Canada’s late Spring real estate market continues, but some of the pent-up demand has caught up. Canadian Real Estate Association (CREA) data show a new all-time record for August sales. The rise is largely due to the lockdown delaying the busy Spring season into the Summer. The result is an odd comparison period, that is likely to continue until the pent-up demand has caught up.
Canadian Real Estate Sales Are Up Over 33% From Last Year
Canadian real estate sales printed another all-time record, as only some of the pent-up demand caught up. CREA reported 58,645 sales in August, down 6.2% from the month before. This works out to an increase of 33.5% when compared to the same month last year. The monthly decline is seasonal, but the annual increase is not. Last month was the biggest August for home sales in the history of the MLS.
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.The annual rate of growth was huge, printing the highest level seen in over a decade. The 12-month increase of 33.5% in August is the highest rate since March 2010. Last year was unusually slow, but this has to do with pent-up demand shifting the trend later. This is easier to understand when it’s visualized.
Canadian Real Estate Sales
The unadjusted sales for all home types, as reported through the Canadian MLS. Source: CREA, Better Dwelling.A chart of annual overlays shows how the pandemic pushed spring demand later into the year. Due to the lockdown, a number of markets couldn’t conduct sales in April and May. This delayed both buyers and sellers into the following months. The whole trend essentially just shifts to the right, with a little boost as pent-up demand catches up. When looked at year to date, the lag becomes a little more evident as well.
Canadian Real Estate Sales: Rolling Average
The 12-month rolling average of Canadian real estate sales. Source: CREA, Better Dwelling.Looking at the 12-month rolling average, we see how the pandemic months are still causing a lag, which we’re still catching up from. There were 40,747 sales in August as a 12-month rolling average, 4.5% higher than it was during the same month last year. It’s definitely busier this year than last, but it’s not quite the boom time trend seen from 2015 to 2018.
The year-over-year growth numbers for both buyers and sellers is a bit of an anomaly. The records set this year are unlikely to be beat for a very long time, since people aren’t usually physically restricted from participating in a market for months. As the delayed buyers catch up, the trend should die down to a reduced rate. Until then, the market is likely to print record sales. However, this is very different from when sales records are set in traditional market seasons.
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I agree, but freehold sales are already falling in York and listing numbers are still rising. Might now see a big enough divergence in September, but October may be already caught up.
October will be the beginning of the end for housing. CEWS is ending. Deferrals are too. Cold weather is coming meaning these pop up patios are going to shut down meaning more unemployment. No return to tourism or travel anytime soon (as is evident with the airlines now begging for hand outs) meaning gig is dead (AIRBNB, Uber, Lyft, etc.). October will be when the cracks in the foundation of real estate here in Toronto and surrounding areas become a lot more prevalent but in my opinion the time to watch for will be spring 2021. At that point home prices will crater. Even now Condo prices in the GTA have already started coming down quite significantly and this is due to rental prices collapsing. Rental prices which people needed at a higher price point so that they could make ends meet. Condos that were renting for 2800 last year but now are renting for 1900 a month (Park Lawn and Lakeshore). Luxury homes too are being listed at record pace and are being reduced by 10’s if not 100’s of thousands on a regular basis to get gone before the banks come knocking as again deferrals are coming to an end. I’m personally in the market for a Luxury Home (personal residence not investment) so have been keeping track and the numbers have been dropping since around May of this year. I notice a lot of empty ones where a person or people bought a home on a nice sized lot then tore down the home and built a McMansion on it and now can’t even pay to stage the home.
How much will home prices crater? To January 2020 prices?
No… by a lot. My personal opinion is that home prices will reduce to bring all home averages (not just ‘Typical’ ones that are being qualified by the various real estate corporations) in the GTA down to around 450k. That’s average. In other words a reduction of almost 50% from where all homes (not ‘traditional’ ones) are currently.
That will put the average squarely back in line with where they’ve always been historically. In other words between 4 and 5 times yearly earnings. But that’s my opinion. I’ve had this opinion for about a year now (before this whole shut down).
Housing prices and sales continue to soar. A trillion dollars has to be spent to support the economy. Stock market is up. In my area in BC, Vancouver Island people cannot even find a place to rent. A lot of businesses reported above average sales when Canadians were released from their false imprisonment.
Many deferred paying for their mortgages, car loans, hydro bills. All governments have deferred various tax payments.
Here we have two ends of a spectrum. The winners and the losers.
Yet, we have our taxes being used once again to flood the system with cash.
I don’t think there any long term winners in this situation. BOC is seriously considering negative interest rates. So even if you unloaded your real estate like Svengali, now you’re going to pay to store your cash. Or, there’s the stock market 😉 Canada is in the throws of catastrophe, unlike anything most living Canadians have ever seen. The GOC hopes you don’t notice. If you think that is an exaggeration, the BOC is trying to assess our acuity – and tolerance for severe pain – by asking for our opinion on what they should do to get us out of the mess they created.
Here’s the survey, try to ignore the leading questions, and brace yourself Effie.
https://www.bankofcanada.ca/toward-2021-renewing-the-monetary-policy-framework/toward-2021-outreach/lets-talk-inflation/?utm_source=BTT&utm_medium=referral&utm_campaign=SRITR20
And THAT is why I keep my savings in precious metals bruh.
That survey is a train wreck. The way it primes and answers… And the answer options arent even collective exhaustive. Who hires these morons?
Just look at question 10. There isnt even an option to vote for higher I.R.
“throes” of a catastrophe
Says the guy with no regard for capitalization 😛
Correction noted. Thank you.
There will be a huge shift in wealth. People who really did nothing wrong and followed others driving up prices (people who bought 1, 4 or even more investment properties to rent out or AIRBNB) will now end up bankrupt and those that have a little savings but really never took risks will end up being able to buy their property. The former haves will become the havenots (except for of course the top 10% wealth wise…they will only have more).
Are you suggesting that the meek will inherit the earth? Or possibly it’s the Bonfire of the Vanities? Pick your fiction.
Time to bring down real estate prices, this government sponsored scam needs to come to an end. If they dont allow prices to come down this cycle, we need an investigation into real estate corruption.
This is the biggest crime against Canadians in our history. Someone needs to be held responsible for this bubble.
As if politics ever worked like that. How else are they going to get votes?
Trudeau: yeah, we’re going to crash the housing market and the dollar so you can bring the economy back down to Earth. It is inevitable, but better sooner than later; i’ll take the blame for it and your kids can thank me. In the mean time, enjoy losing your jobs, your homes, and the luxury you’ve been spoiled into your entire lives.
CREA Year-To-Date sales shows only 0.8% increase so far this year compared to 2019.