Home sales in Canada fall for the third consecutive month in June – ET RealEstate

OTTAWA: Canada‘s scorching hot housing market is starting to cool, as burned-out buyers shift their focus from getting more space to getting back to normal after COVID-19, and the fear of missing out fades into a prevailing sense of “wait and see.”

Home sales in Canada fell for the third consecutive month in June and sit 25% percent below March’s peak, though they still touched a monthly record, data showed on Thursday. The average selling price fell to C$679,000 ($540,777), down 5.3% from the March apex.

“People are focusing their minds on different things. They want to go to the beach, they want to enjoy the summer, they’re just not as focused on real estate these days,” said Jeremy Cossette, an agent in Regina, Saskatchewan.

Home prices surged across Canada amid the COVID-19 pandemic as lockdowns prompted people to seek out more living space and record-low interest rates fueled a buying frenzy. At the peak, home prices were up more than 40% year-over-year on average, and desperate buyers were offering hundreds of thousands over the asking price just to get a toehold in the market.

A few months later, high vaccination rates have allowed Canadian cities to reopen. Consumer spending on restaurants, hotels and clothing jumped in June, according to the RBC COVID Consumer Spending Tracker, and travel spending is shooting up.

That shift in priorities may have would-be home buyers reconsidering how much they want to spend and even where they want to live, Bank of Canada Governor Tiff Macklem said.

“Now that we can go back to a restaurant, do you still want a bigger kitchen? We’ll see,” Macklem said on Wednesday, while explaining that the central bank is seeing signs of moderation in the market.

‘See what happens’

In Calgary, long-time agent Lowell Martens said the lull may be more about buyers sensing there is less competition and just taking some time off to “see what happens in the fall”.

While that pause has cooled things down, it does not feel like previous collapses, he said, with activity still strong in certain segments. “I think it will be a softer landing that we’ve had in the past.”

In Toronto, often Canada’s hottest housing market, June sales were well below March’s peak, but still strong relative to previous years as a drop in new listings kept conditions tight, according to agent and market analyst John Pasalis.

“It’s like if you’re in a car that’s going 200 kmh (125 mph) and then it drops down to 120 kmh (75 mph). You’ve slowed down, but you’re still fast,” he said.

The big question is what will happen in the autumn when more people typically list their homes and inventory begins to build. Agents believe buyers will be back, particularly if COVID-19 border restrictions loosen and immigration begins ramping up.

But some would-be buyers are looking elsewhere. A recent poll by Ontario‘s Real Estate Association found nearly half of residents under 45 are considering leaving that province because of the high cost of housing.

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Canada home sales, average price decline in April – ET RealEstate

OTTAWA: Canadian home sales, prices and starts all fell in April compared with the previous month, as some of the frenzy of recent months began to unwind, though activity remains strong, data showed on Monday.

Canadian home sales fell 12.5% in April from March, while the average selling price was down 2.9% in April from the previous month, according to data from the Canadian Real Estate Association (CREA).

Housing starts, meanwhile, fell 19.8% in April compared with March on a sharp decline in multiple urban starts, though starts remain well above pre-pandemic levels, separate data from the Canadian Mortgage and Housing Corporation (CMHC) showed.

“While housing markets across Canada remain very active, there is growing evidence that some of the extreme imbalances of the last year are beginning to unwind,” said CREA chair Cliff Stevenson in a statement.

Stevenson added that the decline in sales came amid a third wave of COVID-19 cases and fresh restrictions, which could somewhat obscure underlying levels of supply and demand.

Canada’s housing market has been on tear in recent months, with home prices escalating sharply amid investor activity and fear of missing out. Even small cities and towns are grappling with red-hot markets usually reserved for major urban centers.

Actual sales, not seasonally adjusted, rose 256% in April from a year earlier, CREA said. Sales and prices in April 2020 were sharply impacted by the first wave of COVID-19 and a strict nation-wide shutdown.

The national average selling price of a Canadian home was C$696,000 ($575,064) in April, falling 2.9% from March, but up 41.9% from a year earlier – again skewed by the “base effect” of the April 2020 decline, the industry group said.

CREA’s Home Price Index, which smoothes average price fluctuations, was up 23.1% on the year and up 2.4% from March.

The seasonally adjusted annualized rate of housing starts fell to 268,631 units in April from a revised 334,759 units in the previous month, the CMHC said. Analysts had expected 280,000 unit starts in April.

“Housing starts remained hot in April, just not at the scorching temperature from March,” said Royce Mendes, senior economist at CIBC Capital Markets, adding starts could continue to decelerate on high building costs and rising interest rates.

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Canadian towns grapple with big-city-like real estate boom – ET RealEstate

OTTAWA: Small cities and cottage towns across Canada are grappling with the fallout of surging popularity amid the COVID-19 pandemic, as urbanites flock in, driving up home prices with big-city-style bidding wars and putting pressure on municipal services.

The growing demand has led to some small Canadian communities seeing house prices jump more than 75% in one year.

“The small towns are getting hit hard. They’re getting interest like they’ve never had before,” said Stephan Gauthier, an Ottawa real estate agent who is increasingly helping clients buy in villages well outside the city.

