Canadian Real Estate Market
In a recent report by the Canadian Real Estate Association (CREA), the Canadian housing market may have reached it peak. While some markets are still experiencing record breaking gains, “these broad-based trends are spotlighting some crucial developments.”
This is some good news, since that means things could be returning to some what of a normal market. The question now is, will this help some Canadians get into the housing market or move up in the market. This is something that we’ll need to watch over the next few months to know for sure.
“Whether you are of the opinion that the boiling Canadian real estate market has been reduced to a simmer, or that it is poised for a steep correction, it’s always prudent to analyze the numbers. In this case, the late summer figures that are emerging may suggest one thing: the peak happened months ago.”
Has the Canadian Real Estate Market Peaked?
This is the question we’re all asking ourselves right now, this is because the housing market has been very hot for quite some time. According to CREA, sales of residential properties had a 3-5 per cent decrease month-over-month since July. That decrease is the smallest monthly decline since March. However, since March housing transactions have decreased 28 per cent and 15-2 per cent on an annualized basis, in terms of unit sales on an annualized basis. What does this data mean and what does it highlight?
“The data highlighted that the slowdown in the national real estate market was less broad-based as the drop in sales was concentrated in two-thirds of local markets, led by Calgary and Edmonton. Sales also moderated in places such as Montreal. But it should be noted that July 2021 sales were still the second-best month of July on record.”
When it comes to supply, it has continued to be an issue in the Canadian real estate market. This is because the number of new listings for residential properties had an 8.8 per cent decrease month-over-month in July. The largest decreases were in Vancouver, Calgary, Montreal and the Greater Toronto Area. This indicated that it has been a sellers market, “since it suggests the number of months it would take to exhaust demand at the present rate of sales activity.”
The Canadian Real Estate Association also reported that, “housing starts totalled 286,620 units in July, down from 293,085 units in June. Single-detached urban starts jumped by 7.1 per cent, but multiple urban starts tumbled by 3.1 per cent. Rural starts were relatively flat at a little more than 23,000 units.”
Real Estate Cool Down
Is this indicated the real estate market is finally cooling down? According to an op-ed in the National Post, sated that sellers are in fact turning down offers in hopes that they’ll receive a better offer.
“Indeed, after seeing meteoric gains in recent months, many homeowners might believe they can wait until they receive a better offer. However, that higher bid may not come as many homebuyers have done one of three things: exited the market due to soaring costs, suffered buyer fatigue, or chose to wait until a correction intensifies.”
It’s also been reported that some of these sellers are choosing to listen to their family and friends, rather than the data. This is according to some industry experts who also say that this is being done even though there is a lot of data out there.
“While it is true that the Canadian real estate market remains robust as prices approach an average of $700,000, growth has ostensibly reached its zenith, at least for now. On the one hand, the price growth may have erected a multi-year barrier for young families and first-time homebuyers. But, on the other hand, at least many Canadians know what to expect as the housing market could eventually return to pre-pandemic conditions, especially in areas that have historically been more affordable.”
So what now, what happens next? It was reported that the Bank of Canada may rise the interest rates next year, making the real estate market is vulnerable to a rate hike. The next 12 to 18 months will be interesting for real estate agents and their clients as we watch the market.
Contacting Lori and Team
It’s exciting when you’re taking the step to look for your new home and I want to make sure that you have a wonderful experience. Myself and my team work hard to make sure that our clients are happy and in love with their new home.
You can contact me either by phone to email and I will be happy to answer any questions about how mortgages work, and any others you might have. If you’ve been wondering what your home is worth, you can use my What’s My Home Worth calculator. I’m looking forward to working with you soon!