June 15th 2020
The sales data is in for the month of May and it is really quite encouraging. Across the 10 regions we track monthly in Niagara there were 499 sales registered last month. And there are two ways of looking at it. It was down considerably from the 778 sales registered in May of 2019. That’s a drop of 35.9%. But at the same time that 499 figure is significantly higher than the 280 registered in April. Up 78.2%
So is the glass half full or half empty? Should we be please or should we be discouraged? To answer that question, we need to look at trends.
As we’ve discussed previously the COVID-19 Pandemic has had an unprecedented negative impact on the economy of the entire world. It’s impact has resulted in record unemployment, record federal deficit’s, business closures and so on. But while all those devastating realities are economic, they were not economically induced. They were health induced. The fundamentals of the marketplace haven’t changed. People still want to socialize. They want to attend sports events. They want to travel. And they want to buy and sell real estate. And because the desire is there and the climate is so right, especially in real estate, that is why I believe as the restraints are removed, the economy will bounce back very rapidly. And we are beginning to see that in real estate. At the end of March, market activity had dropped by about 90%. Early April we were down about 70%. The month of April sales were down year over year by about 62%. Now May figures show a drop in activity of about 42.3% year over year. That tren d can be more fully appreciated when we track it on a graph.
Now unfortunately we only have raw data on a monthly basis. To truly see the impact of COVID-19, decline and recovery, we would need to pinpoint data daily, or at least weekly. But from the graph you will see that while 2019 registered more sales than 2018, in actual fact 2020 started out in January and February stronger than either 2018 or 2019. COVID-19 impacted the market in mid March and the sales trended downward rather than upward. But the real impact was evident in April. May as you can see is rebounding, and while we still have a way to go, we are more than halfway back and moving rapidly in the right direction.
But to really understand the strength in the marketplace, in spite of the COVID-19 pandemic, we need to look at the impact the slowdown is having on home prices. Have a look at the price trends in the various municipalities in the first 5 months of the year, and compare those to the same 5 month period in 2019.
As you can see, prices throughout the region continue to hold steady, they are consistently higher than they were the same period in 2019 and in fact for the region overall the average price in May was the highest it has been. It would appear that as we come out of the restrictions caused by COVID-19, the real estate market is positioned to move forward as it was before the interruptions.