Most importantly, I hope you are keeping healthy and safe.
After the first full month with social distancing measures in place, the housing market is adjusting to the effects of COVID-19. The decline in home sales does not come as a surprise. The combined impact of COVID-19 and the situation in the energy sector is causing housing demand to fall. April sales hit a decline of 63 per cent over last year. It’s very disappointing after a good start in the year.
Demand is also falling faster than supply giving us ten months of supply. This is keeping the market in buyers’ territory and weighing on prices. Sales activity eased across all price ranges, but the largest declines were for homes priced above $600,000.
With a greater share of the sales occurring in the lower price ranges, the average price decline was more than eight per cent. Prices for the average home are also declining, reflected by the benchmark price, which fell by nearly two per cent compared to last year.
The economic impact of the situation is significant and early indications point toward more job losses and higher unemployment rates. Several government incentives will help cushion the blow, but challenges in the housing market are expected to persist throughout this year.