Canadian housing market bounces back in May in first step to long recovery: RBC Economics

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      RBC Economics has noted increases in home resales in Canada of up to almost 70 percent in May.

      In a report, economist Robert Hogue noted that last month’s numbers signal the start of a slow market revival.

      “May’s rebound is the first step on a long road to recovery,” Hogue wrote Wednesday (June 3).

      On the same day, the Real Estate Board of Greater Vancouver reported that home sales in the region increased 33.9 percent in May 2020 compared to the previous month.

      The Fraser Valley Real Estate Board noted in a separate report that transactions rose 17 percent last month compared to April 2020.

      In his report, Hogue observed that although the country’s housing market “kicked into gear” last month, it was “still (very) far from the usual bustling spring-time activity”.

      “The month-to-month percentage increases—ranging from 30% to almost 70%—certainly look impressive though this speaks more about the extremely weak comparison point in April,” Hogue wrote.

      Home sales crashed in April because of the COVID-19 pandemic.

      What was supposed to be a strong start in the spring market last March stalled as economic activity ground to a halt.

      The nearly 70 percent increase in May 2020 was recorded in the Calgary area, although Hogue noted that it may have “reversed only about a third of the decline that occurred in March and April”.

      The Toronto area saw a 53 percent month-over-month increase in May, but sales were down 54 percent from last year.

      The Vancouver area “partly recovered” last month, but was still down 44 percent from a year ago.

      “The good news is buyers and sellers are becoming more comfortable participating in the market,” Hogue wrote.

      The prospects are not all rosy.

      According to Hogue, there are “signs of weakening property values emerging on the horizon”.

      “Sales-to-new listings ratios fell in Vancouver and Calgary, which could foreshadow similar declines in other markets in the coming months,” Hogue stated.

      According to Hogue, the “severity of the COVID-19 recession will delay some first-time homebuyers’ ownership plans at a time when some sellers might be in a more urgent situation to sell”.