National home sales are slowly recovering from their dip in February, but are still 10% below the highs reached in 2016 and 2017.
After reaching a six-year low early in the year, home sales rose for the fifth consecutive month this July, according to the Canadian Real Estate Association’s (CREA) monthly report, and are a full 12.6% higher than in July 2018.
“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,” says Gregory Klump, CREA’s chief economist.
“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 added. “Meanwhile, the mortgage stress test is doing no favours for homebuyers and sellers alike in places facing challenging local economic prospects and subdued consumer sentiment.”
Activity is high in the Greater Vancouver and Toronto areas, but still below peak levels. Calgary, Edmonton, Ottawa, Montreal and Hamilton also showed higher activity from last year.
CREA raises the possibility that the recent reduction in mortgage rates may have incentivized prospective buyers to jump into the market.
The MLS benchmark price stands at $620,900, stable from last year. The benchmark price tracks 19 major cities in Canada and is a more accurate reflection of the “typical” property since it excludes the highest and lowest property prices.
Ottawa and Montreal posted the biggest benchmark gains from July 2018, rising 8.84% and 7.23%, respectively. Homes in those two cities remain affordable for first-time buyers. Hamilton, Oakville, Toronto and the Niagara region also posted gains, all at around 5%, proving the Greater Golden Horseshoe’s resilience.
British Columbia, on the other hand, did poorly, with the Lower Mainland plunging 8.43%, Greater Vancouver 9.38% and the Fraser Valley 6.58%. It’s unclear why Ontario is doing so much better.
The Prairies continue their decline due to a glut of inventory and low oil prices. Calgary (-3.53%), Edmonton (-3.30%), Regina (-4.55) and Saskatoon (-1.27%) are all in the red, with benchmark prices declining even from 10 years ago.
For more stats on July’s national real estate picture, check out the infographic below: