As businesses start to re-open and as things slowly crawl back to normal, it seems someone just flipped on the switch when it comes to the real estate market.
Comparing year-over-year performance for June, sales are only down a mere 1.4%. New listings creeped up 2.1%.
Here’s where things get interesting.
The number of active listings on the market (supply) dropped a whopping 28.8%.
The average price surged 11.9% to $930,869.
Why did we see a double digit price growth all of a sudden, after minimal increases during the period of time when COVID-19 came about and the lockdown happened?
Because demand is drastically outpacing supply.
More buyers in June searched and found their next home. But fewer homeowners are listing their homes on the market.
If inventory continues to diminish, you’ll see continued price growth.
The first week of July did see a slight rise in listings after the Canada Day holiday. In spite of this increase, some neighbourhoods I’m closely monitoring have seen listings sell in multiple offers only a few days after coming to the market, while others are going from listed to sold conditionally as quickly as 3-4 days of being on the market.
The ‘delayed’ spring market has spilled over into the summer, and it is here for the next few weeks.
We could point to a couple of reasons that might have led to June’s sales jumping up and reaching near last year’s sales levels.
Changes in the mortgage underwriting rules might have been one factor, pushing buyers to commit to buying a house before their buying power gets reduced.
Pent up demand from the late spring market is another factor — where buyers have been sitting on the sidelines, staying safely away from unnecessary exposure, but yearning to get into their next home.
Diminishing supply is another factor, as buyers browsing on apps and websites seeing a limited supply realized if everyone else is buying, why aren’t they?
This active market with increasing demand, decreasing supply and double digit price growth should have us wondering — what happens in the fall?
How will unemployment affect homebuyers who were planning to buy this year but can’t do so without having a stable income?
What about homeowners who have deferred their mortgage payments — will they start paying the mortgage or will they be forced to sell?
Time will tell.
What we do know is that the market has picked up momentum and seems to have come back to ‘normal’ all of a sudden.
Buyers are confident.
Sellers are slowly creeping back in.
Over the next few weeks, keep an eye out on new listing inventory.
Let’s see if they sell and keep on pace with buyer demand.
This summer is going to be busier than usual, with record breaking sales figures, all because of the delays in the spring market caused by the COVID-19 pandemic.
Make sure you navigate it carefully.