Canadian real estate sales are soaring, shattering quite a few records. Canadian Real Estate Association (CREA) data shows another monthly record in December. The annual rate of growth was also the highest rate since just after the Great Recession. The trend of higher growth is most likely going to last at least another six months. At which point a more consistent comparison window will provide a little perspective.
Canadian Real Estate Sales Rise Over 47%
Canadian real estate prices are much higher than last month, even adjusting for a big year. There were 59,543 seasonally adjusted sales in December, up 7.2% from the month before. Unadjusted there were 39,876 sales in the month, up 47.2% from the same month last year. Big gains all around due to the seasonal shift that occurred this year. The seasonally adjusted gain is due to a smaller than typical decline in home sales for the month. December’s unadjusted sales were still lower than November.
The rate of growth is accelerating, but it’s hard to yield very many insights due to the demand shift. The 12-month unadjusted growth rate of 47.2% in December is the highest since the Great Recession. Demand is higher than usual, but it’s hard to tell how much of this is due to the first two months of the pandemic. Artificial restrictions forced an unusual market last year, delaying some buyers. Those delayed, bought a little later, pushing seasonal peaks out further. Higher growth was expected, but should taper (at least a little) in the second half of 2021.
Due to the demand shift and the depressed numbers coming up, it would be odd to not see a higher rate of growth. This is especially true in April and May, which came in at historic lows due to lockdowns. This is what analysts call a low-base effect, which is when an unusually low value shows very large growth. This very large growth isn’t particularly helpful in a forecast though, since it’s relatively unstable. About mid-2021, we’ll see the base effect make regular sale volumes appear low. This also won’t be particularly helpful in forecasting either.
The massive gains aren’t entirely due to a shift and pent-up demand. There’s a significant shift in buying trends, with low interest rates and work-from-home changing buying behavior. Lowering interest rates typically pull forward future demand, by making debt cheaper. The work-from-home trend is also allowing people to work further from City centers, and escape high priced rentals. This has been driving more buying outside of primary cities, and into neighboring regions.
Canadian Real Estate Sales Change
The annual percent change of unadjusted sales for all home types, as reported through the Canadian MLS.