Home Sales Churn on in August
Well lookie-loo all you naysayers! Not only were home sales up in July, after many predicted that the market was to crash and burn right around the same time, but a new report from the Canadian Real Estate Association also shows that they were up in August too!
On a month-over-month basis, home sales in August were up 2.8 per cent from July. And when looking at a year-over-year basis, they jumped up a total of 11.1 per cent from August of last year. These stats came after a severe softening was expected, and the market wasn’t expected to rebound from last year’s tough mortgage restrictions until the end of this year at the very best.
“Suffice it to say that next to no one predicted a big mid-year bounce in home sales at the start of 2013, when calls for Canadian housing market calamity were all the rage,” said Dough Porter, BMO Capital Markets Chief Economist. (What Mr. Porter fails to say is that he was one of the many that was expecting the world to end for our housing market, sometime right around now if not a few months beforehand.)
But there are reasons for everything, and these numbers are no exception. When comparing year-over-year, you need to look at the housing market climate of last August. The rules had just been implemented, and for a short while they did put the housing market into slow motion. Such is the reason for the huge year-over-year jump. And with banks finally raising their mortgage rates to near-normal standards, many buyers and homeowners jumped into mortgage deals before they could get too much further ahead.
“Recent increases to fixed mortgage rates caused sales to be pulled forward as buyers with pre-approved financing at lower rates jumped into the market sooner than they might have otherwise,” says Gregory Klump, CREA Chief Economist.
Klump also stated however, that the number of buyers with pre-approved mortgages has shrunk significantly, and that will most likely have an impact on the fourth quarter of this year – the quarter in which economists were predicting last year that the housing market would finally start churning once again.
Of course, through this all there is still the matter of pricing, something that is probably concerning buyers much more than past home sales. Unfortunately for them, prices continue to go up. Calgary saw gains of 7.4 per cent in their pricing while Saskatoon prices increased 3.9 per cent. Toronto saw increases of 3.7 per cent, Montreal homes saw an overall jump of 2.4 per cent, and Ottawa prices inched just 0.8 per cent. Vancouver and Regina both saw declines, with 1.3 per cent and 1.5 per cent declines, respectively.