As we head into Canada Day this weekend, this is a signal that the year is half done. This week we are going to look at the real estate market across Canada to see how things are going nationally.
Realtor.ca published a blog on June 15th that took into account Canada's housing market for May of 2023. With a title of "Home Sales Up in 70% of Canadian Real Estate Markets," it is no surprise that the Bank of Canada (BOC) increased interest rates to temper the market and consumer spending. It can be viewed here.
The Canadian real estate market is experiencing gains in home sales and prices in 2023, particularly in cities such as Toronto, Montreal, Vancouver, Calgary, Edmonton, and Ottawa. According to the Canadian Real Estate Association (CREA), home sales saw a notable 5.1% increase in May compared to April, and when compared to May 2022, there was a 1.4% increase in home sales.
This trend is significant because it marks the first time since June 2021 that Canada has seen a rise in year-over-year sales. Larry Cerqua, Chair of CREA, emphasizes that May's data highlights the positive year-over-year comparisons in national sales activity and average home prices, reinforcing the ongoing rebound in the real estate market. However, Cerqua notes that the extent to which the recovery will impact sales versus prices depends on the supply of available housing, which remains low.
Shaun Cathcart, CREA's Senior Economist, acknowledges that a rebound in housing activity was expected in 2023, but the limited supply of properties has contributed to rising prices. Although the number of newly listed properties increased by 6.8% in May compared to April, the levels are still historically low. As a result, the demand for housing has outpaced the supply, exerting more pressure on prices than anticipated.
The MLS® Home Price Index, which provides accurate insights into neighbourhood home price levels and trends in Canada, shows a 2.1% month-over-month increase in May, following a 2% gain in April. Cathcart emphasizes the significance of these numbers, stating that while they may not match the record-breaking growth seen in previous years, they still represent substantial historical growth.
Although prices are still below the levels from a year ago, Cathcart points out that the gap is closing rapidly. He predicts that at the current rate, the market could regain all the losses from last year by the end of 2023.
The future trajectory of the real estate market is dependent on the Bank of Canada's approach to curbing inflation. Cathcart suggests that another interest rate hike could occur as early as July, potentially dampening housing market activity as buyers lose confidence and purchasing power.
In May 2023, the national average home price, not seasonally adjusted, was $729,000. Since January 2023, the national average price has recovered by over $116,000. Excluding the Greater Toronto Area and Greater Vancouver from the calculation significantly reduces the national average price by almost $150,000.
All in all, it appears the housing market is hanging in there so far with the rate increases. Now that Canada has hit over 40 Million people the low supply and need for more housing is evident. Hope you have a great long weekend! Reach out if you have any questions! -Mark and Maddie