Despite the stress test, Canadian home sales are returning to healthy levels, according to the monthly report from the Canadian Real Estate Association.
In July 2019, national home sales increased for the fifth consecutive month, coming in 15% higher than the six-year low hit in February 2019. While sales are picking up steam, activity was still 10% below the highs hit in 2016 and 2017, but this is probably a healthy state for the market. Sales can’t always be hovering around record highs.
The Greater Toronto Area and Greater Vancouver Area led in month-over-month sales growth. On a year-over-year basis, national sales activity increased 12.6%.
Though the housing market seems to be recovering, the CREA is still blaming the stress test for slower activity in certain markets across the country:
"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. 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."
As sales heated up, new listings fell back 0.4%, but there was a slight increase in the GTA. On a national level, there were 4.7 months of inventory as of the end of July 2019, which is the lowest level since December 2017. The long-term average is 5.3 months.
It’s always important to remember that Canadian housing markets have distinct supply issues. For example, the Prairies and Newfoundland & Labrador are oversupplied, so there’s plenty of choice for buyers at the moment. This slows price growth. In Ontario, we’re having the opposite issue where there’s not enough supply, so competition between buyers is leading to greater price gains.
Nationally, the price of two-storey single-family homes increased 0.3% year-over-year, while one-storey single-family homes and condo apartments remained relatively unchanged. The price of townhomes fell 0.7%.
In the Greater Golden Horseshoe, home prices went up 6.9% year-over-year in Guelph and 5.9% in Niagara Region. The Hamilton-Burlington area and Oakville-Milton both had 5% increases in home prices, while the GTA followed with a 4.4% jump. Barrie home prices fell 1.3%.
The overall average selling price on a national level in July 2019 was just under $499,000, which is nearly 4% higher than a year ago. If you take the most expensive markets - the GTA and GVA - out of the equation, the average price is just under $393,000.