Residential Market Commentary
The crush of home sales that was expected in the run-up to the stricter mortgage stress-tests that kicked-in this month did not materialize. Nonetheless May sales still set a record for the month.
More than 56,000 sales were recorded last month, up by more than 100% from a year ago. However, it has to be remembered that last May’s figures were the lowest since the late 1990s, as the economy was largely shut down by the pandemic. More tellingly, May marked the second consecutive month-over-month decline in sales, dropping 7.4% from April.
Demand, supply and prices also moderated in May.
“More and more, there is anecdotal evidence of offer fatigue and frustration among buyers, and the urgency to lock down a place to ride out COVID would also be expected to fade at this point given where we are with the pandemic,” said Cliff Stevenson, Chair of the Canadian Real Estate Association.
“[F]or now at least, with the light at the end of the tunnel so close, it feels like housing may take a back seat to us all starting to get our lives back to normal this summer,” said Shaun Cathcart, CREA’s Senior Economist.
CREA’s Composite Home Price Index showed a 1% m/m increase between April and May – a noticeable deceleration. Most of that slowdown happened in single family homes. On a year-over-year basis the Composite Price rose 24.4%.
The National Average price topped $688,000, a 38.4% increase over a year ago. With the busiest and most expensive markets – Toronto and Vancouver – taken out of the equation, the National Average price drops to $548,000.