The Canadian real estate market is heating up again!
After a cooldown in 2018, economists predicted a modest rebound this year. However, the housing market has exceeded expectations with total national sales volume on the rise since March. July sales were up 3.5% from the previous month and 12.6% higher than last year.1
So what triggered this faster-than-expected turnaround and renewed market activity? And is it sustainable?
To answer these questions, we take a closer look at some of the key indicators and explore what they mean for buyers, sellers, and homeowners.

HOME VALUES ARE RISING
The scenario varies by region, but nationally, home values are appreciating. According to the Canadian Real Estate Association, the average sales price in July was up 3.9% from the same month last year.1 Economists attribute the increase in housing prices and sales activity to strong population growth, a solid job market, and lower mortgage rates.2
What does it mean for you? Those who were concerned about a market crash should take comfort in these latest numbers, which indicate that the cooling effects of the stress test are diminishing. If you’ve been waiting on the sidelines to buy, don’t let fear hold you in limbo. The market is cyclical, and home prices will continue to fluctuate. But over the long term, real estate has consistently proven to be a good investment.

FIXED-RATE MORTGAGES ARE ON SALE
Historically, Canadians have had to pay a premium for a fixed-rate mortgage. But a slide in the international bond market has made it cheaper for mortgage lenders to offer fixed-rate mortgages than variable ones.3 In fact, rates on standard five-year fixed-rate mortgages are at their lowest level in two years. Meanwhile, in July, the Bank of Canada dropped its five-year benchmark rate, which has made it easier for borrowers to qualify for a mortgage under the stress test requirements.4
What does it mean for you? If you’re planning to buy a home, now is a great time to apply for a fixed-rate mortgage. The recently-lowered benchmark rate has made it easier to qualify, and you can lock in a great interest rate and guarantee yourself a predictable payment for the next five years.

NEW INVENTORY IS ON THE WAY
Across the country, new home starts are on the rise. July construction levels were 10% higher than the previous year and 17% higher than the median rate of growth over the last 10 years. Meanwhile, the number of new real estate listings in July declined slightly by .4%.4 The Royal Bank of Canada predicts this will help balance the incoming pipeline of new construction. “Elevated levels of apartment construction in Halifax, Vancouver, Toronto and Montreal raise some longer-term absorption issues. There’s little risk near term as unsold inventories are low at the present time.”
What does it mean for you? If you’re a buyer who’s had trouble finding the right property, you may have new options coming to your market soon. If you’re planning to sell your current home, now may be a good time to list. Competition from new construction is likely to increase over the next few years.

HOMEOWNERSHIP IS BECOMING MORE AFFORDABLE
According to the National Bank of Canada, housing is finally becoming more affordable. In fact, during the second quarter of this year, the cost of owning a home, relative to income, fell to its lowest level in a decade.7 An increase in wages, combined with falling mortgage rates, is helping to bring the relative cost of homeownership down.
What does it mean for you? If you’ve previously been unable to afford or qualify for a mortgage, it may be worth another try. A decline in mortgage rates, an increase in housing supply, and a lower stress test benchmark rate could help put your dreams of homeownership within reach.

Sources: 1. Canadian Real Estate Association 2. CBC 3. Global News 4. Global News 5. Better Dwelling 6. RBC 7. Huffington Post

I AM HERE TO GUIDE YOU

While national real estate numbers can provide a “big picture” outlook, real estate is local. As a local market expert, I can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood. 

If you have specific questions or would like more information about how market changes could affect you, contact me to schedule a free consultation. I am here to help you navigate this shifting real estate landscape.