Canada

Canadian Real Estate Sales Soar, With Only Two Markets Showing Declines

World’s largest bubble? Canadians aren’t buying it, but they are rushing to buy homes again. Canadian Real Estate Association (CREA) numbers show a massive jump in sales for July. The increase makes it the most July sales in years, with only 2 major markets showing declines.

Canadian Real Estate Sales Rise Over 12% From Last Year

Canadian real estate sales showed massive growth compared to the past few years. CREA reported 47,793 sales in July, up 0.07% from the month before. This represents an increase of 12.60% compared to the same month last year. Yes, that is a very substantial increase on an annual basis. July sales were the highest for the month since 2016.

Canadian Real Estate Sales

The unadjusted sales for all home types, as reported through the Canadian MLS.

Source: CREA, Better Dwelling.

The rate of growth is increasing, but there’s a few things worth noting. First, this is a rare monthly increase for July, and the first one in over 10 years of data. Typically sales make a seasonal decline in July, and this year they did not.  The 12-month rate of growth has been trending higher, but making its fourth positive print. However, only seven out of the past 36 months have shown an increase on a year-over-year basis.

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.

CREA Chief Economist Gregory Klump notes, “Sales are starting to rebound in places where they dropped when the mortgage stress test took effect at the beginning of 2018, but activity there remains well below levels recorded prior to its introduction.” Further adding, “sales continue to rise in housing markets where the mortgage stress test had little impact due to upbeat local economic conditions and a supply of affordably priced homes.”

Quebec City, Toronto, and Vancouver Markets Top Growth

The top annual increases were observed in Quebec City, Toronto, and Vancouver. Quebec City reported 629 sales in July, up 35.3% from the same month last year. Toronto followed with 8,595 sales, up 23.5% from last year. Vancouver came in third with 2,584 sales, up 22.6% from last year. Quebec’s large increase is relatively easy to see in such a small market, but the other two – not so much. However, both Toronto and Vancouver are coming off multi-year lows last year. The rise didn’t take either market back to historically typical levels, but it’s big growth.

Canadian Real Estate Sales By Market

Canadian real estate sales in markets with more than 400 sales in 2018.

Source: CREA, Better Dwelling.

Only Two Major Canadian Real Estate Markets Showed Declines

There must be something in the water, because only 2 major markets are showing declines. Saskatoon made the biggest drop with 459 sales in July, down 8.9% from last year. Windsor-Essex followed with 707 sales, a decline of just 0.7% from last year. That’s it. The next major market is Winnipeg with 1,365 sales, up 4.7% from last year. Yes, the third slowest market showed nearly 5% growth in sales. That’s absurdly large growth for the third slowest major market.

Canadian Real Estate Sales Change By Market

The percent change in Canadian real estate sales, in markets with more than 400 sales in 2018.

Source: CREA, Better Dwelling.

Canadian real estate sales made an unusual increase last month, bucking seasonal declines. Ironically, this irregular increase puts the market close to historical levels of buying. It’s not there yet, but the growth combined with a major rise in sales show the trend may be reversing. This begs the question, if things are almost back to normal – why is the government giving stimulus later this year?

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17 Comments

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  • Marc 1 month ago

    “it’s because Vancouver is a popular place for immigrants”

    But everywhere is showing growth? Literally, places like Newfoundland are showing double digit sales growth – with a population decline?

    “I don’t know.”

    Nevermind. I’m sure it is demand.

    • Blair 1 month ago

      Hong Kong elites parking their money in Canada to prevent a China confiscation. China isn’t going to let go of Hong Kong.

  • Yan 1 month ago

    “why is the government giving stimulus later this year?”

    The obvious answer that this is loss mitigation (i.e. all of those units being completed in other markets are being sold to end users now). If they don’t help “investors,” they would have to all take the loss. Instead, what they would rather do is spread out the losses, to maximize downside protection. It’s not as bad in the government’s opinion if a bunch of people lose less dollars.

    Normally I would vote for this government, but these reckless policies seem to only be designed to help developers and banks. I can’t in good faith support this, even though I’m likely the market most primed to benefit from the robbery of younger generations.

    • Bluetheimpala 1 month ago

      Hmmm, you seem to be very confused. Similar to my cat not understanding why shitting on the floor is ‘very bad’ and why he keeps getting in trouble. The BoC is bipartisan. If anyone thinks removing baby J does anything is either, a)naive b) lacking education c)a moron d)my cat.
      I love how every corner of the ‘shiternet’ get political around election time. Give it a rest, the liberals don’t need help losing votes. Sheerer looks like a guy who has sex through the sheets; one of those ‘good cristians’ who turns out to be on the DL with an addition to meth. NDP…lol, that’s ok.
      BD4L.

