The average price of a Canadian resale home has risen by more than 15 per cent in the year up to October, the Canadian Real Estate Association said Monday.
The group that represents more than 130,000 real estate agents across Canada said that last month was the busiest October ever for home sales, continuing a trend that started in May after COVID-19 lockdowns in March and April put the market into a deep freeze.
While sales plummeted in the early days of the pandemic, they have been on fire ever since. Some 56,186 homes changed hands during the month, bringing the total tally of 2020 as a whole to 461,818. That’s the second-busiest 10-month stretch ever.
Sales continued to boom compared to normal levels, and prices seem to be doing the same thing.
The average price of a resale home sold on CREA’s MLS system went for $607,250. That’s up by 15.2 per cent compared to last October. Six provinces saw double digit gains and one — Manitoba — missed it by a hair, at 9.6 per cent
CREA warns that the average selling price can be misleading, since it tends to be skewed higher by sales of expensive houses in places like Toronto and Vancouver, so it puts out another number — known as the Multiple Listing Service House Price Index, or MLS HPI, that adjusts for market size and type of home.
The MLS HPI rose by 10.9 per cent in the year up to October. That’s the fastest annual increase in more than three years, dating back to July 2017, before the government implemented stress-test rules aimed at slowing down the market.
Continuing a trend that’s been observed since the start of the pandemic, homebuyers are showing a preference for two things: more space and bigger homes just outside big cities.
“The real price strength is in markets just outside (call it one-to-two hours) of the biggest urban centres,” BMO economist Robert Kavcic said in a research note.
A number of markets scattered across southwestern Ontario are seeing annual gains of more than 20 per cent right now, he said.
“On the flip side, the big cities, while still seeing price growth, are losing ground on a relative basis. For example, Vancouver is now underperforming the Okanagan Valley; and Toronto is now significantly underperforming surrounding markets like Georgian Bay, Barrie and London/St. Thomas.”
TD Bank economist Rishi Sondhi said that while still well up over the longer term, the volume of sales slowed by 0.7 per cent in October compared to the previous month, which could be a sign that the pent-up demand caused by the pandemic is dissipating.
“Sales are likely still well above fundamentally-supported levels in October [and] in our view, they can only remain that way for so long,” Sondhi said in a research note. “As such, we look for activity to continue to cool in coming months. And the possibility of more widespread lockdowns could add further downward pressure to sales moving forward.”