It’s been an interesting ride through this COVID-19 rollercoaster and it’s especially interesting how the market’s reacted. Initially, we noticed a sizable decrease in sales and prices but now, with less uncertainty, we’re seeing some recovery.
I think the turning point was when precautions were relaxed. It gave people a sense that things will be alright and they could begin to move forward again.
Initial market feedback
Initially, our local for-sale inventory fell with people taking their homes off the market and others choosing to wait. Home buying also slowed with the economic uncertainty.
In April, the first full month with COVID-19 restrictions, we witnessed sales drop 58% and the average sale price drop 16% over the same month a year earlier. It’s concerning when number drop quickly because it generally takes a much longer time to recover.
With a slowdown in listings and sales activity, we did also see some positive fallout. Normally in the Spring inventory grows but with the slowdown it looked to be balancing nicely. But that didn’t last long.
What happened in May
Surprisingly enough the stats following April showed nice improvement. Sales didn’t bounce back to their normal numbers in May but any improvement would be good. Sales in May were down only 39%.
A drop of 39% doesn’t sound great but it was relieving to see after April’s tragic numbers. However, most people were interested in what would happen to home prices. Even with the home sales improvement, it wasn’t certain what would happen with pricing.
The pandemic didn’t only scare people from buying or selling, it also had a very substantial economic affect. If fewer people were able to buy due to income etc prices could drop further.
Lucky enough, however, prices improved in May. After April’s 16% price drop May’s 5.2% drop (over May 2019) was relieving for homeowners. When it was uncertain what would happen with prices May’s numbers offered some confidence.
There is one thing that could go wrong over the next few months that could slow improvement. Inventory. Sales are up a little but they aren’t improving at the same rate as inventory is growing. We have to understand, sales will probably remain relatively slow, and too high of inventory will put negative pressure on prices.
If number continue to improve, buyers who chose to wait will be kicking them selves.
I will post the inventory report in a couple days, check back at www.HomeScope.ca.