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Canadian Real Estate Approaching Sellers’ Market: July CREA Report

Written by Posted On Thursday, 22 August 2019 13:25

The Canadian real estate market continued to tighten in July, with an increase in annual sales and a decline in new listings pushing conditions closer to a sellers’ market. 

Transactions increased for the fifth consecutive month with a 12.6% year-over-year increase, up 3.5% from June. New listings brought to market experienced virtually no changes, experiencing a mere 0.4% drop. This has put pressure on national home prices, which rose 3.9% to $499,000. If the GVA and GTA markets were excluded, the average price would be $393,000.

On the Road to Recovery? 

Overall, the Canadian Real Estate Association (CREA) reports that market conditions have improved by 15% from a February low, though remains 10% below peak activity in 2016 and 2017.

Sales were up in 60% of all local markets, with the lions share in the GTA and GVA. Other increases were experienced elsewhere in the BC Mainland, Calgary, Edmonton, Hamilton-Burlington, Montreal, and Ottawa. While this increase is partially due to buyers absorbing the effects of the mortgage stress test and lower interest environment, even the larger markets still remain below pre-policy levels.

“The extent to which recent declines in mortgage interest rates have helped lift sales activity varies by community and price segment,” shares Jason Stephen, the president of CREA.

The association’s chief economist, Gregory Klump, explains that though borrowers seem to be adjusting to the stress test, which adds roughly 2% to their borrowing qualifications, its mark on sales remains prevalent. This is felt especially in higher-priced housing markets, like Toronto and Vancouver, and other markets experiencing economic challenges.

“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. By the same token, 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,” he shared.

“Meanwhile, the mortgage stress test is doing no favours for home buyers and sellers alike in places facing challenging local economic prospects and subdued consumer sentiment.”

Canadian Buying Conditions Inching Towards Sellers’ Market

From a national point of view, markets became more competitive. This was attributed to an increase in sales coupled with a lack of new listings tightening Canada’s sales-to-new-listings ratio to 59.8%, up approximately 2% from June. This value, which is determined by dividing the number of sales by the number of new listings over the span of a month, measures the level of buying competition in a given market. A ratio between 40 and 60% is indicative of a balanced market, while below and above that range favours buyers’ and sellers’, respectively. According to this criteria, the Canadian real estate markets is balancing on the edge of a sellers’ market.

From a local perspective, however, the majority of markets can be considered balanced. That being said, the number of months of inventory – the amount of time it would take to sell all available housing stock on the market – fell to 4.7 months. This is the lowest point since the end of 2017 and below the long-term average of 5.3 months.

While this shows that oversupply from slower periods is starting to alleviate, CREA points out that inventory levels are quite different across the country, sitting much higher than average in Newfoundland and Labrador and the Prairies, and well below average in Ontario and the Maritimes.

Uneven Price Trends Across Canada

The overall value of homes boosted slightly, shown in a 0.2% year-over-year increase by the MLS Home Price Index – the largest in two years. This is due to an increase in single-family and two-storey home prices, which rose 0.3%. One-storey single-family and condo prices remained stagnant, while townhouse prices dropped by 0.7%.

The gap between price trends continues across the country, as prairie and western markets experience a downturn, while central and eastern provinces experience rapid growth. 

Ontario: Prices are up in most of the Greater Golden Horseshoe, rising 6.9% in Guelph, 5.9% in Niagara Region, 5% in Oakville-Milton, and 5% in Hamilton-Burlington. Sales in Toronto rose 4.4%. The Barrie and District market was the only market to see a decline, down 1.3%. The strongest price growth in the province continues to be among condos, townhouses, and houses for sale in Ottawa, up by a strong 8.9%.

Prairies: The Prairie markets continue to manage oversupply issues while home sales falter, causing prices to drop. They’re down 3.2% in Edmonton, 3.5% in Calgary, 4.4% in Regina, and 1.3% in Saskatoon. CREA predicts that the home pricing environment will remain weak in these cities until demand and supply reach a more balanced state. 

BC: Prices continue to fall in the Vancouver market by 9.4%, and by 6.7% in the Fraser Valley. The decline was less prominent in the Okanagan Valley at only 0.9%, while prices jumped 1.2% in Victoria, and up 3.4% on Vancouver Island.

Eastern Canada: Price growth continues to be robust in Greater Montreal, up 7.3%, while numbers climbed by 2.4% in Greater Moncton.

Zoocasa is a full-service brokerage that offers advanced online search tools to empower Canadians with the data and expertise they need to make more successful real estate decisions. View real estate listings for condos and houses for sale in Kitchener, Gueph, and the rest of the GTA at or download our free iOS app.

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