Despite multiple pandemic pressures, the Canadian housing market’s robustness is showing no signs of abating as national sales activity has broken records anew.
The latest figures from the Canadian Real Estate Association (CREA) show that home sales activity surged by 39.2% year over year in February, reaching an annualized pace of 783,636 units. This was considerably higher than CREA’s revised forecast of 700,000 home sales for 2021.
“For the eighth straight month, sales activity was up in the vast majority of Canadian housing markets compared to the same month the previous year,” CREA said in its data release. “Among the eight markets that posted year-over-year sales declines in February, extremely limited supply at the moment is the most likely explanation.”
The greatest increases were seen in the Greater Toronto Area and several other Ontario markets, along with Calgary and a number of markets in British Columbia. These compensated for noticeably weaker sales in Montreal.
New listings also surged by 15.7% month over month in February, “recovering all the ground lost to the drop recorded in January,” CREA reported. This pushed the national sales-to-new listings ratio to its second-highest ever reading of 84%, far above the long-term average of 54.4%.
On average, only 1.8 months of inventory remain across Canadian markets as of the end of February, the lowest reading on record for this metric.
“With sales-to-new listings ratios historically elevated at the moment, indicating almost everything that becomes available is selling, it was not surprising that many of the markets where new supply bounced back in February were the same markets where sales increased that month,” CREA added.
The aggregate composite home price as recorded through MLS systems nationwide saw a 3.3% monthly gain in February, settling at a benchmark of $697,000.
Shaun Cathcart, senior economist at CREA, stressed that these trends were years in the making.
“We are right at the start of the first undisturbed (by policy or lockdown) spring housing market in years and we also have the most extreme demand-supply imbalance ever by a large margin,” Cathcart said. “I think part of it is demand that built up as a result of regulatory changes in the years leading up to COVID that is playing out now. Part of it is demand that is being pulled forward from the future either in search of a home base to ride out the pandemic, or to lock down a purchase amid rapidly rising prices while securing a record low mortgage rate.”
However, Cathcart ventured that the most significant factor is “the emergence of existing owners with major equity, prompted by the great shake up that is COVID-19 to pull up stakes and move. First-time buyers, which we have a lot of, are now having to compete with that as well.”