OTTAWA, Ontario – After sustaining steep declines at the start of the pandemic, sales of existing homes in Canada’s biggest urban areas quickly rebounded beyond pre-pandemic levels, according to the Canada Mortgage and Housing Corporation (CMHC).
The CMHC’s recently released “Housing Market Insight: Canada’s Major Markets,” examines trends in existing home sales and prices during the COVID-19 pandemic in Calgary, Edmonton, Montreal, Ottawa, Toronto and Vancouver. It uses pre-COVID-19 activity recorded in the fourth quarter of 2019 as a benchmark to identify key drivers of recent sales and price changes.
A key preliminary trend identified in the report is that higher-income households, who tend own homes, had greater opportunities to maintain their income by working from home. Consequently, they were in a better financial position to purchase a home.
Other highlights of the report include:
- Restrictions introduced by Canadian governments at the start of the pandemic severely impacted economic conditions, amplified by the withdrawal of households from normal activity to avoid infection. This resulted in sharp declines in existing home sales and price levels in the second quarter of 2020 from generally elevated pre-pandemic levels.
- By the end of the third quarter of 2020, however, home sales, average prices and new housing starts had recovered beyond pre-pandemic levels, despite the pandemic continuing and the associated risks to economic recovery.
- Sales, prices and starts in the third quarter also exceeded most forecasts for major metropolitan centres.
- Total sales outpaced total new listings as the existing home market recovered, supporting overall price growth. The mortgage deferral program may have delayed the imperative to sell housing in cases where households were not able to service their mortgage, which held listings down.
Sales growth was stronger for relatively more expensive housing in Vancouver, Toronto, Ottawa and Montreal, further supporting price gains in these markets. This shift likely reflects the uneven distribution of the economic impacts of the pandemic, with higher-income households able to maintain their income through adapting to work from home. For example, in the Island of
Montreal, the share of sales of single-family homes above $1 million rose to 18.5% in 2020 from 14.2% in 2019.
Although housing activity in most major markets has been unexpectedly strong during the pandemic, CMHC said it remained “concerned about major risks that will underlie (its) upcoming Housing Market Outlook report to be released in the second quarter of 2021. In particular, employment conditions remain below pre-COVID levels while the high level of supportive government income measures are temporary in nature. Full and sustained recovery continues to depend on the uncertain
course of the pandemic.”
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