TORONTO – The Canadian Real Estate Association found that home sales fell for the fifth month in a row between June and July.
On a seasonally adjusted basis, the association said sales in July fell 5.3 percent compared to June. The actual number of sales last month was 37,975, down 29 percent from July last year.
“That leaves activity in the pre-COVID range, or about 40 percent below the peak of the demand-side blowout seen last year,” Robert Kavcic, senior economist at BMO Capital Markets, said in a statement. a note to analysts
“Without adjustments, it was the quietest July for sales since the 2020 financial crisis.”
July’s drop in month-over-month sales was the smallest in five months. Market watchers said it’s too early to tell if that trend will continue.
Still, economists and CREA president Jill Oudil said it is a continuation of the market cooling from the torrid pace seen last year and earlier this year, when bidding wars were the norm.
Much of the cooling has been attributed to the Bank of Canada raising its key interest rate by one percentage point to 2.5 percent in July, the biggest increase the country has seen in 24 years.
Changes in mortgage rates tend to reflect such increases, which affects purchasing power.
As rates have risen and sales have plummeted, many buyers have stood on the sidelines, predicting better deals to come in the fall and frustrating sellers, who have had to accept the fact that they probably won’t get as much as their neighbors. which sold in the winter.
“There are definitely a lot more people who are waiting until September before listing properties and trying not to do it in August, if they don’t have to,” said Davelle Morrison, a Toronto broker with Bosley Real Estate Ltd.
As a result, new listings in July totaled 73,436, down six percent from last July and, seasonally adjusted, down five percent from June.
When houses were flying off the market earlier this year, people could buy before they sold their own place and had little risk that their property wouldn’t sell.
Now Morrison is telling people to sell their house first because of the age of the properties.
He is also telling his clients to “buckle up” if prices fall further and interest rates continue to rise.
The median sales price was $629,971, down five percent from last July’s $662,924 and on a seasonally adjusted basis it was $650,760, a three percent drop from June, CREA said.
Excluding the typically heated Vancouver and Toronto metropolitan areas from the calculation takes $104,000 off the national average price.
Kavcic believes the declines constitute a market correction that is happening “almost everywhere, but to varying degrees.”
“Southwestern Ontario is feeling it the most, with markets like Kitchener-Waterloo and London already down about 15 percent from their peak,” he said.
He has noted that Vancouver prices have now fallen for four months in a row and Montreal has been more immune but is not escaping the recession with declines in the last two months.
“We see Alberta as the market most capable of weathering this storm because it had already been stagnant for several years before the pandemic, never saw the same froth as Ontario, and is now supported by nearly $100 worth of oil and population flows of other regions,” Kavcic wrote.
“But, in a demonstration of the power of higher interest rates, even Edmonton and Calgary have been subject to a flattening (Calgary) or a decline (Edmonton) in prices even though sales activity remains strong.” .
This report from The Canadian Press was first published on August 15, 2022.