Even the most bullish housing observers would have had a tough time anticipating just how quickly Canada would bounce back from the pandemic shock that froze up market activity in the late winter and spring.
But, after what RBC Senior Economist Robert Hogue calls a “spectacular rally,” the market has fully recovered and then some. National home sales hit an all-time high for September, climbing over August and up 46 percent over 2019’s total for the same month.
What comes next, however, is still shrouded in uncertainty.
Housing Market News Alerts
Sign up now for news alerts on the Canadian housing market
In commentary published earlier this month, Hogue said that while the summer housing rally had been extended into September, the market has likely expended all the pent-up demand that had accumulated from earlier in the year at the height of the pandemic shutdowns.
The economist wrote that the market is set to cool off without the pent-up demand to keep it aloft. Tight supply relative to current demand for housing will also have an impact on sales numbers through the fall.
In what will be long remembered as a bizarre year for Canada’s housing market, it’s far from unusual for home sales to slow as the year winds down. But Hogue believes the next few months should at least offer some clues as to where the market is heading in 2021.
“We’ll see whether low interest rates and changing housing needs can keep demand boiling hot, or whether the exhaustion of pent-up demand and plummeting immigration will cool things down,” Hogue wrote.
“We’ll also learn how many current homeowners will be in trouble once mortgage payment deferrals expire and are forced to sell,” he added.
RBC has maintained a relatively positive outlook on the country’s housing market through the pandemic. Hogue said that answers to these questions, as well as a better view into how the second wave of COVID-19 plays out, should provide a better understanding of the risks as we move into the second calendar year of a pandemic-affected housing market.