The Canadian real estate market picked up in August, with prices rising and sales volumes stagnant in July.
According to the Canadian Real Estate Association, there were 48,379 home resales last month on a seasonally adjusted basis. This was 0.5 per cent lower than July’s activity and the smallest month-on-month decline since April.
The home price index, which adjusts for pricing volatility, peaked at $736,600 last month, a 1 percent increase in July and the first acceleration in month-to-month price inflation since February, according to CREA. The index value is 21 per cent higher than in August of last year.
Sean Cathcart, senior economist at CREA, said the country’s housing market appears to be “somewhere between pre- and peak pandemic levels”, at a time when a lack of homes for sale and strong demand raised competition to unprecedented levels.
Rising prices prompted CREA to revise its home price forecast slightly higher. The association is now predicting that the national median home price will reach $680,000 this year, which is 19.9 percent higher than in 2020.
CREA’s previous two outlooks predicted annual price increases of 19.3 percent and 17 percent. The association does not provide forecasts for its home price index, even though it is a more accurate representation of typical home prices.
The real estate boom of the pandemic has been prompted by buyers looking for larger properties to work from home and live in during the health crisis. This has fueled the demand for homes across the country, especially in small towns and semi-rural areas where real estate is cheaper than in major urban centres.
Places that were once considered affordable, such as Hamilton and Barrie in Ontario, and Chilliwack in BC, have seen prices rise significantly during the year. It was a similar story in August. The home price index was up 2 percent month over month in the Chilliwack area and Okanagan Valley in B.C. as well as the Oakville and Milton areas in Brentford and Ontario. The index was up more than 1 percent in most of New Brunswick and about 2 percent in Fredericton.
Overall, more homeowners listed their properties for sale in August. New listings across the country were 1.2 more than in July but 22 percent lower than in August last year. It is unclear when more listings will hit the market.
Some realtors have said the fall is approaching a typical sales year, when activity follows the summer break and precedes the traditionally slow winter months. Colette Gerber, a realtor in the Vancouver area and former chairman of the local board, said some of her clients are waiting to buy and sell until late September or early October.
But with the price of many Canadians off the market and a lack of properties for sale, CREA expects a decline in resale next year. Even though the association predicts that there will be less urgency to find a major asset to exit the pandemic, prices continue to rise. CREA expects the national median home price to rise 5.6 percent to about $718,000 in 2022.
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