Canadian real estate buyers were out in full force last month. Canadian Real Estate Association (CREA) data shows sales made a substantial jump higher in December. Most of the increase is due to Vancouver real estate’s return to normal volumes. However, almost every major market across Canada is seeing sale volumes climb substantially.
Canadian Real Estate Sales Rise Over 22%*
Canadian real estate sales made a big jump from last year, as BC sales returned to normal. There were 26,976 sales in December, down 27.50% from a month before. Even with the decline, sales came in 22.7% higher than the same month last year. The monthly drop is seasonally expected, and the year-over-year increase is… up to interpretation.
Canadian Real Estate Sales
The unadjusted sales for all home types, as reported through the Canadian MLS.
Source: CREA, Better Dwelling.
The 12-month increase is large compared to last year, but last year was unusually slow. The 22.7% increase brings December sales just 0.85% below 2017 sales. Yes, prior to the implementation of B-20 Guidelines. However, more technical people should note the distribution of this trend.
Canadian Real Estate Sales Change
The annual percent chage of unadjusted sales for all home types, as reported through the Canadian MLS.
Source: CREA, Better Dwelling.
Most of the sales volume surge in the back half of 2019, doesn’t quite make up for the slow first half. Using a 12-month rolling average, December comes in with 40,548 sales. This is up 1.05% from the month before, and 6.39% from the same month last year. It’s an improvement, but not quite the growth story told by the headline numbers.
Canadian Real Estate Sales Rolling 12-Months
The rolling 12-month average of Canadian real estate sales, as reported through the Canadian MLS.
Source: CREA, Better Dwelling.
B.C. Real Estate Sees Biggest Growth In The Country
The biggest growth numbers were in last year’s biggest losers – around Greater Vancouver. Vancouver reported 2,046 sales in December, up a whopping 87% from last year. Fraser Valley follows with 1,137 sales, up 53.9% over the same period. Quebec City comes in third with 632 sales, up 31.4% from last year. The small catch is Vancouver and Fraser Valley had unusually slow sales numbers last year. This brings them more in line with 2017 volumes for the month. Quebec City on the other hand, is an actual growth story for sales volumes.
Canadian Real Estate Sales By Market
Canadian real estate sales in markets with more than 200 sales in the month.
Source: CREA, Better Dwelling.
The biggest declines were… well, there weren’t very many declines in major markets. However the only decline, and the lowest growth was all located in Southern Ontario. Kitchener-Waterloo reported 236 sales in December, down 11.6% from last year – the only decline. Hamilton reported 585 sales in the month, up 3.9% from last year – the smallest growth. The Niagara region reported 310 sales in December, rising 6.9% from last year. In case you missed that, the smallest growth in sales volume is still very high.
Canadian Real Estate Sales Change By Market
The percent change in Canadian real estate sales, in markets with more than 200 sales in the month.
Source: CREA, Better Dwelling.
Canadian real estate sales are rising, but the weak first half to the year makes it a little complicated. Yes, sales are producing big numbers, and straining inventory. However, since the beginning of the year started off so weak, a number of buyers likely just delayed their buying decisions.
Sales rising in almost every single major market across the country is also a bit of a concern. This likely indicates it has less to do with markets being “hot,” and more to do with buyer perception and credit availability. That can still push prices, but has a very different meaning for those watching housing from a macro perspective.
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Anyone want to ELI5?
Separate the issue, and realize that sales have two impacts: price activity and spin off activity.
Price activity increases when there’s low inventory, relative to sales. So that’s happening, which is why prices are increasing.
Spin off activity is the related economic activity for real estate. CREA estimates each sale creates $60k in activity for the local economy.
Now combine the two. Prices are moving higher (implying the economy is doing well), but total year volumes aren’t as strong (indicating the economy isn’t doing well). It’s a divergence of dynamics, which creates a more vulnerable scenario, since people are optimistic but not seeing the weakness.
For those who claim we have a supply problem the solution is simple. Force real estate predetors with multiple homes to sell them and release supply in the market.
Its like when many people have no shelter yet we ignore the people who have multiple homes where they collect rent at the expense of others.
Time to tax all none primary residence, all corporate (front companies) owned residential real estate and all foreign owned residential real estate. This is the best way to release supply.
If interest rates stay artificially low much longer a whole lot of paper wealth and debt will be created in Quebec, the last major market where prices still had a semblance of relationship with incomes. For Montreal, sales are up 26%, inventory down 24%, prices up 9%. My hopes that this whole mess would correct itself before the market went fully stupid in Montreal are dwindling.
Lets see, from 1979-2018, on average, in took two years to sell a home on my mom’s south shore street. Its a nice street in a great town too. I know lots of properties that took five years to sell too. Some that never sold after repeated attempts.
In 2019, homes started selling in two months or less. A few blinged out homes sold in days. It blows my mind. Never, ever thought I’d live long enough to see a bubble in Montreal area. Most younger people I know say f-it, I’ll just rent, when faced with run away prices. There are great rentals.
Over-asking – dream on. Bidding war on a tear down, I don’t think so. Cash offers to subdivide a large yard property, are you nuts? Property owners have that glint in their eyes, I’ve come to hate. Its a greed fever.
Exactly , greed and nothing else…greed that will rob next generation of Canadians , either through a high rent or huge mortgage, lifetime of high debt. Letely , I am hearing more and more how young people should move out of the city , where, in Cambridge? do we have enough jobs in Cambridge to accommodate all newcomers to Cambridge? Are we talking about commuting from Cambridge to Toronto? then let’s move to US or somewhere else in US where the cost of life is cheaper and commuting is shorter, so we have a life outside of busy highway or low speed trains.