Engel & Völkers is excited to share its 2020 Mid-Year Canadian Luxury Real Estate Market Report. This report combines market data with intel from Engel & Völkers’ local Canadian market experts. The result is a residential property analysis covering the markets in Halifax, Montréal, Ottawa, Toronto, and Vancouver through April, May, and June. The report shares insights on what’s happening inside Canada’s top real estate markets including notable trends, in-demand neighborhoods, economic factors, and changing buyer and seller preferences in three different price segments; under $1 million, $1-4 million, and over $4 million. In addition, the analysis discusses how the COVID-19 pandemic is affecting real estate through Q2 and forecasts what lies ahead for Q3.
Canada’s major metropolitan areas are defying doom and gloom forecasts, showing market resiliency following a significant pause due to COVID-19. Until lockdown began across Canada in late March, Halifax, Ottawa, Montréal, Toronto, and Vancouver reported 2020 began as one of the busiest years on record. As lockdowns went into effect, the Engel & Völkers global digital infrastructure enabled advisors to continue providing services while protecting clients’ safety and financial interests.
In British Columbia, Nova Scotia, and Ontario, real estate was deemed an essential service, allowing transactions to occur under significant restrictions. Québec, on the other hand, put the market on an unprecedented pause, effectively shutting it down from the end of March through May 11.
At a national level, April was marked by generational lows. Home sale activity fell by a record 56 percent compared to an already affected March. Year-over-year, national sales dropped by 57.6 percent and the number of newly listed homes across Canada declined by 55 percent in April compared to March. Despite these declines, prices held in most markets through the pandemic. National home sales rebounded in May by a record 56.9 percent, constituting one-third of a return of the activity lost between February and April. The number of new listings across the country climbed by a record 69 percent in May compared to April. By June, home prices circled back to pre-pandemic levels, as inventory increased, but not enough to meet pent-up buyer demand. Engel & Völkers specifically saw a 30 percent year-over-year increase in closed sales volume and a 28 percent year-over-year increase in average sales price across Canada from January to June 2020.
Halifax’s low inventory, coupled with its position as a destination for entrepreneurial millennials and international buyers has positioned it as an up-and-coming Canadian “market to watch.”
The year began with an active first quarter compared to last year. Fewer days on market, multiple offer situations, and price increases were typical conditions in the first quarter. However, as COVID-19 restrictions set in, mid-April experienced an abrupt stop in new inventory that sustained for three weeks. As COVID-19 stretched into May and consumers became accustomed to changes in market conditions, properties were being listed again by mid-month. Despite home sales decreasing by 47.3 percent year-over-year and residential listings dropping 42.1 percent year-over-year, prices did not. A short supply combined with buyer demand contributed to a sharp 9.3 percent price increase in May. June reported a significant increase of 10.4 percent in home sales compared to last year, setting a new sales record for the province. Halifax closed the second quarter holding its position as a strong seller’s market with sustained buyer demand from locals within the province.
Montréal’s complete real estate stoppage from mid-March to May 11 is proving to be more of a pause rather than a tipping point toward a downward market.
Montréal began 2020 on an upward trend, seeing prices sharply rise across all property types in the first quarter. At the close of March, Montréal celebrated the 23rd consecutive quarterly increase in sales. Transactions through Q1 surpassed a two-decade record, totaling 14,662 sales, with a 13 percent increase year-over-year, the best sales result since 2000. At the same time, lockdowns due to COVID-19 had already begun, and real estate was deemed non-essential by mid-March. It returned after nearly two months, coming back on May 11. Montréal sprung into May, with sales and listing inventory discernibly improving with prices continuing to rise, with home sales increasing 16 percent year-over-year by the close of June. After a historically low April and stabilization in May, June brought a flood of buyers returning to the market after lockdown restrictions lifted. The end of Q2 is seeing Montréal hold its position as a seller’s market as prices climb and new listings hit the market. Already low inventory coupled with pent-up demand from domestic and international buyers, pending borders and universities reopen by September, is positioning Montréal for a record-breaking Q3.
Despite the pandemic, Ottawa has only strengthened its position as a seller’s market, maintaining its status as one of Canada’s fastest-growing real estate ecosystems.
In April, the pandemic’s impact triggered a year-over-year decrease in residential home sales by 55 percent. Mid-May saw a stark improvement with monthly unit sales rising 11 percent from April’s figures, but still down by 44 percent compared to last year. At the close of May, average prices for residential units rose by 13.8 percent compared to last year. June saw recovery back to normal levels with a mild two percent drop in unit sales year-over-year, a drastic improvement from the 55 percent drop in April, and a 44 percent drop in May. June saw Ottawa’s house prices rise 15% year-over-year and 17% in the condo segment, boasting the largest price increases in Canada, as was predicted by Engel & Völkers in its Spring 2019 forecast. Despite COVID-19, this market is holding its position as one of the most attractive for investment by virtue of its stability and healthy economic environment.
June boom: sales of homes and townhomes accelerate while condo slowdown presents a temporary buying opportunity in Toronto’s downtown core.
The first quarter of 2020 showed busy activity until the onset of Ontario’s COVID-19 lockdown mid-March. Resales were up 49 percent year-over-year during the first two weeks of March and then as lockdowns began, home sales plummeted 16 percent in the latter half of the month. May brought the first glimmer of market recovery as Toronto saw a pick-up in housing activity with home sales increasing by 55.2 percent and new listings jumping by 47.5 percent compared to the previous month. At the close of the month, prices rose by three percent year-over-year, indicating the market was regaining traction and moving toward normalcy. June’s arrival ushered in pent-up buyer demand, especially for detached and semi-detached homes. This, coupled with tight housing supply and growing consumer confidence post-COVID, effectively positioned Toronto as a seller’s market. Residential home prices were up 11.9 percent year-over-year and average sales price was also up substantially by 7.8 percent month-over-month, signaling a revival in the higher price-point segment in the Greater Toronto Area (GTA). Despite a mid-Q2 pause, Toronto’s popularity among domestic and international migrants is keeping the market on firm ground.
As Vancouver begins to see COVID-19 restrictions ease, it is holding its position as a balanced market, with conditions favoring sellers on certain properties.
In tandem with the COVID-19 lockdown, the total number of home sales declined steadily in the latter two weeks of March and into April. However, considering the first two weeks of March were the busiest of the year, signs pointed to market demand being paused rather than halted. From April to May, the sales to active listings ratio increased from 11.8 percent to 15 percent. Listings began to increase and prices rose by 2.9 percent year-over-year, signaling a recovery. In June, the market began to normalize as home sales and listing activity returned to stable levels. Residential home sales increased by 17.6 percent year-over-year and by a sharp increase of 64.5 percent from sales in May. Listings also rose by 15.1 percent, proving that sellers are gaining confidence in the market once again. Fall is forecasted to heat up with more listings and greater consumer confidence, boosting supply and potentially shifting to a buyer’s market.
Find the full version of the report below.