Property bubble worries are back in Canada, where home sales posted their biggest jump since the summer in October.
Sales jumped 8.6 percent from September, making it the second-busiest October on record, according to the Canadian Real Estate Association, according to Bloomberg. Prices climbed 2.7 percent in the month.
“After a summer where it looked like housing markets might be calming down a bit, October’s numbers suggest we might be moving back towards what we saw this spring, with regards to current market demand and supply conditions,” said Canadian Real Estate Association Chairman Cliff Stevenson.
America’s northern neighbor is uniquely at risk for a housing bubble because mortgages make up one of its biggest sources of consumer debt. The Canadian financial system’s exposure to mortgages is twice that of its U.S. counterpart.
Sales surged in June and July as the nation lifted pandemic restrictions on real estate, unleashing a surge of pent-up demand for a flood of deals. The rush prompted Canadian Prime Minster Justin Trudeau to propose a two-year ban on foreign buyers, seeking, seeking to give locals a better shot at purchases and curtail rising prices.
While the number of new listings increased 3.2 percent in October from September, Canada is still short on housing. It has just 1.9 months of inventory on the market, near all-time lows hit last year. In the U.S., the pace of sales and pricing stabilized somewhat toward the end of the summer.
Economists earlier this year projected that the home sales in Canada would peak this year and start to fall in 2022 and beyond.
[Bloomberg] — Dennis Lynch