In September the real estate market just became super hot! While there are many headlines touting the 56.2% increase over last year, it is the 10-year average number that is impressive. When the year before was weak, the year-over-year numbers are always strong. But this past September, the sales are 44.8% above the 10-year September average. The busiest September on record.
The sales-to-active listings ratio indicates that this is a seller’s market. By
property type, the ratio is 28.3% for detached homes, 36.1% for townhomes, and
24.8% for apartments. Any time the ratio is above 20%, there is upward pressure on prices.
For detached homes, the benchmark price increased 1.1% from last month and 7.8% from a year ago. The benchmark price for attached homes was up 0.4% from last month and 5.2% from a year ago. Apartments had the weakest numbers, but it is still up 0.3% from last month and 4.5% from a year ago.
All this was going on while prognostication of a market downturn continues. Moody’s is predicting a drop in detached home prices of 6.7% and a drop in condo prices of 6.5% in 2021. CMHC reiterated that they stand by their forecast in May that average prices would fall between 9% and 18%. There was an interesting comment in an UBS report on global real estate bubble risk that I think shed light on this situation. In this report, UBS analyzed real estate in 25 cities around the globe. Vancouver and Toronto were the two Canadian cities covered. About half of the cities in the report were either bubble risks or “significantly” overvalued. The author commented that four quarters of rising real estate prices during a global recession is unsustainable noting that it has been nearly 15 years since prices rose in so many global cities at once. This confirms for me that it is the covid-19 related monetary stimulus that is occurring across the globe that must be causing the strength in the various real estate markets. For Canada some have estimated that for every dollar of salary lost due to the pandemic, the government have replaced it with approximately $2.50. And I bet some of that money has made its way into the real estate market.
