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Home sales are roaring on Prince Edward Island. Photo: Doug Kerr/Flickr

The Canadian Real Estate Association (CREA) is still calling for 2016 to be a record-setting year for home sales, but it has revised its forecast slightly downward based on recent developments in BC and Ontario.

The quick slowdown in BC’s Lower Mainland in the wake of a new foreign-buyer tax and Ontario’s persistent strength are the main reasons CREA gives for revising its forecast.

“Taking these factors into consideration, sales forecasts have been revised upward for Ontario and downward for British Columbia,” the association says .

In terms of their impact on national sales totals, these divergent trends mostly cancel each other out, CREA notes.

Now CREA expects 535,900 homes to change hands in 2016, up 6 per cent from the year before. This is a nudge down from the earlier forecast of 536,400 transactions, or a 6.1 per cent year-over-year increase.

Either total would be enough to surpass the annual sales record of 521,804 units dating back to 2007. “However, after adjusting for population growth, sales are still expected to remain below the peak,” CREA points out.

Four provinces are expected to see record annual home sales this year. Despite its recent downturn, BC will be one of them, with activity soaring 14.6 per cent over 2015’s totals, CREA expects.

The others are Prince Edward Island, where sales are projected to increase 20.1 per cent year-over-year, as well as Ontario and Manitoba, which will see transactions rise 7.1 per cent and 5.3 per cent respectively.

Meantime, CREA now pegs the national average sale price to reach $487,800 this year, which would represent a 10.1 per cent annual leap.

In Ontario, CREA forecasts the average home price will hit $524,600, an increase of 12.7 per cent from a year ago and the largest percentage increase of any province.

The association’s revised forecast, published yesterday, came out alongside its August home sales data showing activity was up 10.2 per cent from that very month last year.

The average price of a Canadian home last month was $456,722 in August, having climbed a more-muted 5.4 per cent from where it stood a year ago (the average price surged 9.9 year-over-year per cent in July).

BMO economist Robert Kavcic says a likely cause for this cooling in gains is “a slide in high-end home sales in pricey Vancouver.”

Average home prices are influenced by the mix of home sales in a given period. A higher number of luxury sales in an expensive market can drive up the national average price, even if these transactions still account for a relatively small share of overall activity.

“The big story behind the national figures (which you can go ahead and call irrelevant) is one that has already been told by the initial releases from the major local real estate boards,” says Kavcic. “That is, Vancouver has gone cold, while Toronto is heating up to a rolling boil.”

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