In this article, we dissect the latest data from The Canadian Real Estate Associate (CREA). Per CREA, the MLS Home Price Index (HPI) is the most advanced and accurate tool to gauge home price levels and trends. The national benchmark price was $736,000 in July 2021, representing a month-over-month gain of 0.2% and a year-over-year gain of 22.2%.
Given that home prices have grown so much in 2020 and 2021, we generally find it more useful to track month-over-month activity rather than year-over-year. The year-over-year figures will still be quite large for the coming months, even if prices aren't changing significantly anymore each month. In last month's update, we questioned whether the streak of consecutive month-over-month gains could end in July. This did not end up being the case, but July marked the 5th consecutive month of price deceleration.
Breaking down the July 2021 benchmark prices by home type, we can see that all categories performed similarly in July.
Ottawa was one of the only cities (and the only major city) that saw price declines across all home types from June 2021 to July 2021. The benchmark home price has declined by $20,000 since May 2021 in Ottawa.
From May 2021 to June 2021, 6 cities saw price declines. From June 2021 to July 2021, this number increased to 16 cities. Despite the prairie cities seeing the least amount of growth since 2020, they all grew by less than 1%, with Edmonton and Saskatchewan declining.
Bancroft is in the lead once again, but monthly price gains decelerated from 7.2% to 4.8%. Bancroft home prices are up 48% just since January 2021.
As mentioned earlier, a number of cities saw price declines in July 2021. However, no cities are close to erasing the gains they've experienced since 2020. While Southern Georgian Bay declined the most (by 3.3%), home prices are still up by $209,000 since January 2020.
The madness certainly slowed down in most smaller cities, with prices being relatively flat from June 2021 to July 2021.
While things can change quickly, it does appear that price growth is taking a pause in most cities. Our guess is that instead of seeing monthly gains across the board as we did during most of 2020 and 2021, monthly price changes will be much more varied going forward, depending on the city and home type. Given the astronomical gains that have taken place across Canada, corrections in some cities should not be surprising.
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