Canadian home sales and the average home price set another monthly record in September, according to the latest figures from the Canadian Real Estate Association (CREA).
Home sales across Canada went up by nearly 46% from September 2019, or 0.9% from August on a seasonally adjusted basis, with about 60% of local markets seeing gains. Increases in Ottawa, Greater Vancouver, Vancouver Island, Calgary and Hamilton-Burlington sales were mostly offset by declines in the Greater Toronto Area (GTA) and Montreal.
The average sale price of a home in September topped the $600,000 mark for the first time at $604,000, representing a 17.5% increase from the same month last year. The national average home price is heavily influenced by sales in Greater Vancouver and the GTA — two of Canada’s most active and expensive housing markets.
“Many Canadian housing markets are continuing to see historically strong levels of activity as we enter into the fall market of this very strange year,” Costa Poulopoulos, Chair of CREA, said in a statement on October 15. “Along with historic supply shortages in a number of regions, fierce competition among buyers has been putting upward pressure on home prices,” Poulopoulos adds.
Shaun Cathcart, CREA’s senior economist, said September’s record-breaking numbers are “starting to sound like a broken record.”
Canada’s home sales have been setting new year-over-year records since July.
Apart from pent-up demand from the lockdown, government financial support and low interest rates that have been driving Canada’s real estate market, Cathcart says another factor to consider, which has no historical precedent, is the value of a home during this time.
“Home has been our workplace, our kids’ schools, the gym, the park and more. Personal space is more important than ever,” Cathcart says.
The number of newly listed homes fell by 10.2% in September, reversing the surge to record levels in August. New supply was down in two-thirds of local markets, led by declines in and around Vancouver and the GTA. With sales edging up in September and new supply dropping back, the national sales-to-new listings ratio tightened to 77.2% — the highest in almost 20 years.
Robert Hogue, a senior economist with RBC Economics, says in his report that September’s first drop in new listings in five months could be a “turning point”, signaling the wave of sellers is receding. If sustained, a lack of supply will increasingly restrain activity again.
“This isn’t good news for buyers hoping for fewer bidding wars in most market segments,” Hogue says.
While the current demand-supply conditions support further overall price increases in the near term, Hogue says he expects prices for single-detached property to far outpace downtown condominium apartments. Condo prices have already stagnated over the past six months both at the national level and in some of Canada’s largest markets, including Vancouver, Toronto and Hamilton. This contrasted with a 7.3% increase for single-detached homes nationwide over that period.
“The penchant for low-rise properties with more living space (and a yard) has also fueled activity in suburbs, exurbs and cottage country markets,” says Hogue, adding that some of the stronger resales increases in September in Ontario were recorded in smaller markets such as Niagara Falls-Fort Erie, Muskoka-Haliburton and Orillia.
Marc Desormeaux, a senior economist with Scotiabank Economics, says the persistence of consumer preferences for single-family homes needs further monitoring. “One interpretation — combined with more modest gains for apartments — is that the pandemic and prevalence of remote work is encouraging prospective buyers to seek out more space and settle further away from cities’ downtown cores.”
Hogue believes that a better sense of the broader economic conditions will not be apparent until mortgage payment deferrals expire and the impact of the pandemic’s second wave on the market bears out in many parts of the country.
“The coming months should provide more precise clues about the market’s direction in the year ahead,” Hogue says.
Jean Lian is Head of Communications and Brand Marketing with HomeLife Realty Services Inc. in Toronto. Contact Jean at firstname.lastname@example.org.