After cooling for much of the past year, the country’s biggest real-estate markets are once more catching fire, evidenced by August figures showing sharp growth in resale activity and an uptick in prices.
Toronto home sales jumped by 21 per cent last month, according to the real estate board of the country’s biggest city, which provided its monthly update Thursday. Meanwhile, the number of Vancouver homes changing hands soared by 52.5 per cent compared to a year earlier.
Activity has picked up in big cities across the country.
Calgary’s real estate board reported a spike in sales of 27.5 per cent, trailed by Victoria where sales rose 20.7 per cent and Edmonton, which registered 9.9 per cent higher sales.
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Economists say one factor for the late summer boom is the far weaker comparable sales numbers a year ago, when Finance Minister Jim Flaherty introduced a handful measures aimed at slowing things down, including shortening amortization periods on insurable home loans back down to 25 years.
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Still, “home sales in several major cities sparkled,” Sal Guatieri, senior economist at BMO said in a note. “Even if the year-over-year comparisons were flattered by the deep dive following last summer’s tightening of mortgage rules.”
The average selling price for a home in Toronto, which takes into account the three major housing types of detached, semi-detached and high-rise unit, is up 5.5 per cent to $503,094. The comparable number for Vancouver is $601,500. The national average resale prices is $383, 373, according to the Canadian Real Estate Association, up 8.7 per cent from last summer.
Guatieri said nationally, resale activity is poised to climb as well as prices, although “moderately.”
“The larger story is that, after last year’s plunge in response to tighter mortgage rules, home sales have stabilized near normal levels and prices are rising moderately in most regions—a near perfect soft landing with shades of taking flight again,” he said.
With interest rates on the rise, many buyers in August may have been enticed into the market to take advantage of mortgages with pre-approved rates, or secure a home loan before interest rates rise further.
Based on historical trends the flurry of sales in August could be followed by a chill this fall, TD Economics said in Aug. 23 note.
The recent rate increases – which have added 0.8 per cent to standard mortgages – “will likely lead to volatility in home sales in the coming months,” the bank said.