More homes were sold in Canada this July than any other month on record, as the COVID-19 pandemic has reshaped demand and pushed prices to all-time highs.
The Canadian Real Estate Association said Monday that the 62,355 sales in July 2020 marked the highest monthly sales figure on record, with data going back more than 40 years.
Sales in July were up 30.5 per cent compared with the same month a year ago and up 26 per cent from June, rebounding from lows of earlier this year when the COVID-19 pandemic froze the market.
CREA said the sales came as the actual national average price for homes sold in July hit a record $571,500, up 14.3 per cent from the same month last year.
CREA senior economist Shaun Cathcart said there was more than one driving force behind July's full-tilt housing market, citing both COVID-19 and existing issues heading into 2020.
"A big part of what we're seeing right now is the snap back in activity that would have otherwise happened earlier this year," Cathcart said.
"Recall that before the lockdowns, we were heading into the tightest spring market in almost 20 years."
"Some purchases will no doubt be delayed, but the new-found importance of home, lack of a daily commute for many, a desire for more outdoor and personal space, room for a home office, etc. will certainly also spur activity that otherwise would not have happened in a non-COVID-19 world."
Sales have also been helped by low mortgage rates with rates for five-year fixed-rate mortgages being offered at less than two per cent.
The uptick in home prices was broad-based, with all 20 of the markets tracked by CREA reporting month-over-month increases in July.
The Toronto area, Guelph, Ont., Ottawa and Montreal saw the biggest price spikes, with prices climbing faster in most markets east of Saskatchewan. Prices rose more modestly in British Columbia and Alberta, CREA said.
While work-from-home solutions may be temporary for some, Ottawa real estate broker Rachel Gagnon agreed with Cathcart that the "new-found importance of home" has emerged as a more permanent consideration for buyers. She noted that the dangers of the pandemic -- such as relying on daycare or navigating the grocery store -- have translated into buyers who want to create a self-contained family unit with a playground and veggie garden.
"This has put things in perspective, they'd much rather have full control in their day-to-day," says Gagnon.
But Gagnon also noted that many of those in the market at the moment are second-time homebuyers, who may have benefited from rising prices and are taking advantage of low interest rates to move up.
"Unfortunately, it's definitely the lower bracket first-time home buyers who are getting hit the hardest. They're the first ones to be touched with employment and child care financial issues during the pandemic, so as home prices keep soaring and lending restrictions get tighter, they're the ones to get pushed out of the market," said Gagnon.
Brian DePratto, senior economist at TD Economics, said it can be hard to understand how the housing market can be so hot when the unemployment rate remains in double-digits.
DePratto said that the strength of the recent rebound in the housing market is "definitely surprising" and he will be watching for the end of mortgage forbearance programs that have helped "insulate the economy" during the pandemic.
"As autumn approaches, these programs will expire or change form. Depending on the progress of the broader economic recovery, this could bring significant headwinds to housing markets, particularly prices," DePratto wrote.
Bethany King, real estate team leader and sales representative at Century 21 Millennium Inc., says she also has seen fear about a "second wave" pushing housing decisions. For instance, she said, parents may be worried schools will close again -- and may decide to move to a home with a "classroom," even if it's outside the desired school district. On the other hand, she said, a second wave of COVID-19 infections may force parents to take unpaid leave from work and stay home with children, which could lead to long-term mortgage defaults.
King said that condos are already being listed in Toronto, as owners have failed to make money through renting on short-term rental sites such as Airbnb. If other homeowners hit hard by the pandemic eventually decide to sell and downsize, it could push supply onto the market and shift from a "seller's" to a "buyer's" market this fall, King said.
In July, demand outpaced supply, as sales increased faster than new properties could be listed. Although new listings hit a record for the month of July, as the number of newly listed homes climbed by 7.6 per cent in July compared with June, it came amid a 26 per cent jump in sales.
Cathcart said despite the surge in new listings hitting the market, the total number of listings that lingered on the market as inventory was at a 16-year low.
CREA's statement also suggested that new supply appears to be "tapering off in many parts of the country," with the Toronto area dominating new listings. The "sales-to-new listings" ratio in July was at its highest levels since 2001-2002, at 73.9 per cent.
"There are listings that will come to the market because of COVID-19, but many properties are also not being listed right now due to the virus," Cathcart said.