The eye-watering gains in Canada are mirroring similar trends in New Zealand, Australia and Britain, where rural home prices are accelerating faster than in cities as avid buyers rush to snatch up cheaper small-town properties and as white-collar workers bet on being able to work from home even after the pandemic ends.

The boom in Canada has builders flooding into smaller communities. More homes mean more demand for drinking water and wastewater treatment, forcing some towns to fast-track expensive infrastructure projects.

For locals, the influx of city people is a double-edged sword. New residents are breathing life and diversity into places where – before the pandemic – schools were closing and many businesses struggled through the winter.

But the soaring housing prices are locking locals out of the real estate market, and competition for rentals means many people can no longer afford to live locally, leaving small-business owners scrambling for staff.

Even existing homeowners, whose home values have risen sharply, are unable to move up the property ladder as the gap to the next rung widens past their means.

“You want people to come here and help build the community. But at what cost to the people who have been here for literally generations?” said Nancy Cherwinka, who lives in Prince Edward County, a peninsula in Lake Ontario known for its wineries and beaches.

Move to the country

Roughly 75,000 people left Toronto and Montreal – Canada’s two biggest cities and main COVID-19 hot spots – for other parts of their respective provinces of Ontario and Quebec in the year up to July 2020, the largest such migration since at least 2001, according to the latest Statistics Canada data.

For Prince Edward County, about 200 km (125 miles) east of Toronto, that migration has helped drive house prices up 78.5% on the year, putting ownership out of reach for many local residents. The average selling price of a home there in April was C$740,112 ($610,000).

“Now the rental market has gone nuts,” said Chuck Dowdall, executive director of the Prince Edward County Affordable Housing Corporation, with potential home buyers giving up on buying, and renting instead.

The rental crunch is making it difficult for small businesses to hire and retain staff, even if they pay above minimum wage.

It is a struggle that Samantha Parsons and her husband, owners of Parsons Brewing Company, know well. They built a small bunkhouse next to their brewery to house workers temporarily and have even had staff stay with them. This year, they arranged a lease for a three-bedroom home for employees.

“You have to be creative,” said Parsons, adding they still lose out on talent because of the housing challenge.

If you build it

To tackle the housing crisis, Prince Edward County is planning for more than 3,000 housing starts through 2026, including dozens of below-market rental units.

That boom is putting pressure on municipal services, notably aging water infrastructure. The region is hastening plans to spend C$68 million ($56.2 million) on its water and wastewater system, with developers on the hook for much of the bill.

New-home construction is also surging in other smaller centers across Canada, with rural starts in the first quarter of 2021 at their highest point since 2008.

In Collingwood, Ontario, a four-season resort town about 145 km (90 miles) northwest of Toronto, the population boom has forced the community to pause all new-home construction while it sorts out how to address its critical water shortage.

In Nelson, a former mining town in British Columbia’s Kootenay mountains, a pandemic-driven explosion of infill and coach housing is forcing the small city to expand its wastewater and water infrastructure sooner than planned.

“We were heading down that road anyway … but now it’s been accelerated. So that’s going to put us a little bit on our back foot,” said Mayor John Dooley, adding that the sewage treatment plant alone will cost about C$25 million.

Dooley said Nelson hoped to split the costs with the province and federal government.

Back in Prince Edward County, about half the children at a rural daycare are new to the community since the pandemic. At the sister daycare in town, a quarter of students are newcomers. Enrollment at local schools is also up, reversing a trend that had led to closures in previous years.

More young families living in the community will ultimately be beneficial, said Cherwinka, as long as they stick around once life goes back to normal.

“Hopefully they stay, hopefully it’s not just a pandemic solution,” she said. “Hopefully it’s long term.”

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Canadian home sales, prices surge to new record in March – ET RealEstate

OTTAWA: Canada‘s average home selling price soared an eye-watering 31.6% year-over-year in March, hitting a new high as sales also climbed to a new all-time record, the Canadian Real Estate Association (CREA) said on Thursday.

National home sales rose 5.2% in March from February, as more supply came to the market and was quickly snapped up by hungry buyers. Actual sales, not seasonally adjusted, rose 76.2% from a year ago.

The number of newly listed homes, meanwhile, climbed 7.5% to set a new record in March from February. Supply is up more than 25% in the last two months, the CREA data showed.

“The big rebound in new supply to start the spring market is the relief valve we need the most,” said Cliff Stevenson, chair of CREA, in a statement.

“It looks like we may finally be rounding the corner on these extremely unbalanced housing market conditions. It’s great news for frustrated buyers,” he added.

But even with a surge of new supply, the average selling price of a home in Canada hit a new record at C$716,828 ($572,821) in March, rising 5.7% from a month earlier.

The largest year-over-year gains continue to be smaller cities and rural parts of Ontario, followed by markets in British Columbia, Quebec and New Brunswick.

Single-family homes remain the biggest gainers, as people continue to seek out more space amid the COVID-19 pandemic and a long-term bet on working from home.

The industry group said its Home Price Index – which smoothes out average price swings – was up 20.1% from last March and up 3.1% from February.

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