House price growth in Canada is out of control, and the chief economist at the country’s real estate association says that won’t change until the pandemic lets up, and more people list their homes for sale.
The average resale price for all property types in January was $621,525, up 22.8 per cent from a year ago, the Canadian Real Estate Association (CREA) said Tuesday.
The number of home sales was up 35.2 per cent from a year ago, to the highest total for a January on record. Meanwhile, new listings plunged 13.5 per cent nationally, and by around 35 per cent in Toronto and Montreal, creating a record shortage of available homes.
Watch: Why low inventory means more house prices increases ahead. Story continues below.
“There were only 1.9 months of inventory on a national basis at the end of January 2021 – the lowest reading on record for this measure,” the Canadian Real Estate Association said in a statement, adding that some 35 Ontario markets have less than one month of inventory.
In Quebec, New Brunswick, Nova Scotia and P.E.I., the ratio of sales to new listings was above 100 in January.
“This means that there were more sales than new units listed last month in these provinces. This is a rare situation, but has occurred before in the Atlantic provinces. However, January marked a first on this front in Quebec,” TD Bank economist Rishi Sondhi wrote in a client note.
Sales-to-new-listings ratios were also very high in Ontario and Manitoba, bringing the national ratio to 90.7, its highest level in 19 years.
Economists credit record-low interest rates with spurring the homebuying boom. Even as prices have soared, monthly mortgage payments have fallen, making home ownership more affordable ― at least for those who can save up the record-high down payment needed to afford a home today.
“A big surge in supply is what so many markets really need this year to get people into the homes they want, and to keep prices from accelerating any more than they already are,” CREA senior economist Shaun Cathcart said in a statement Tuesday.
“We’re unlikely to see a rush of listings until the weather and public health situations improve, and we won’t see buyers until those homes come up for sale.”
TD’s Sondhi predicts that “with sales likely running above fundamentally-supported levels... some cooling in activity will take place, especially in the second half (of the year).”