Canadian Real Estate Market, Reaching New Heights

The real estate industry could be considered unpredictable. The past year saw several twists and turns for the market. As with each and every real estate year, the market could shift in an instant. Thus, real estate professionals should keep their eyes open for the next up-and-coming trend to hit the market and cause a stir. Knowing in advance what to expect when it comes to market trends for the industry not only gives investors an edge over the competition, but could help serve customers better as well.

The real estate market in Canada, just like all the other markets in the world combats the ups and downs of the industry on a regular basis. The housing market rebound of the country appears to be slowing in the midst of declining increases in sales of homes on a national scale, based on a report by the CREA or the Canadian Real Estate Association. It further stated that sale of homes witnessed their fourth consecutive increase in August, growing 0.9 percent month after month, from 39,028 to 39,366 and coming roughly half of all markets saw a month after month uptick. Nonetheless, sales of homes during August experienced a 3.8 percent non-seasonally-adjusted yearly drop simultaneously.

The drop is attributed by the association to ‘major declines’ in the real estate market in British Columbia, as well as the more stringent regulations, which came into effect at the beginning of the year. The improving national home sales in recent months continue obscuring considerable differences in regional trends for sales and prices of homes. Moreover, the recent sales increase every month are subsiding, which suggests that the recent rebound could be starting to lose strength.

Economists state the slowdown could signal a shift from the ‘wild swings’ that the market witnessed recently, as demand and prices for homes skyrocketed, which often cause a frenzied sales pace. Although one month of data barely makes a trend, the performance during the month of August could be a sign that the worst is over for the area. The state of the industry varies from region to region. Greater Vancouver saw decrease of sales by 36.7 percent, while Victoria and Fraser Valley witnessed consecutive drops of 39.5 percent and 17.6 percent each.

The Greater Toronto Area fared better and continues to stabilize, as CREA reported. The home sales in the region rose 7.6 percent from 6,357 in the previous year, to 6,839 in August of this year. It furthermore saw a 2.2 percent boost in homes sold month-over-month. For the fourth month in a row, Canadian home sales rose, with growth led by the Greater Toronto Area, along with gains in Edmonton and Montreal.

Real estate investors lift Canadian commercial real estate to new heights, with transactions reaching $16.5 billion, or 38 percent more than the previous record. The industry reached new heights during the second quarter, boosted by huge acquisitions as well as the lure of income-producing, attractive property. The deal volume for the first six months was $26.8 billion, which is a half-year record. A couple of big purchases, which closed during the second quarter dominated the action, namely the acquisition of Choice Properties of the Canadian Real Estate Investment Trust and the purchase of Blackstone Property Partners of the Pure Industrial Real Estate Investment Trust. These deals accounted for the overall 45 percent.

Doug Porter, the chief economist of the Bank of Montreal is confident that, in general, this means that the volatile housing market in the past years is over—albeit with differences in regional markets. The Canadian household debt appears have settled. In the second quarter of this year, the average Canadian household held $1.69 of debt for each dollar of disposable income, slightly down from the same quarter last year. The mortgage stress test, which was introduced back in January that reduced the borrowing of Canadians definitely, with a total value of new mortgages in the second quarter of the year, which is a third lower than the previous year.

Of course, the industry will always be unforeseeable. Nonetheless, what appears to be definite is that with the variations in the national housing markets so broad, for an average homebuyer or homeowner, it makes a lot of sense to be alert and to be updated on what’s going on provincially, or even locally. For beyond everything, it’s perfectly possible for a region to see a housing market correction, which do not apply to other areas, and most likely this is what is happening in the area presently.

The Real Estate Association in British Columbia asserted that he recent real estate downturn of the province is ‘largely behind’ them, with home sales growing on a seasonally adjusted basis during the past couple of months. Overall, the future of Canada and British Columbia’s housing markets is anyone’s guess.