CREA says home prices were up by 14% annually in July

Last month, Canada’s real estate market showed a strong rebound with record home sales and a 14% annual prices gain.

According to the Canadian Real Estate Association (CREA), there were 62,355 resale homes sold via the MLS, which is even higher than the previous record for a month.

July sales were up by 26% from June. As a rule, July doesn’t tend to show such a strong activity, but the COVID-19 pandemic has changed everything.

“These three months showed a huge difference: from the lowest market results in April to the multiple monthly records in July,” – CREA’s chief economist Shaun Cathcart noted.

The strongest sales increases were reported in Canada’s largest cities with a 49.5% gain in the Greater Toronto Area, a 43.9% rise in Greater Vancouver and a 39.1% hike in Montreal.

The average home price rose by 14.3% annually and reached $571,500.

In CREA’s opinion, the average price can’t show the entire picture, as it’s affected by sales of expensive properties in large markets of Toronto and Vancouver. That’s why the Association also calculates the Home Price Index, which excludes such volatility.

Last month, the HPI rose by 7.4% on a year-over-year basis, marking the fastest growth pace since 2017. All 20 biggest real estate markets reported monthly increases.

Although home prices and sales are going up, it’s clear the market is still affected by COVID-19.

The amount of homes available for sale went down to the lowest level in 16 years.

TD Bank economist Brian DePratto says we have at least one ‘V’ recovery now.

“In only three months, the resale market activity and average prices have even exceeded the pre-pandemic levels and reached new record highs,” – he said.

Although DePratto considers July results impressive, he believes there’s a certain reason for it and the trend will not last for long.

According to him, government programs and bank mortgage deferral programs have supported the national real estate market, protecting it from the influence of economic slowdown. However, we can’t put off this influence forever. “In autumn, these programs will expire or change form. And depending on the progress of the economic recovery, it could lead to significant challenges for housing markets, especially in terms of the prices.”