Canadian Housing Holds Up

The Canadian housing market has held up despite the COVID shock, says BMO Global Asset Management. For Canadians, this is crucial as a resilient housing market leaves consumers in a more robust shape as the economy navigates through this COVID world. Despite high uncertainty and a wave of unemployment, sales, and construction activity have fully recovered. Home sales collapsed by a record 63 per cent over March and April, but have bounced back to pre-COVID levels. Construction activity has fared even better, with housing starts down 22 per cent over the same period, but have since rebounded above pre-COVID levels. Sales-to-listings ratios have also recovered to above 60, indicative of a seller’s market and supportive of home prices. Ultra-low interest rates, pent-up demand, and changing consumer tastes have driven the speedy recovery. Past population growth and tight labour-market conditions underpinned by strong pent-up demand to be unleashed after COVID effectively delayed the spring buying season. The labour market has deteriorated, but the most affected groups of workers – younger age cohorts – have lower homeownership rates. As well, the exodus out of cities is spurring demand in suburban and rural regions.