Canada’s markets have been flooded with cheap money, causing a buying frenzy across the country. Canadian Real Estate Association (CREA) data shows record real estate sales in November. Unlike previous boom-time periods, the rise in home sales wasn’t confined to a few hot markets. All but two major cities across the country are seeing double digit growth in home sales.
Canadian Real Estate Sales Hit A New Record In November
Canadian real estate sales are showing a small seasonal slowing, but are still up huge from last year. There were 55,343 seasonally adjusted sales in November, down 1.6% from the month before. Unadjusted, there were 49,564 home sales, up 32.1% from the same month last year. The seasonal adjustment shows a little bit of the pent-up demand is catching up, but the annual gain was so large – it’s mostly insignificant. This was the most home sales for the month across the country in the history of the index.
Canadian Real Estate Sales ChangeThe 12-month percent change of unadjusted real estate sales for November. Source: CREA, Better Dwelling.
Small Canadian Cities Lead In Real Estate Sales Growth
Canada’s smallest real estate markets are actually leading in growth. Regina saw the biggest annual gain with 294 sales in November, up 77.1% from last year. Saguenay came in second with 117 sales, up 62.5% from last year. Rising sales in secondary cities confirms the pandemic may have accelerated migration.
Only Two Real Estate Markets Didn’t See Double Digit Sales Growth
No major real estate market in Canada is seeing fewer sales, and only two markets saw less than double digit growth. Trois Rivieres saw the lowest annual growth with 119 sales in November, flat from the same month last year. Thunder Bay was in second with 172 sales, up 3.6% from last year. Flat is flat, but Thunder Bay’s growth would be considered substantial in any other year. That’s how out of whack things are right now.
Greater Toronto Real Estate Sales Grow Over 23%
Greater Toronto real estate sales to contrast is seeing a bigger slowdown, and smaller than average growth. There were 9,209 seasonally adjusted sales, down 2.1% from the same month last year. Unadjusted, there were 8,766 sales, up 23.6% from the same month last year. The seasonal slowdown is larger than usual, but the annual gain is still one of the biggest on record. Even so, the annual increase in sales was one of the smallest in the country.
Vancouver Real Estate Sales Increase Over 23%
Greater Vancouver real estate’s seasonal slowdown was a little bigger than Toronto, but the annual gains were still huge. There were 3,268 seasonally adjusted sales in November, down 4.7% from the month before. Unadjusted, there were 3,131 sales, up 23% from last year. The monthly decline shows some pent-up demand is catching up, but the annual gain is still very large. Even if it’s one of the smallest in the country.
When one or two markets are seeing increased real estate sales, regional pressures are likely at work. Canada’s population is fast growing, housing takes a long time to build, and there’s so many areas with fast growing employment. When real estate sales are soaring against declining population, and higher unemployment – this likely has to do with an oversupply of credit.
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I learned from one your presentations that monetary policy takes 8 to 12 months before it starts to appear in the system through timing lag.
The BOC continually easing in March and April had no effect on the stabilization. They kept doing stuff because they couldn’t look like they were doing nothing. By that measure, we should see all those decisions hit the market right about now through the Spring.
Stimulus prepared when they thought the pandemic was going to be the end of the world… is going to hit the market after the market was already flooded by credit easing from OSFI.
Government of Canada, OSFI, and Bank of Canada.
Government of Canada deferred payments.
OSFI lowered buffers to allow more borrowing at cheaper rates. This was the fall.
BOC cut rates and did QE, which is going to hit now.
All 3 rolled out measures designed to do the same thing, blowing probably the most epic bubble they could have.
House prices are going to go nuts soon (even more nuts). I don’t know how long that’s going to stick around though.
Buy now to avoid a price hike, and pray that the measures didn’t pull so much demand from the future it creates a buyer gap in the future.
Uhhh yes go nuts like crash down. Massive bubble burst.
Now the biggest problem facing the BOC is how to reduce the money supply. Its pretty simple to increase the MS. Just print more government debt and buy it., which release more dollars into the system.
Now how is the BOC going to reverse this process..?? No one will buy government bonds in an inflationary period, as bonds drop on price as rates move higher.. The BOC cannot force someone to buy their unwanted debt.
The process of controlling the MS, only works in normal times, with rates in the mid range 4% to 5%, and economic growth in mid ranges..
But nothing will work when rates are Zero or 20%, either the economy will fail or the currency will fail.
Interesting times ahead
I do not see how this market will fall.. Interest rates are way too low for that to happen. There is a lot of money in the middle to upper class Canadian households. What could possibly blow the real estate bubble?? Wait until the borders open up again! There will be a feeding frenzy on Canadian real estate. I am not sure what these analysts and economists are talking about. Please enlighten me on how this real estate market bubble will pop…
I mean, you kind of said it. This market is predicated on historically low interest rates for a very, very long period of time. Eventually something will have to give there. And that’s all it will take. Also, borders aren’t gonna reopen for another 8-10 months. A lot can happen in that time. Finally, negative capitalization condo investors will start heading for the exits even more than they have. Will that just hurt condos or housing as a whole? TBD.
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