On Tuesday, September 15, the Canadian Real Estate Association (CREA) released its national housing statistics for the month of August. Below, CREA’s Senior Economist Shaun Cathcart provides an update on the current state of housing markets in Canada and explains what the data means for members.
Well, after adjusting for seasonality, August 2020 was yet another all-time record for Canadian home sales!
Together with July’s record, this summer has seen more homes trade hands via Canadian MLS® Systems than in any other two-month period on record. Along with that, we’re looking at the tightest market conditions ever and some pretty strong price growth as well.
So, what’s going on? First and most importantly, remember this follows the worst spring on record, so a big part of what we’re seeing now is the spring market having been pushed into the summer by the initial COVID-19 lockdowns.
On balance, sales in 2020 have now pulled even with the first eight months of 2019 (which were nothing to write home about), so the big picture is despite the record volatility we’ve seen these last few months, it’s balancing out such that 2020, overall, is looking like it will wind up being a fairly middling year historically. Obviously, it will be much weaker than in a non-COVID-19 world, but I’d say we’re doing quite a bit better than I think anyone would have expected back in April or May. So, there’s the one hand, but also the other.
What about those market conditions? The tightest ever? Yep! For the country overall, measures of market balance are indicating pretty much the tightest demand/supply conditions ever. That can’t happen unless you have a majority of local markets that are sellers’ markets. Not all markets obviously, but the majority. That means a lot of multiple offers and the price gains that go along with that.
But I would point out these are exactly the kinds of conditions we had been expecting this year before COVID-19. If anything, you could say we’ve been building towards a year like this for five years now.
It’s not surprising those are the market conditions we’re seeing re-emerge now a few months after lockdown. As for sales, bear in mind because of COVID-19 we’ve only seen two months of this stuff, whereas, in that hypothetical non-COVID-19 world, we likely would have already had six months of activity at least as strong as this. When you think about how affordability could have really taken a big hit this year, the whole coronavirus experience has really tapped the brakes on that—silver lining?
The MLS® Home Price Index climbed by another 1.7% from July to August and is up 4% just in the last two months. The MLS® HPI is now up almost 10% on a year-over-year basis. Heating up!
As an overall summary, strong numbers this summer, no doubt. Some of that is the snap back of activity that didn’t happen this spring, but a lot of it is likely also the re-emergence of the very same market conditions that prevailed pre-COVID-19.
I’ll be back with an update in mid-October. Until then, stay safe everybody!
To view a more detailed look at August’s national housing statistics, visit creastats.ca.