  • Mike 1 month ago

    The drop in Mortgage Rates is certainly helping affordability.

    • Bluetheimpala 1 month ago

      You nailed it. I can get a 5 year fixed lower than I could 5 years (3.24). So borrowing costs have come down. The underlying issue of ridiculous debt-to-value and carrying costs hasn’t been addressed. Pile on the debt like ball sweat and take a deep breathe…yuummm, fruity-tang. BD4L.

    • George Smith 1 month ago

      And little one, You seem Canadian enough.

  • Louis 1 month ago

    Very bullish numbers. Better to get on the property ladder or risk being in Toronto Life magazine.

    https://torontolife.com/city/evicted-horror-stories-recently-ousted-renters/

  • Joe 1 month ago

    How high will the dead cat bounce? Maybe bounce back to life? A cat has 9 lives though…

  • carlton 1 month ago

    “why is the government giving stimulus later this year?”

    To help buyers who are not money launders screw themselves for life. Thats incredibly obvious!

    Transparency report states they were 28 billion dollars laundered in Toronto real estate. Money launderers have purchased approximately 40,000 homes in Toronto alone. Driving up prices and depleting the little inventory available. What has the government done to halt this criminal activity? oh…. they’ve lowered rates so the banks will give the average consumer more money than they can ever pay back in a life time to get into bidding wars with the same CRIMINAL money launderers. We wake up everyday and work for the government paying taxes, when is the government gonna ever work for us? Its obvious we only vote to give someone else a turn to [email protected]#k us.

    Starter townhomes that were 250k six years ago are now 700 in Brampton of all places, Brampton!. Most people in Canada believe real estate can only go one direction so they won’t stop until their entire paycheck for next 50 is consumed by mortgage payments.

    Wait, that has already happened……. my condolences to the financially dead aka new home suckers/buyers

    • Bluetheimpala 1 month ago

      1) The government does not control rates, the BOC does

      2) BOC did not reduce rates. Personally I find BDs assumption we will follow lock-step to be premature. Regardless, you are incorrect that the BOC did anything. No injecting liquidity is different but you didn’t mention the MBS buying prog.

      3) The stress test, overseen by the OFSI, came down but it was just a natural reaction to lower rates and demand. The stress test was supposed to save us from ourselves and it seemed to be working.

      4) Here’s the rub honey bun: for every 5 people complaining they cannot afford there is/was an ‘uncle tony’ who flipped 10 assignments in a year, banked half a millie, put it down on a place in Vaughn and then flipped that and bank a million. Right or wrong, this ‘issue’ is being viewed like the stock market; you should’ve bought amazon when it was $10, stop complaining you can’t afford it at $1000. And that is the problem, housing is not an investment unless, you know, you actually bought it as an investment and understand who to run it like an investment.

      5) Stop the ranting. Reminds me of my cat getting all pissy when I bust him pooping on the floor. Bad cat, baaaa cat.

      BD4L.

      • Louis 1 month ago

        Can you explain your reasoning that the BOC following lock step with the FED is premature? Just curious since you have been a full on bear on the property market but yet purchased a condo within the last year (good buy though!). Also, you predicted rates going way higher, but that’s hasn’t come to fruition. Educate us please.

      • Jin 1 month ago

        The government does suppress rates through asset purchases. Mortgage rates in particular are influenced by liquidity injections done through the mortgage bond program. The government maintains they aren’t buying them with the *intention* of suppressing rates, but they only buy on a non-competitive basis, so they are injecting liquidity which does suppress rates. QE light.

        The BOC is in theory non-partisan, but in practice it isn’t so clear. It’s as non-partisan as the ministry of finance, and CMHC since they all work together. Both organizations do tend support whatever government policy lands.

      • Jin 1 month ago

        Re: 2. BOC expanded the balance sheet and are actively buying CMBs. Both actions are designed to keep rates low.

        I don’t believe they should move lock step with the Fed, because that would take CAD to $0.60 since the additional pressure of the debt would lead to faster depreciation than it would in the US.

        Flight to safety. If you’re interested, check out the US treasury and gold buying surge we’ve been seeing recently. The demand for CAD treasuries isn’t nearly as high.

  • Rui Amaral 1 month ago

    and tie this nonsense to the jobs numbers (RE jobs increase while the other types decrease) and you can see the whole country is headed for major trouble. What a f*****in disaster.

  • Fraser 1 month ago

    Up, up, up and away until…lolllllllllllllllllll…its coming and it will be ugly…

  • SUMSKILLZ 1 month ago

    Shouldn’t everyone be enjoying the lake?…summer is too short. Camping is cheap. Go jump in the lake it will do you good.

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