There’s a simple answer to that question, with a somewhat counterintuitive explanation. How has COVID-19 affected housing sales? Well: housing sales have hit record highs, with housing prices closely following suit in July and August. From the looks of things, I’d say that far from hindering the housing market, the pandemic has actually boosted it.
While that alone is a remarkable testament to the resilience of the Canadian real estate market, the factors contributing to the sizeable jump in sales volume and price are interesting themselves. After all, it’s strange to hear about success in industries unrelated to PPE or disinfecting wipes in a year where our world was brought to a screeching halt by the massive spread of a pandemic.
Let’s take a quick look at the elements that contributed to the predicted early-slump and unexpected surge in housing sales over the year so far.
Short-term contributing factors
Housing sales were delayed from lockdown
Under normal circumstances, Spring tends to be when housing sales are highest, after which they ease off throughout the summer and sputter out altogether by wintertime. However, the timing of pandemic lockdowns in March and April this year caused a lot of sellers (and buyers) to put everything on hold. As a consequence, housing sales sprung back with greater intensity to compensate from the lost sales period earlier in the year, once restrictions started lifting across provinces.
That’s why, housing sales through the first eight months of 2020 were actually 0.8% ahead of the sales pace from 2019 according to a news report from CBC, despite being lower than they’d been in decades during April.
Low mortgage rates have been enticing for first and second-time homebuyers
Following the big drops in interest rates from earlier this year in March, it’s been possible to find fixed-rate mortgages under 2% for much of 2020. In light of that, it’s unsurprising that homeowners looking to upgrade or buy their first home have been taking advantage of high housing prices and low mortgage rates to make the leap. While many first-time buyers have been drawn to the expanded supply of condos coming onto the market (especially from AirBnB units), current homeowners appear to be cashing out the higher values on their property and moving to places more aligned with their requirements.
Long-term contributing factors
The trend of moving away from urban centres has continued
There’s been a trend of people moving away from cities to the suburbs and “recreational markets” for some time now. The pandemic has exacerbated that migration, either because of financial reasons or lifestyle preferences. Now that working from home has firmly become part of our lives for the foreseeable future, many Canadians have taken the opportunity to relocate to homes that better suit the non-work aspects of their lives. In other cases, the prospect of enduring the high cost of living in urban centres may no longer make sense should a second-wave hit the country, necessitating another lockdown.
The pandemic has changed housing priorities
Speaking of working from home, people have also changed what they prioritize in their houses. The year-long stress test we’ve all been put through has highlighted our different attitudes towards living space. While some have thrived in the confines of their houses and apartments, others have found it increasingly difficult to fit home offices, classrooms, and recreational areas for themselves and their children. Unsurprisingly, buying homes with much more indoor and outdoor space has become a lot more attractive. For provinces where COVID-19 outbreaks appear concentrated in certain areas, this seems even more prevalent.
What can we expect in the future?
Sales and prices are projected to drop a bit, heading into 2021, with the market returning to more normal levels. Mortgage deferrals will likely play a role as well, especially if we’re hit with a second wave of COVID-19 cases. Assuming deferrals aren’t put in place again, a worst-case scenario of continued unemployment or interrupted income could see units being released on to the market as folks try to stay afloat.
According to projections, housing sales by the end of 2020 should better reflect the overall state of the year in its numbers. Figures are expected to be better than anyone expected they would be during a pandemic, but not particularly remarkable compared to normal years. It seems that the strangeness of this year really just changed when sales happened, as opposed to suppressing them altogether. However, the full impact of COVID-19 and the permanent changes it has made to so many of our lives will take many more months to manifest.
What are your thoughts on the impact of COVID-19 on house sales? Let us know in the comments.
Freelance writer and communications professional at the University of Toronto. He’s an avid cinephile, voracious reader, and a terror at karaoke bars.