Home sales in major markets across the country delivered more impressive increases in September as activity continued to rebound from the lows seen in April and May.
Market data published over the last week by local real estate boards saw trends first observed in the early summer remain fairly uniform across the country, especially the ongoing divergence of low-rise home sales and prices and activity seen in the condo segment.
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Commenting on the latest set of data to emerge from Canada’s major housing markets in the pandemic era, RBC Senior Economist Robert Hogue noted that demand for single-detached and other low-rise homes appeared “universally stronger” when compared to condos.
“The pandemic is altering the housing needs of many current owners, which simultaneously shifts demand from condo apartments to single-detached homes and other low-rise categories, and boosts the supply of smaller condos in core urban areas. These trends have put single-family home prices on accelerating trajectories,” Hogue wrote.
Average condo prices have remained on a much less impressive upward trajectory during the course of the pandemic thus far, but Hogue doesn’t believe this will last. With buyers looking elsewhere and new listings steadily rising, the economist said that condo prices will lose ground in 2021 in some of the country’s major urban markets.
Zeroing in on Toronto, Hogue pointed to September’s 90 percent year-over-year increase in new condo listings as a sign that demand-supply conditions were softening for the segment. Meantime, the Toronto region’s MLS Home Price Index hit a three-year high growth rate of 11.6 percent over September 2019’s reading, with the “heat,” as Hogue put it, concentrated in the market’s low-rise segments.
Detached home prices also accelerated in Vancouver, up 7.8 percent in September on an annual basis compared to the 6.9 percent increase recorded in August. Home sales increased 77 percent over the previous year, while new listings rose 18 percent.
The divergence of supply and demand in the detached and condo segments was not as pronounced as what was observed in Toronto, but Hogue believes it will still impact prices for both housing types. New condo listings rose faster than sales, with the former recording a 44 percent increase over the previous year and the latter logging a 37 percent rise. This meant condo prices rose a calmer 4.5 percent annually.
“We expect prices to heat up even more in [the detached home] segment in the near term. We expect more plentiful inventories will do the opposite for condo prices,” Hogue wrote.