National sales volumes have been sliding for a few years, but this is like nothing seen in a long time.
By Kaitlin Last, for Better Dwelling:
Canadian real estate sales have dropped to the lowest level in a generation. Canadian Real Estate Association (CREA) data shows sales fell in April. Slower growth was expected going into this month, however not this slow. The volume for the month was the lowest since 1984 – when the population was a third smaller.
Canadian Real Estate Sales
Canadian real estate sales slipped to a generational low. There were 16,612 seasonally adjusted sales across CREA in April, down 56.8% from the previous month. Unadjusted sales came in at 20,630 for April, down 57.6% from a year before. Most of the slowdown was obviously due to the pandemic, however not all of it.
Slower growth was expected before the pandemic, due to the comparison period. The months in the first quarter of this year were being compared to negative growth last year. Comparing it to negative numbers last year, makes the acceleration seem more impressive than it is. Due to the pandemic, the numbers are obviously worse than they would have been under normal circumstances.
National sales volumes have been sliding for a few years, but this is like nothing seen in a long time. April sales peaked in 2016, and have had trouble challenging that high. Last month was the worst April since 1984. This is easily explainable by the pandemic, but the lack of sales volume still has broader macro market consequences – regardless of the reason.
Vancouver Real Estate Was One Of The Least Impacted
All markets have seen an impact, but some markets saw declines of less than half. Winnipeg saw the smallest drop with 739 sales in April, down 36.2% from last year. Vancouver follows with 1,119 sales, down 39.5% from last year. Halifax came in third with 354 sales, down 47.2% from last year. Winnipeg and Vancouver have both slipped for two consecutive years.
The largest drops were in Eastern Canada, with Montreal and Toronto taking big hits. Montreal reported 1,890 sales in April, down 67.1% from last year. Toronto followed with 2,975 sales, down 67.1% from last year. The Niagara region came in third with 213 sales, down 64.6% from last year. Both Niagara and Toronto are in the same economic region, and both slipped for a second April in a row.
The insights in this month’s numbers aren’t as clear as most analysts claim. Sales are predictably down, due to pandemic measures – that’s obvious. Sales will rise as the pandemic measures are lifted, that’s also obvious. What isn’t clear, is whether the volume can be made up without driving prices lower. The Bank of Canada is forecasting mortgages in arrears will triple over the next few months. They don’t see the arrears rate peak until next year – and this a conservative, anti-fear mongering forecast. If that happens, some buying volume may be delayed as people wait for the air to clear in the market. By Kaitlin Last, for Better Dwelling