Housing market cooldown continues as sales prices way up from last year but down from last month

The price of the average Canadian home that sold in June was $679,000, an increase of 25 per cent in the past year. While sales have risen sharply, too, both figures were lower last month than in the month before.

The Canadian Real Estate Association said in a release Thursday that home sales have now fallen for three months in a row after setting an all-time high in March 2021.

Just over 50,000 Canadian homes changed hands during June. The average selling price, $679,000, was down from $688,000 in May, $696,000 in April and $716,000 in March.

On a monthly basis, home sales fell by 12 per cent in April, by seven per cent in May and then by eight per cent in June. But they were still 13 per cent higher than this time last year and in fact were still the strongest June on record â€" a sign of just how red-hot housing was earlier this year.

"While there is still a lot of activity in many housing markets across Canada, things have noticeably calmed down in the last few months," CREA chair Cliff Stevenson said. "There remains a shortage of supply in many parts of the country, but at least there isn't the same level of competition among buyers we were seeing a few months ago."

Markets in Ontario and British Columbia are among the hottest in the country, with annual increases in both provinces topping 30 per cent. Interestingly, the gains are lower in both Toronto and Vancouver than in the rest of each respective province. The annual increase in Vancouver came in at around 14 per cent, while in Toronto it was 20 per cent.

Some parts of Ontario are currently clocking increases of more than 50 per cent.

If there's a broad trend across the country, it's that suburban communities continue to be a lot hotter than the downtown cores they are next to. For example, home sales in Cochrane, Alta., just northwest of Calgary doubled in June.

"It's been absolutely insane," local realtor Kendra Watt said in an interview with CBC News. "I love absolutely every part of it [but] we're just exhausted."

Booming suburbs are a recurring theme across the country as buyers from big cities are taking their price gains and moving farther afield in search of more bang for their bucks.

Ryerson University professor Murtaza Haider says the pandemic has obliterated some of the usual forces that drive real estate, but it remains to be seen if those trends last. (Greg Bruce/CBC)

"This is because people are working from home and there's a greater preference for space," said Murtaza Haider, a professor at Ryerson University in Toronto who studies the housing market closely. 

Haider said he wonders how much longer that trend will continue, as offices reopen and millions of people return to work.

"I would expect that this change will result in a slowdown in the appreciation rate of prices in the periphery," he said. "It would slow down, I would expect but by how much I wouldn't be able to to wager a guess at that."

The flight to the suburbs is definitely still a factor in Cochrane, Watt says, as about half of buyers right now are out-of-towners â€" far more than usual.

That is hurting some local buyers, even those who are lucky enough to already own. Dawn Granley said she loves the Cochrane area and would like to buy something similar to her existing bungalow, but with a bit more garage space. She's thinking of selling but is worried about what might happen if she does.

She has friends who sold and weren't able to buy back in. She's heard other stories of houses selling sight unseen, so she's reluctant to dive in until things calm down.

"It's a double-edged sword," she said in an interview. "Yes we'll get more money for our house but at the same time ... it's like we're gambling to sell this house. 

"We may not be able to find anything comparable to live in for even the same price, which makes no sense to my brain."

Still hot

Economist Robert Kavcic with Bank of Montreal agrees that the June numbers still paint a picture of an extremely hot housing market by any historical metric.

"Don't be fooled â€" this is still an extremely strong level of demand," he said. "Home sales have backed off extreme levels seen in recent months, but demand is still historically strong and driving strong price growth. We believe that sales activity will continue to gradually cool in the year ahead, but it's going to take higher interest rates to soften the market in a meaningful way."

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