TECHNOLOGY @ RBC
COVID-19 hasn't derailed Canada's housing market-far from it
■ COVID-19 severely disrupted housing markets across the country. Home resales plunged this spring but then strongly rebounded this
summer to record levels as mobility restrictions were eased, and as pent-up demand and exceptionally low interest rates drew in more
buyers and sellers (per Canadian Real Estate Association). Activity is expected to cool later this year to more sustainable levels once
pent-up demand has been largely exhausted.
■ The current strength in the housing market is uneven. Buyers are drawn to single-detached homes and other low-rise categories
offering more living space and backyards, putting intense pressure on little available supply. Demand for downtown condos, on the
other hand, is levelling off at a time when condos for sale are surging-many condo investors are selling amid soft rental market in
some of Canada's largest markets.
■ The unevenness of the market is being reflected in property values. Single-detached prices are rising at an accelerating pace whereas
downtown condo prices have plateaued. Such diverging trends are expected to persist in the near term.
■ Canada's longer-term housing market fundamentals continue to be favourable despite near-term turbulence. Immigration will be a
major driver of housing demand once a likely short-term in-migration pullback runs its course.
■ Lenders maintain strong underwriting discipline and require extensive documentation.
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Most mortgages held on balance sheet and conservative lending policies have led to low delinquency rates.
Demand-supply conditions are generally tight
Sales-to-New Listings Ratio (1)
Historic government aid temporarily lightens debt service
Household Debt Service Costs (2)
(Mortgage & non-mortgage principal & interest
payments as a % of household disposable income)
(Residential unit sales to new residential listings)
1.00
16
0.90
0.80
14
Seller's market
0.70
12
0.60
0.50
Balanced market
10
0.40
8
0.30
Buyer's market
0.20
6
0.10
4
0.00
1996
1998
2000
2002 2004 2006 2008 2010 2012
2014
2016
2018
2020
91 92 93 94 95 96 97 98
99 00
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
16 17
18 19 20
(1) Canadian Real Estate Association, RBC Economics. (2) Statistics Canada, RBC Economics. PDI: Personal Disposable Income.
55 | CANADIAN HOUSING MARKET
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