Judging by the volume of business most brokers have been generating over the last few months, it’s obvious that Canada’s various housing markets are changing right before our eyes. But with so much happening at once – a pandemic, low rates, new underwriting guidelines, massive unemployment – taking a moment to actually stop and assess the underlying trends is a luxury most brokers don’t have.
“The real estate market in Canada—and globally—is constantly shifting,” says Eugene Levin, Chief Strategy Officer at SEMrush, a trends data provider that, on Thursday, released a report on the trends currently shaping Canadian real estate.
“We wanted to see what Canadians have been specifically looking for to better understand what industry priorities are and where real estate marketing efforts might be most effective in 2020.”
After combing through online search data, SEMrush identified three major trends being driven by Canadian home buyers.
People want to buy
When COVID-19 first slammed the Canadian economy shut in March, few had any idea what was in store for the housing market. CMHC was predicting disaster, and record unemployment was expected to put a damper on housing activity. That certainly didn’t happen in June or July, where some markets experienced record sales levels, but SEMrush found that homebuying intent started growing in April and May, when, in a reversal of the search activity seen between January 2019 and January 2020, searches for “property for sale” surpassed the average number of searches for “properties for rent” by almost 20 percent.
The surge in buying activity seen in June and July certainly backs up SEMrush’s findings. In an unstable environment where unemployment is still a considerable problem, some are questioning the logic of purchasing property when one key driver of housing stability is largely absent. But according to Walter Melanson, co-founder of PropertyGuys, there is little cause for concern.
“It’s important to point out that the buyers who are driving this market are obviously confident about their current and future financial situation,” Melanson says. “With lending rules so tight, only the most financially qualified are able to buy right now.”
Much has been said about how COVID-19 may be changing the tastes of consumers, with some expecting Canadians who have been cooped up in their apartments and condos demanding more spacious homes, while others are projecting an exodus of homeowners from major urban centres to less crowded exurbs and rural markets.
SEMrush found little evidence of the former. In fact, consumers seem more interested in smaller properties than they were a year ago. Searches for “tiny homes” and “townhomes/townhouses” increased by 55 percent and 54 percent, respectively, since January.
Searches for smaller properties spiked considerably in Atlantic Canada, where average searches for “tiny homes for sale” skyrocketed by 733 percent in Nova Scotia, 467 percent in New Brunswick, and 200 percent in Prince Edward Island between 2019 and 2020.
In that same period, the average search volume of “condos for sale” in Ontario fell by 15 percent. But with Ontario and British Columbia still the top two markets when it comes to “properties for sale” searches, there is little sign that consumers are swearing off densely populated communities entirely.
Still, Melanson believes tastes have undoubtedly been changed by COVID-19.
“The lure towards cottages, camps, tiny homes is all a product of the new brave world we live in,” Melanson says. “The lure of vacation type homes and the communities that are off the beaten path gives people more comfort during these times. Another big factor fuelling this trend is the Work from Home Culture that’s being driven by the pandemic.”
One interesting piece of data from the report was the cost-per-click on real estate keywords in each Canadian market. Ontario was way out in front, with an average CPC of $0.62. Only Alberta and B.C. had an average CPC around $0.40. The remaining provinces were all $0.23 or lower.
Overall, web traffic to Canadian real estate sites increased by 26.8 percent year-over-year, with Royal LePage, Keller Williams and PropertyGuys.com seeing the highest increases in traffic.
“We’ve seen a 93% spike in website traffic since January, according to SEMrush,” says Melanson, “which aligns in our understanding of how the market has shifted towards using online options and modern services like ours, which offer tech-driven solutions to buy and sell homes.”