Despite the economy being at a stand still, for which it had been for a number of months, the federal government reduced interest rates and introduced a first-time housing buyer incentive to spur the market...and it worked.
Prior to this buyers had been holding firm. The market was still moving but it was a more balanced market. Buyers who wanted to own a home or upgrade their present residence had been left saving after the introduction of the mortgage stress test.
A measure that incidentally put a hole in consumer’s pockets as they felt the pinch of having their buying power reduced in an instant by approximately 25%.
However as interest rates were reduced with the start of 2020 which put more money in people’s pockets, this incentivized some renewed confidence in consumers and allowed people to consider once again the reality that they could buy a home they wanted.
The beginning of Covid..
Then Covid.
On March 13th, Trudeau gave a press conference that informed Canadians they would be shutting their doors for 5 weeks due to the seriousness of the “Corona Virus” that had come from China. As the country, began tracking the surge in Covid infections and deaths, this lead to a 3 month shut down in Ontario as schools closed, businesses closed aside from grocery stores and what was deemed “essential” taking us almost to the end of June for most industries before having the opportunity to open once again in June.
Unfortunately some people had already sold their homes prior to this announcement or had bought a home, those needing to buy or sell were caught in the crossfire.
Home selling was quickly reduced to virtual showings, some buying sight unseen, others had to answer a battery of questions and then were masked, gloved and sanitized (to which we still are) and prices swiftly dropped to almost the previous years prices.
Others were lucky and delayed their closing dates or cancelled their sales/listings because they couldn't find somewhere to move and still others had to swiftly reduce the price of their homes in an effort to sell. This craziness lasted into almost the end of June, fortunately the real estate profession and public at large began adjusting come May.
Despite Hamilton still remaining relatively unscathed in regard to housing prices and the real estate machine still chugging along. Other cities weren’t as fortunate as you got closer to Toronto and took a hit.
Burlington, ON
Burlington home sales were reduced to a snail’s pace as the number of listings was reduced to approximately 42% of the number of homes selling in March and in turn sales activity dropped by 48%.
We saw the median sale price of homes from March 2020 to April 2020 drop by approximately $110,000 bringing prices back to where the market was a year prior.
As buyers and sellers began adjusting to the new normal, May saw an increase in prices once again. As the number of buyers and sellers on the market fractionally increased it was still not a normal May or June but they were a lot closer to normal than it was in April.
The introduction to summer brought with it an ease on restrictions. As people acclimatized to the new normal and became more confident with the new process we saw a slight increase in homes on the market and we had a new type of buyer on the scene too.
The Covid Buyer
As people spent almost 3 months isolated within their homes either laid off from work or working from home, it gave people time to reflect and ponder life going forward at the same time, many businesses also adjusted and became accustomed to the reality that they could still be productive if their employees worked remotely. Then for other people they pondered their future and question whether they should ease up on debt, cash in and buy cheaper.
This opened the market up for a new buyer and a new market.
As many buyers focused on finding solace experienced with the freedom to stop and smell the roses, something they didn’t do prior to Covid this meant moving out of the big city centers like Toronto in pursuit of a more affordable price!
After being confined and imprisoned with the mandatory lockdown this desire for more space, preferably green space or need to shave off some debt and live more stress free became a reality for many.
So How Did Our Covid Buyers In Addition To Buyers From A Delayed Spring Impact The Market?
We Had A Buyer Bubble… for lack of a better term
And BOOM.. they were off again.
Ontario hit record sales for the month of August as average sale prices increased by over 23%.
As September came and went with parents, children and schools having to work out the logistics for in-class and virtual learning, the roaring summer momentum continued.
Average days homes sat on the market were down. Sales activity up 48% with average and medium prices up 18% and 15%.
Is There No End In Sight? Will The Housing Market Ever Cool?
How can this be?
There’s been a grumbling of a pending economic collapse but despite overcoming the start of an unconventional school year, there was an uncharacteristic flurry of housing sales where we would normally see a slowdown.
Well we did see a slight slow down as we entered October and I do mean slight.
RAHB (Real Estate Association of Hamilton Burlington) reported 1615 homes sold, down 7.6 percent from September.
But hey! Who wants normal these days!?
As November came and went, we saw Days on Market consistently low BUT look at the average and median prices for November. As median figures show a tendency of where price is generally trending which was fairly on par with October, the average sale price would indicate there was a return to luxury sales which would indicate, yup…. sales of luxury homes.
Generally when the market is slow luxury sales feel the effects first and it is generally longer lasting than lower priced homes.
Could this be an indication of confidence in the economy or is this a sign of people cashing in?
Overall, we will have to wait and see what 2021 brings and how the market plays out for December but based on Day on the Market both charts would indicate homes are moving pretty quickly off the shelves so far..
If you would like to receive a personalized market analysis of your home….
Contact me
Rachel Craggy
Salesperson