National home sales continued to chill in August from their frenzied pandemic peak, but it was still an unusually busy month for market activity, according to the Canadian Real Estate Association.
Their most recent report reveals a total of 48,379 homes changed hands last month; and while that marks a dip of -0.5% from July and -14% from 2020’s scorching summer market, it’s the second-best August in history in terms of real estate transactions.
Record-Low Supply Leads to National Sellers’ Market
However, the standout trend in today’s market is the drastic shortage of homes for sale – new listings rose a scant 1.2% month over month, while overall months of inventory – the amount of time it would take to entirely sell off all available housing stock – sits at a dire 2.2 months. That’s less than twice the long-term average, and is putting considerable pressure on today’s prospective home buyers, who face a steep sellers’ market from a national perspective.
The sales-to-new-listings ratio (SNLR) was 72.4% in August, well above the long term average of 54.7%. According to CREA, a ratio between 40 – 60% indicates balanced market conditions, while above and below that threshold indicate sellers’ and buyers’ markets, respectively. As housing has been considered a sellers’ market for the past year, that’s boosted home values at an unprecedented pace; CREA reports the average national home price hit $663,500 in August, up 13.3% year over year. The HPI Composite Benchmark – a measure of the most typical homes for sale – rose 0.9% from July, the first increase seen since February.
According to CREA, a large chunk of price growth is occurring in secondary markets rather than in big city centres like Greater Toronto or Vancouver. Check out the infographic below to see how benchmark prices trended across Canada in July:
Home Prices Rise 17% in the GTA
Greater Toronto home buyers continued to be challenged by a steep shortage of supply, as the number of new listings plunged -42.6% in August, with 12,255 homes brought to market. That has contributed to a -2.7% decline in sales from July and a -20.2% drop from 2020, as 8,579 homes traded hands. That’s led to an SNLR of 70%, well into sellers’ market territory, and up 8.7% from the same time last year. Benchmark prices continue to be historically elevated, up 17.3% year over year to $1,059,300.
Ottawa Remains a Sellers’ Market
A double-digit drop in listings is being keenly felt by Ottawa home buyers, who have witnessed steep price growth over the last year. A total of 2,102 homes were listed in August, down -10.4% from July, and -18.5% from 2020. Combined with 1,467 sales (-4.4% MoM and -21.8% YoY), the city’s SNLR sits at 69.8%, indicating a hot sellers’ market. As a result, prices have surged 18.6% since last year to a benchmark of $653,600, though this is unchanged over the short term, down -0.7% from July.
Home Prices Are Up Nearly 30% in Kitchener-Waterloo
Home price growth has been scorching in Kitchener-Waterloo, as the benchmark price rose 29.5% year over year in August to $764,300. However, buyers may be breathing a bit easier this month as the region is one of the few to experience an increase in new listings as 759 homes were brought to market, up 8.9% from July (though still down -29.3% from 2020). A total of 539 homes sold, down 6.6% month over month, and -23.3% year over year.
While that uptick in new supply helped lower the SNLR to 71% from July’s sizzling 82.8%, this still indicates a very competitive sellers’ market, and 8.2% higher than at the same time last year.
Hamilton-Burlington Benchmark Home Price Nears $900K
The Hamilton-Burlington housing market has seen its popularity surge in recent years, especially as an affordable alternative to the GTA. However, home prices are rapidly reaching the $1-million threshold, up 25.6% to $896,000. Price growth has been exacerbated by the same drop in listings seen across the region, down -31.7% from 2020 with 1,461 homes brought to market in August. Sales are down 24.6%, but that’s not enough to alleviate hot sellers’ market conditions, as the SNLR rose 7.6% annually to 76.1%.
London-St.Thomas Remains Relatively Affordable, But Prices Up Sharply
In comparison to other southern Ontario markets, the London-St. Thomas region offers an attractive price point; at a benchmark price of $590,900, it is a popular real estate destination for first-time buyers, young families, and retirees. However, it is experiencing the same kind of upward price pressure due to a supply-demand imbalance; prices are up 32.9%, while 903 homes sold, a -6% decrease from 2020. A total of 1,149 new listings came to market in August, marking a -3.1% drop from the year before, and contributing to a hot SNLR of 78.6% – nearly 10% higher than last year, which will be reflected in ultra competitive conditions for buyers.
Too Few Homes for Sale Will Push Prices Higher Into 2022: CREA Updated Forecast
CREA believes low inventory and rising prices are trends that will persist well into next year, especially as the vaccination rate increases, economies open, and immigration picks back up. The association updated their forecast for this year and next, predicting 2021 will set an all-time record for sales with 656,300 transactions by years’ end, marking an 18.8% increase from 2020. The average price is set to end the year at $680,000, up 19.9%.
In comparison, 2022 sales will trend lower, mainly due to record-low inventory. CREA is calling for 577,000 transactions, at an average price of $718,000, an increase of 5.6% from 2021.
Thinking of selling your home? Check out the Zoocasa Sellers’ Guide for info on everything from choosing a listing agent to closing.
Penelope Graham is the Managing Editor at Zoocasa, and has over a decade of experience covering real estate, mortgage, and personal finance topics. Her commentary on the housing market is frequently featured on both national and local media outlets including BNN Bloomberg, CBC, The Toronto Star, National Post, and The Huffington Post. When not keeping an eye on Toronto's hot housing market, she can be found brunching in one of the city's many vibrant neighbourhoods, travelling abroad, or in the dance studio.