The Canadian housing market continued its strong bounce back in August 2019, according to the latest figures from the Canadian Real Estate Association.
In August 2019, national home sales increased for the sixth month in a row, coming in 17% higher than the six-year low hit in February 2019. On a year-over-year basis, national sales jumped 5%, with significant activity in the Greater Toronto Area.
“The mortgage stress test has eased marginally and that’s helped some potential homebuyers,” says Jason Stephen, CREA’s President. “But the extent to which they’re adjusting to it continues to vary by community and price segment. All real estate is local. Nobody knows that better than a professional REALTOR®, your best source for information and guidance when negotiating the sale or purchase of a home.”
“The recent marginal decline in the benchmark five-year interest rate used to assess homebuyers’ mortgage eligibility, together with lower home prices in some markets, means that some previously sidelined homebuyers have returned,” adds Gregory Klump, CREA’s Chief Economist. “Even so, the mortgage stress test will continue to limit homebuyers’ access to mortgage financing, with the degree to which it further weighs on home sales activity continuing to vary by region.”
New listings also went up, but only by 1.1%. Nationally, there were 4.6 months of inventory as of the end of August, which is the lowest level since December 2017. The long-term average is 5.3 months. Tighter supply and strong demand typically leads to price growth. Keep in mind Canadian markets vary across the country. For example, Newfoundland and Labrador and the Prairie provinces are currently oversupplied, while Ontario is lacking supply.
Two-storey single-family homes saw the greatest price growth, increasing 1.2% year-over-year. One-storey single-family homes increased 0.7%, and townhomes and apartments went up 0.3% and 0.5%, respectively. The Greater Golden Horseshoe saw signs of a strong price rebound.
The national average price in August 2019 was approximately $493,500, up nearly 4% from a year ago. Without the most expensive markets - Greater Vancouver and the GTA - the national average price is less than $393,000.
Now that the federal election is underway, many members of the industry, including the CREA, are calling for an adjustment to the mortgage stress test. We’re interested to see if this issue is addressed in the coming weeks leading up to October 21.