Average home prices rise from year before, marking turning point

By
Millicent Wong
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256
financial contribution

  1. property

The median home price hits $729,000 in May, the first year-over-year increase in 12 months

Published on June 15, 2023 • Last updated 1 day ago • 2 minutes reading time

Home sales in May were up 1.4 percent from the same period last year, marking the first nationwide year-over-year sales increase in almost two years. Home sales in May were up 1.4 percent from the same period last year, marking the first nationwide year-over-year sales increase in almost two years. PHOTO BY AZIN GHAFFARI/POSTMEDIA

The nationwide median home price in Canada jumped to $729,000 in May, up 3.2 percent from the same period last year and the first year-on-year increase in 12 months.

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Strong sales in British Columbia’s Greater Toronto Area (GTA) and Lower Mainland were responsible for the gains, according to figures released June 15 by the Canadian Real Estate Association (CREA).

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Nationwide, sales continued their upward trend in May, rising 5.1 percent from April. The increase followed a sharp rise in April and smaller gains in February and March. The sales increase was seen in around 70 percent of local markets, including the main markets of Toronto, Montreal, Vancouver, Calgary, Edmonton and Ottawa.

The number of transactions in May was up 1.4 percent from the same period last year, marking the first nationwide sales increase year-over-year in almost two years.

“The rebound has been evident for several months at this point, but May has made it clear with year-over-year comparisons of both national sales activity and national average home prices returning to positive territory,” CREA Chairman Larry Cerqua said in the report. “However, the extent to which any recovery will play out on the sell side rather than the price side will depend on supply, which remains quite low.”

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Despite some positive indicators, such as a 6.8 percent mom inventory increase in May, overall supply remains at historically low levels, CREA said.

Christopher Alexander, president of Re/Max Canada, warned that the real estate market could see further price increases if shares don’t rise significantly.

“Everything is going in the right direction, but stocks are still insanely low,” Alexander said in an interview. “(And because of that) prices will go up. Situational demand still exceeds supply. There are people who have to move for a variety of reasons. They have babies, they have to get married, they get divorced, downsizing, death, all those things. That’s what I call situational demand – which in itself exceeds supply.”

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Alexander acknowledged that further rate hikes before year-end could dampen price growth. However, he believes the 0.25 rate hike in June was not significant enough to significantly impact consumer confidence on its own.

“The rate hike hasn’t been that big and I think consumers are already very confident in the market,” he said. “(Buyers) have braced themselves for this to be the right environment. Most people, unless you’re a first-time buyer, are in a good position to move out because they’ve accumulated a lot of equity over the years.”

  1. A housing development in Bradford West Gwillimbury, Ontario.

    In Vancouver and Toronto, the housing stock grew faster than the population

  2. A for sale sign on a home in Ontario. The Bank of Canada's recent rate hike could put pressure on house prices.

    The Bank of Canada just “trampled” the housing market recovery.

  3. A realtor sign outside a home for sale in Toronto.

    Most home seekers are waiting for mortgage rates to come down

Data from CREA showed that the MLS Home Price Index (HPI) rose 2.1 percent month-on-month in May but is down 8.6 percent year-on-year.

The nationwide median home price in April was $716,000.

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