TORONTO -- Canadian real estate sales have fallen to historic lows during the pandemic as fears about the market's future keep cautious buyers and sellers from making a move.
Home sales in April plunged a record-breaking 57.6 per cent from the year prior to 20,630 sales nationwide, the lowest activity on record since 1984, according to the Canadian Real Estate Association.
The stunning drop was most apparent in the country’s two hottest real estate markets, where spring is usually the one of the busiest times of the year. Activity fell 66.2 per cent in the Greater Toronto Area and 51.5 per cent drop in Greater Vancouver. Those cities were followed by Ottawa, which saw a 51.5 per cent drop, and Winnipeg, with a 42 per cent drop.
Those numbers come as little surprise to Vancouver-based realtor David Hutchinson. He listed a new property in April and received just one phone call about it the entire month.
Buying a home is one of the biggest financial commitments a person can make, and Hutchison says both buyers and sellers have decided to take a wait-and-see approach.
"People are on the sidelines a lot more,” Hutchison told CTV News.
While home sales have fallen dramatically, prices have not followed suit. The most recent numbers from April show that the national average price for a home was more than $488,000, down just 1.3 per cent from the same month last year.
Regardless, what’s clear is that anyone looking to sell a home isn’t facing the same set of circumstances as they would have before March. Toronto-based realtor Gus Papaionannou showed CTV News the numbers on a detached home in Toronto’s Riverdale neighbourhood that recently sold for $1.2 million — about $140,000 less than what the sellers were asking for just six weeks ago.
“Prices in general are flat, but there are certain sellers that if they need to sell, yes, they need to sell,” he said.
The state of the market is also worrisome for those who recently purchased a home. Myles Wagman and Jenia Bloch took possession of their new home just three weeks ago in Toronto.
“For so long in Toronto it’s just been assured that house prices are going up,” Wagman said.
If prices take a nosedive, they worry they could be left with a property that isn’t worth what they paid for.
“We haven’t seen prices reduce significantly, but definitely it’s been very, very stressful,” Bloch said.
Lockdown measures have also made it difficult to buy and sell, with most jurisdictions banning open houses. Instead, virtual open houses by Skype or FaceTime have been offered in their place.
It’s too soon to know what next month will bring, but that are early signs that May could be a more positive month for sales, said Sean Cathcart, senior economist with the Canadian Real Estate Association.
"We've developed a bit of a leading indicator and it's showing that things have been improving since about mid-April,” Cathcart said.
The market’s long-term viability could be affected by job losses if hard-hit homeowners begin looking to cash out on their properties. But measures such as mortgage deferrals and financial assistance from the provincial and federal governments may be helping keep those numbers down.
Preliminary figures suggest that about 10 per cent of Canadian homeowners have chosen to defer their mortgage payments, according to the CMHC, and those deferrals are higher in regions that rely on the oil and gas sector.
Nationally, new listings fell 56 per cent from March to April.
With fewer houses up for sale and buyers holding back offers, the market has entered an unusually placid phase, said Robert Kavcic, director and economist of BMO Capital Markets.
"We're in this odd situation where yes we are in recession, but we’re not getting a bump in listings and therefore, we're not getting a decline in home prices.”
It may be years before real estate prices return to pre-pandemic levels. Earlier this month, officials with the Canada Mortgage and Housing Corp. said they don’t expect prices to return to what they were before COVID-19 until late 2022 at the earliest.
With files from The Canadian Press
