July 14th 2020
While COVID-19 has had a profound impact on every aspect of the Canadian economy, it has not affected all industries in the same way or to the same degree. We have seen the retail section, especially malls totally shut down as we on a National scale, a Provincial scale and at a municipal level seek to contain the transmission of the disease. Restaurants, hair salons, all were temporarily mandated to close. And while other industries such as travel may have been allowed to continue, wary travellers and geographic barriers ground them almost to a halt.
At the same time, other industries have thrived. Companies making personal protective equipment for example have more business than they can handle. The construction industry is interesting. While shut down for a time, it has come back very strong. Especially ones in the residential renovation business. I spoke to a paving company and also a general contractor. Both were extremely busy. It seems that people while spending more time at home are becoming aware of the myriad of things that could use a little attention.
Real estate has had an especially interesting time so far during the Pandemic. While deemed an essential service in Ontario, it certainly felt the impact. Open Houses were and still are forbidden. Many people were uncomfortable leaving their homes to view properties on the market and many others were reluctant to open their homes to prospective buyers. As a result, the latter part of March saw activity drop by as much as 90%. That trend continued into April where home sales were still down about 60%-70%. But the trend was upward.
In our last issue of the market report, we saw a remarkable turnaround in momentum in May. In fact, here in Niagara, total sales came in at 499 units compared to 280 just a month earlier. And now have a look at June. A total of 825 sales were recorded in Niagara in the month of June. What is more remarkable, however, is that at 825 sales that’s an increase in volume of 14.4% over the 721 units sold in June last year. Up 14.4% from the same period one year ago when there was no COVID and the market was booming.
So what is happening? It seems that the market is pretty well poised to continue on as it was pre-COVID. There is a strong demand for housing in Niagara and people feel like they have been restricted long enough. They want to get on with life. What we are seeing in these June numbers is, I believe, reflective of that pent up demand and has resulted in an opening up of the floodgate to allow those who have felt held back during those early days of the Pandemic to get back into the market. And bear in mind what we are seeing is in spite of the market limitations: no open houses, social distancing, sanitization measures and so on. Make no mistake, the underlying fundamentals of the market are very strong.
As we did last month, lets look at Market activity depicted on a graph. You’ll quickly see how deep the COVID recession cut and how strongly the market is recovering.
If there was any question as to the current strength of the market, a look at average residential sale prices will help make the picture come clear. Last month we saw the market strengthen to the point the average residential price in the Region was $505,890. That was up 6.4% from the previous month and 8.5% from the same month a year ago. But now look at June. At $548,975 the regional average is another 8.5% above last month and a staggering 22.0% above June of 2019.
Once again we are seeing numerous instances of multiple offers coming in especially where properties are at a high demand price point. What seemed like a pretty high price a few short months ago is now a bargain in many cases. And as we see restrictions continue to ease up around society and life becoming more normal, we can certainly expect to see the housing market continue on its upward trend, both in volume and in price.