There has been a significant boom in the real estate market in Canada this summer. Real estate transactions have shown a surge in July after having seen a decline for half a year.
Canadian Real Estate Association (CREA) data has shown that home prices have once again touched stellar growth in July after seeing minor price declines.
What do CREA data results indicate?
Growth in prices is being nationally spurred by the market surge which is heartening since the market did not perform well over the last 4-5 years or so. The summer has been highly positive for the Canadian real estate market and buyers throughout the country have shown a higher interest in purchasing property. CREA’s seasonally adjusted benchmark price nationally touched $620,900 for July 2019 which indicates growth of 0.57% as compared to June 2019. This is 0.22% of growth in comparison to the same month last year.
The adjusted gains (monthly) were substantial enough to draw the Canadian housing market out of negative growth territory. The CREA report clearly states that realty sales in the country increased by 24% for Toronto and Vancouver had gains of 23% as well. Edmonton and Montreal had sales growth of 12% and 15% respectively while Calgary posted 8% of sales growth. With this huge growth in realty sales figures, the market for July was considerably improved as compared to the same month last year.
Market trends worth keeping in mind
The report has also highlighted the growth of 18% in single-family home sales for Edmonton while Vancouver has posted a whopping 31% of growth in this category. Toronto single-family homes have also found more takers while Vancouver has seen sales growth touching 15% for condos as well. Multiple reports have indicated that the national realty market has improved majorly with single-family housing units and premium condos drawing end-users and investors alike.
However, market experts still wish to sound a cautionary note. With several risks including trade wars, global slumps, protests in several global zones such as Iran, Hong Kong, and Turkey and also negative rates of interest, there could be some issues in the near future, particularly if you add Brexit to this mix. The bond markets have been displaying yield curves which are inverted and this may indicate a recessionary environment looming ahead. The growth in real estate sales should be great news for the industry in Canada although a few volatile quarters in the near future cannot be ruled out due to the above factors. There have also been some measures taken by the Government like the hugely debated mortgage stress test which will keep the market from booming immediately. However, the impact of regulatory limitations has already been absorbed to a large extent and sales growth should continue in the short to midterm at least according to several experts.
What experts feel
This is an industry that is obsessed with ‘location’. However, it is timing that is of primary importance and this is more important than location, particularly for homebuyers who have already got the best possible returns on their investments in property. Buyers have always timed purchases in these cases to match down cycles in markets. For instances, in 1986, if one had purchased a home in Toronto, San Diego or even New York and sold the same off in the year 1989, the person would have drawn a whopping 60% in profits as per studies.
The condos in Vancouver Downtown False Creek (Western Canada) dropped their values by 35% for 5 years between the years 1992 and 1997. If a person purchased a house here in say 1994 and sold off the same in the year 2000, the returns may have been a whopping 45%. Buying a home in Canada back in 1989 and selling it off in 1994 would have earned several people losses of 35% instead!
This shows the importance of timing the markets correctly when it comes to real estate investments. Real estate markets are different from stock markets due to their local nature. The market will naturally witness fluctuations based on the levels of confidence of buyers in any particular market. The loss in value of the property is another aspect where location does not matter as much as the purchase timing. The location is not that important but the investment has to be made at the best time in the market cycle to reap the rewards of high returns and appreciation in value.
With the real estate market growing steadily in Canada, it may be the best time for you to invest in property as opined by a large section of experts.