Canada’s real estate market picked up steam in August, with prices climbing higher and sales volume steady over July.
There were 48,379 home resales last month on a seasonally adjusted basis, according to the Canadian Real Estate Association. That was 0.5 per cent below July’s activity and the smallest month-over-month decline since April.
The home price index, which adjusts for volatility, reached $736,600 last month, a 1-per-cent increase over July and the first acceleration in month-over-month price inflation since February, according to CREA. The index price is 21 per cent higher than in August of last year.
CREA senior economist Shaun Cathcart said the country’s housing market appeared to be “somewhere in between pre- and peak pandemic levels,” a time when a shortage of homes for sale and strong demand ramped up competition to unprecedented levels.
The rising prices triggered CREA to revise its home-price forecast slightly higher. The association is now predicting that the national average home price will reach $680,000 this year, which is 19.9 per cent higher than in 2020.
CREA’s previous two outlooks predicted an annual price increase of 19.3 per cent and 17 per cent. The association does not provide a forecast for its home price index even though it is a more accurate representation of typical home values.
The pandemic’s real estate boom has been driven by buyers looking for bigger properties to live in and work from during the health crisis. That has pushed up demand for houses across the country, particularly in smaller cities and semirural areas where real estate is cheaper than the major urban centres.
Places that were once considered affordable, such as Hamilton and Barrie in Ontario, and Chilliwack in British Columbia, have seen steep price increases over the course of the year. It was a similar story in August. The home price index was over 2 per cent higher month over month for the Chilliwack region and Okanagan Valley in B.C., as well as in Brantford and in the Oakville and Milton areas in Ontario. The index was up by over 1 per cent in most of New Brunswick and nearly 2 per cent in Fredericton.
Overall, more homeowners listed their properties for sale in August. New listings across the country were 1.2 per cent higher than in July but 22 per cent below August of last year. It is not clear when more listings will come to the market.
Some realtors have said the fall is turning out to be like a normal selling year, when activity picks up after summer vacation and ahead of the traditionally slow winter months. Colette Gerber, a realtor in the Vancouver region and former chair of the local board, said some of her clients are waiting until later in September or early October to buy and sell.
But with many Canadians priced out of the market and a shortage of properties for sale, CREA expects resales to fall next year. Even though the association predicts there will be less urgency to find a bigger property to ride out the pandemic, it sees prices continuing to rise. CREA expects the national average home price to climb by 5.6 per cent, to about $718,000, in 2022.
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