Canadian real estate market is slowly recovering

A recent report by the Canadian Real Estate Association (CREA) shows that home prices fell for the third month in a row, following their March peak.

Although the average national real estate price reached $679,051, marking almost a 26% annual gain, it was still 1.3% lower than in May and 5.3% lower than $716,828 reported in March. In case we exclude the expensive markets of the Greater Toronto and Vancouver areas, the average price will reach $544,051, showing a 26.1% year-over-year increase.

In terms of home sales, June saw an 8.4% drop from May and a 13.6% hike from a year ago.

According to CREA Chair Cliff Stevenson, although the conditions have “significantly calmed down” during the previous few months, there’s still an issue of restrained market supply in many areas of Canada.

“Yes, the madness and emotions seen earlier over the pandemic seem to have weakened for now, but the main drivers of a seller’s market are still there,” – noted CREA’s senior economist Shaun Cathcart. He says the previous pause in population growth is probably over.

Let’s look at certain regional and local real estate market results for June 2021:

Ontario: $857,754 (+26.1%)

Quebec: $452,732 (+22.4%)

B.C.: $909,810 (+22.1%)

Alberta: $432,159 (+12.3%)

Barrie & District: $728,200 (+38.5%)

Ottawa: $671,400 (+27.9%)

Halifax-Dartmouth: $468,790 (+27.9%)

Greater Montreal Area: $498,900 (+27.4%)

Victoria: $829,600 (+17%)

Winnipeg: $324,900 (+15%)

Greater Vancouver Area: $1,175,100 (+14.5%)

Calgary: $445,000 (+12%)

Edmonton: $345,600 (+8%)

St. John’s: $277,500 (+5.9%)

In spite of the monthly sales and prices decrease, the market remains strong from historical point of view. June showed record numbers for the month, noted Scotiabank’s Farah Omran.

Nevertheless, she says the national market is showing signs of fatigue, and homebuyers’ preferences begin to change back from the pandemic-caused desire for more space. In addition to it, many buyers are shifting their focus to summer travelling, as restrictions are lifted.

“And yet, we shouldn’t mistake it for a finish line, as the tight market, even despite the drop in sales, keeps pushing prices higher, though more slowly than earlier’, – she noted.

BMO’s Robert Kavcic shares her opinion, saying that historically strong demand will further support today’s prices.

“We expect sales to keep cooling down gradually in the year ahead, but only higher interest rates can soften the market significantly,” – he added.