Home sales recorded over Canadian MLS® Systems increased 6.2% in August 2020, raising them to another new all-time monthly record.
It has been a strong summer as buyers play catch up following the loss of so much of the 2020 spring market, it really does seem that the spring market shifted into the summer.
A strong market can bring a distorted perspective as we sometimes focus on the current rather than taking the bigger picture into account, it is important to look at the overall market. Using almost 9 months of data, we look at where we are now versus where we thought we’d be before anyone had ever heard of COVID-19. Despite record monthly highs and of course the early part of the year lows along with activity showing signs of moderating in September, it may be a fairly average year overall.
Unlike the previous two months in which activity was up right across the country, sales in August were up in about 60% of local markets. Gains were led by the Greater Toronto Area (GTA) and British Columbia’s Lower Mainland and there is still ongoing supply shortages in so many parts of Canada.
The number of months of inventory is always an important measure of the balance between sales and the supply of listings. It represents how long it would take to liquidate current inventories at the current rate of sales activity.
There was just 2.6 months of inventory on a national basis at the end of August 2020 – the lowest reading on record for this measure. Our local market is slightly higher than this and when we go above $700,000 that number more than doubles.
Other factors to watch are the Consumer Confidence Index, Interest rates as well as Unemployment levles, which was at 11.6% at the end of August 2020, down 0.9% from the previous month as businesses continue to re-open.
Full-time employment levels have recovered nearly 50,000 jobs since bottoming out in June.
Sentiment about making major purchases, like a home or a car, remained at historically subdued levels. The overall percentage of consumers who thought it was a good time to make a major purchase took a step down in August, while the percentage of those who were uncertain rose.
On September 9th 2020, the Bank of Canada maintained its overnight lending rate at 0.25%. The Bank noted that as the economy continues to recover, it will hold the policy interest rate at its effective lower bound until economic slack is absorbed to ensure that the 2% inflation target is “sustainably achieved”. The Bank also confirmed that it will continue its large-scale asset purchase program of at least $5 billion per week of Government of Canada bonds at its current pace.
Our local market on Vancouver island, excluding Victoria, recorded 1,101 unit sales (all categories) last month, a 39 % increase from August 2019.
A total of 547 single-family detached properties (excluding acreage and waterfront) sold in August, a year-over-year increase of 35 per cent. Sales of condo apartments rose by 43% year over year while row/townhouse sales increased by 19%.
Active listings of single-family detached properties (excluding acreage and waterfront) totaled 1,081 in August, while there were 427 condo apartments and 221 row/townhouses for sale last month.
BCREA expects unit sales on Vancouver Island to hit 8,300 in 2021, a 15% increase over the 7,200 sales projected this year.
The benchmark price of a single-family home hit $533,300 in August, an increase of three percent from the previous year but two percent lower than in July. (Benchmark pricing tracks the value of a typical home in the reported area.) The year-over-year benchmark price of an apartment rose by five percent, hitting $312,000 but down marginally from July. The benchmark price of a townhouse rose by four percent year over year, climbing to $432,300 and up by one percent from July.
Local market numbers are as follows.
• Malahat and area, the benchmark price of a single-family home last month was $610,200, a seven percent increase from August 2019.
• Campbell River, the benchmark price hit $455,600, up two percent over last year.
• Comox Valley, the benchmark price reached $537,300, up by three percent from one year ago.
• Duncan reported a benchmark price of $480,200, an increase of one percent from August 2019.
• Parksville-Qualicum area saw its benchmark price increase by three percent to $608,300.
• Port Alberni reached $329,100, a four percent increase from one year ago.
• North Island, the benchmark price was $221,000, an 11% increase over last year.
Drilling down into our local market I have provided a few graphs:
I have been successfully predicting Real Estate trends for over my 27 years, using my Canadian Securities knowledge and Stock and Options technical analysis background as a foundation in helping to navigate our local market. There are many different micro markets in our area and on the island and we need to avoid painting the market with one brush and look closer at trends to achieve the best results.
Whether you want to understand how your home and area fits into the market and its current values or if you are thinking of buying and want to understand where the best rate of return will be, we can help.
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