Canadian real estate markets heats up in cities coast to coast leading into summer. The spring and early summer market has remained incredibly strong, with the Greater Vancouver and the Greater Toronto Area as leaders. National sales activity has reached its highest level in more than five years, and prices have increased on a year-over-year basis. Mortgage and interest rates have remained low; however, speculation that rates could increase may be a factor of the spike in the increase in home sales. Canadian Real Estate Association President, Pauline Aunger speculates, “CMHC [Canada Mortgage and Housing Corporation] announced in April that effective June 1 it was hiking mortgage default insurance premiums for homebuyers with less than a 10 per cent down payment, so some buyers may have jumped off the fence and purchased in May to beat the increase”.
Sales activity across the nation is at its peak at the highest level in over five years. Overall in the Canadian marketplace from April to May 2015, home sales rose 3.1 per cent, and are up in about 60 per cent of all local markets, led by the Greater Toronto Area (GTA), Calgary, Edmonton, Ottawa, and Montreal. May marked the fourth consecutive month that home sales increased. “Sales in and around the Greater Toronto area played a starring role in the monthly increase in May sales,” said Gregory Klump, CREA’s Chief Economist. “At the same time, the rebound in sales over the past few months in Calgary and Edmonton suggests that heightened uncertainty among some home buyers in these housing markets may be easing.”
Home prices across Canada have increased, with Greater Vancouver and the GTA as its major drivers. The national average sale price rose 8.1 per cent on a year-over-year basis in May, distorted by Greater Vancouver and the GTA. Excluding these two cities, the price average would have increased by just 2.4 per cent. Historically, the GTA has been the largest driver in the Canadian Real Estate Market; however, in the month of May, Vancouver’s price gains at 9.41 per cent surpassed Toronto’s gains at 8.90 per cent.
Overall, the Canadian real estate market continues to strengthen. Greater Vancouver and the GTA are undeniably the nation’s most prominent markets, boasting the largest levels of sales activity and average price increases. In Calgary, the decline in oil prices has affected buyer confidence in the housing market; however, the rebound in sales over the past few months suggests that its market is moving towards balanced conditions. The housing market in Montreal remains stable, with modest increases in sales and price.
