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The Canadian Real Estate Association (CREA) recently released its latest report on the real estate market. It noted that, Canada-wide, home sales dropped during May after an April that was off the charts. It was the same story here in the Fraser Valley real estate market, according to the Fraser Valley Real Estate Board’s own report.
Now, some of Canada’s biggest banks have waded in with their analysis of the report. Here’s what they said.
RBC is making a lot of the reduction in sales. Robert Hogue, the bank’s Senior Economist, wrote that “the long-awaited cooling of Canada’s housing market may be finally at hand” and called it “encouraging news.” It is probably a bit soon to call it, though, considering that Fraser Valley home sales in May were up 48% year-on-year, despite the dip from April’s numbers.
TD Bank’s Diana Petramala put the drop down to a simple lack of inventory (In the Fraser Valley, new listings were down nearly 7%), saying “May’s decline looks more like a supply story, rather than a demand story, with not enough homes on the market to fulfil what appears to be insatiable demand” and noting that inventory was at a record low in B.C. She also remarks that this level of demand is unsustainable, despite also admitting that there is no change in sight.
Adrienne Warren, at Scotiabank, reminded us that “conditions overall remain strongly tilted in favour of sellers.” This is very true, with average sale prices continuing to rise in the Fraser Valley and across Canada. Agreeing with Hogue, Warren also wrote that “activity may be peaking.” Although, like Petramala, she also didn’t see overall demand dropping any time soon.
All of these economists are cautious in their speculations, and they are right to be. It would take a lot more “cooling off” to significantly change the real estate market from its current state, especially in the Fraser Valley. British Columbia fuelled a large portion of the increased sale prices; if you remove B.C. and Ontario, Canadian house prices actually dropped 0.7% compared with May last year. That goes to show just how supercharged the local real estate market is.