Higher prices may be cooling homebuyer enthusiasm
The buying frenzy seen this past spring is like so yesterday (maybe), according to a survey examining buyer enthusiasm.
“We've really seen a sea change,” says Penelope Graham, managing editor of content with Zoocasa, an online realty firm that conducted the recent poll of 1,400 Canadians, a followup from a previous poll from earlier this year.
The earlier survey measured buyer attitudes in February when price and sales growth across all markets in Canada, including Edmonton, were nearing their peaks in early spring.
“Now that we're out of being locked down, and things have evolved considerably both in terms of the pandemic and the housing market, we wanted to check in to see how that housing sentiment has changed,” Graham says, adding the latest survey found a big change in would-be buyers' views on the market.
“There's a fairly considerable shift in terms of how Canadians are perceiving low interest rates and their impact on affordability and home prices,” she says.
Here the latest study found about 34 per cent of respondents disagreed low interest rates are making home ownership more affordable, a 12 percentage point rise from the February survey.
“The other one that was really an enormous number was to the question if low interest rates are driving up the price of homes, and 84.5 per cent agreed with that statement.” Graham notes this response is 32.5 percentage points higher than in the February poll.
Graham says the survey didn't investigate why respondents may now perceive low interest rates differently than they did earlier in the year. One reason, however, could be the pandemic market peaked in early spring and has since cooled down.
“Based on what we've seen in previous months, it really does look like March and April were the peak of the pandemic market, and we've been seeing consecutive months of market softening for sales activity and price growth on a national scale.”
While the study did not include a breakdown of data regionally, the Edmonton market has showed signs of slowing after setting record sales for previous months, including June.
Sales in July were up modestly from the same month last year at about two per cent, yet down almost 19 per cent from June this year.
Prices also softened month over month in July by about two per cent.
Chair of the Realtors Association of Edmonton Tom Shearer says the market is “normalizing” and moving toward more historical seasonal norms with summer activity dropping off from the typically busy spring market.
“I foresee steady activity (for the remainder of the year) with less price pressure than we saw this spring.”
Graham says Alberta's real estate market — while experiencing many of the same effects of the pandemic — is more affordable than Toronto and Vancouver and, in turn, may be able to sustain price and sales growth longer.
“The Alberta market has experienced softer conditions compared with Ontario and B.C. prior to the pandemic,” she says. “But really, all markets have seen an unprecedented increase in average price growth over the course of the pandemic and all saw an uptick in sales.”