Canada’s housing market came roaring back in a big way in July, smashing the record for the most homes sold during the month, and average prices rising 14 per cent from where they were a year ago.
The Canadian Real Estate Association (CREA), which represents 130,000 realtors across Canada, said Monday that 62,355 Canadian resale homes were sold via the Multiple Listings Service, shattering the previous record for most sales in a month.
The July figure was 26 per cent higher than June’s figure. July is not typically the busiest time of the year for home sales, but as it has with just about everything else, the COVID-19 pandemic has thrown the old ways out the window.
The housing market typically starts off the year slow in the colder months, before warming up in the early spring and usually peaking in about May or June. By later in the summer, sales start to slow, and then go into hibernation through the winter before the cycle starts up again.
But the arrival of COVID-19 in March has seemingly delayed that schedule, as sales in March and April were wiped out because of lockdowns, and that home selling activity is only now returning to the market.
“What a difference three months makes, from some of the lowest housing numbers ever back in April to the multiple monthly records logged in July,” CREA’s chief economist Shaun Cathcart said of the numbers.
“A big part of what we’re seeing right now is the snap back in activity that would have otherwise happened earlier this year.”
The sales boom is being led by Canada’s biggest cities, as home sales rose by 49.5 per cent in the Greater Toronto Area, 43.9 per cent in Greater Vancouver and by 39.1 per cent in Montreal.
Prices rising at fastest pace since 2017
The average selling price in July was $571,500, an increase of 14.3 per cent from the same level a year earlier.
CREA says the average price can be misleading because it is easily influenced by sales of expensive properties in big markets like Toronto and Vancouver. So the realtor group calculates another number, known as the Home Price Index, which it says is a better gauge of the market because it strips out that volatility, and adjusts for both the volume and type of housing being sold in every market.
The HPI increased at a 7.4 per cent annual rate in July. That’s the fastest pace of gain since 2017. All 20 of the biggest housing markets in Canada had a higher HPI number in July than they did in June.
Prices are increasing and so are sales, but it’s clear the market is still being very much impacted by COVID-19.
The inventory level, which is the total amount of homes available for sale, has fallen to its lowest level in 16 years.
“There are listings that will come to the market because of COVID-19, but many properties are also not being listed right now due to the virus,” Cathcart said.
TD Bank economist Brian DePratto said “it looks like we got at least one ‘V’ recovery after all,” referring to the shape of the bounceback — a sharp drop followed by an equally sharp recovery.
“In just three short months, Canadian resale activity and average prices have not just popped back to above pre-pandemic levels, but to new record highs,” he said.
While he described the July numbers as “impressive,” DePratto noted that there’s ample reason to doubt that they can be sustained.
“A number of support programs, including mortgage forbearance, are helping insulate the economy from the worst impacts of the pandemic. As autumn approaches, these programs will expire or change form. Depending on the progress of the broader economic recovery, this could bring significant headwinds to housing markets, particularly prices.”