Market Cooldown in April Across the Country

Published May 17, 2021 by Real Estate Leads

You’re going to struggle to find any industry expert who doesn’t agree that Canada’s housing market is overheated right now, and perhaps that’s even an understatement. Even cities and towns that have never seen a homebuyer frenzy in their entire existence are seeing one now, and obviously to say that makes for a seller’s market in an emphatic way is also an understatement. That has its positives and negatives, and it’s not always entirely a plus for realtors either.

That’s because it becomes increasingly common for realtors representing buyers to have their client’s very fair offer for a home be beaten by others, time and time again. This is happening routinely in desirable metro cities, but again it’s also a phenomenon that’s spreading out to smaller-town Canada too. If you’re the listing realtor you may be guaranteed of sitting pretty, but if you’re trying to put you clients in a new home as buyers then it may be increasingly difficult to earn your commissions the way you used to in that capacity.

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Many of these same industry experts have said that a temporary ‘cooldown’ of the market would be a good thing in the big picture. And it seems that is exactly what has happened now as indicated by the numbers recently put out by the CREA (Canadian Rea Estate Association) for last month, April of 2021

Dip from Massive March

The average selling price for a home in Canada is up by nearly half from the lows it hit in the early days of the pandemic. That’s great, but the number of homes sold in April dipped down 12.5% compared to March – the busiest month ever for Realtors in Canada statistically!

Further, overall sales were down in nearly all markets across the country, including just about everywhere in Ontario and British Columbia. (85% of the country as a whole). The hope for many is that this is something of an invisible hand that’s stabilizing and normalizing the market and maybe keeping it from being overheated to the point that it’s about to burst into flames.

What’s behind it all of course is the COVID-19 pandemic pushing interest rates to record lows and then many buyers also feeling that it’s now or never if they’re ever going to buy a home.

No Normal with Seasonal Patterns

We can also now safely say that COVID-19 has taken the usual seasonal patterns of Canadian real estate and thrown them right out the window. What’s standard is for the housing market to start off the year slowly before heating up as the weather gets warmer. Then sales tend to slow down at the end of summer / start of school year and continue to go down all through the remainder of the year.

No this year, and not even close. COVID-19 shutdowns in the early days of the pandemic caused sales to completely flop in March and April of 2020, but they then exploded once May brought something of a reopening.

Sales should also usually be higher in April compared to March, but as we mentioned March 2021 was the busiest month for real estate on record. So April’s slowdown could be one of two things; a pause in the continuing upward or momentum or a more lasting cooldown.

What we do know is that sales are expected to trend lower in the second half of this years as rising interest rates and stricter stress test regulations begin to be introduced or more firmly in place. Some believe more simply that sales are way down because so many would-be homeowners have scrapped that plan given the financially daunting realities a lot of them would face.

Big Price Gains

The one thing that will look good no matter what to homeowners with a house on the market is that enormous price gains continue to be the norm for homes sold in Canada. The average price of a Canadian home that sold in April was $696,000, and that’s up 41.9% from 2020.

And if you’re inclined to say that the House Price Index is a better indicator for median pricings, we can say the same thing there as even the HPI rose by 23%. That jump is the highest since 2005.

Reality is that demand is extremely strong and the market is still extremely strong and resilient and so it’s unlikely we’ve seen peak momentum, even if it might temporarily look that way right now.


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