August 2020 – average home price in Canada shows an 18% annual increase

Canada’s real estate market kept showing strong activity last month, with home prices growing by almost 20% annually and the sales reaching another monthly record.

According to the Canadian Real Estate Association (CREA), there were 58,645 homes sold in August, marking a 33% hike from a year ago. In addition to it, the number also exceeds July’s record by more than 6%.

As a rule, August doesn’t show high activity, as the hot spring market cools down during the summer. However, 2020 has changed all the rules, as lockdowns in March and April delayed many home purchases and pushed the buying season later into summer.

Moreover, the housing prices were also up significantly, with the average price of a Canadian home reaching $586,000, which is 18.5% higher than in August 2019.

However, CREA believes the average price doesn’t show the entire picture because expensive markets of Toronto and Vancouver distort the results.

In case we exclude those two cities from the calculations, the average price will go down to $464,000. If we exclude the provinces of B.C. and Ontario, Montreal will lead the way with $493,824 and Calgary will follow with $469,883. All other cities will not show prices higher than $400,000.

That’s why CREA also calculates the House Price Index, which is a more accurate gauge.

The HPI was up by 9.4% last month, marking the largest year-over-year hike since 2017.

According to TD Bank economist Brian DePratto, the numbers suggest the market keeps defying gravity, but it’s not clear if it’s for long.

“Although the lack of spring market has been an important factor explaining the unusually strong summer, in case of August, the level of sales is in line with historic norms, meaning that much of this demand has been already satisfied,” – he noted.

Diana Petramala, a professor at the Ryerson University in Toronto, says COVID-19 has sped up certain tendencies which were already seen at the market before the pandemic started.

We’re talking about the desire to have more space, leading to either paying more in large cities, or moving out of them.

“Millennials are aging and as they start earning more, they want larger and better homes,” – she explained.

Some of the largest price increases are reported in suburban markets near major cities, where prices were up by more than 25% in certain areas around Toronto and Vancouver. Meanwhile, the condo markets show softer conditions.