The fact that the Real Estate Market in Canada has proven itself to be very resilient is something we’ve carried into 2021 from last year, and one of the things that’s unfortunately true on the other end of things is that the economic woes of the pandemic are far from over. The continued vitality of the market has been a mix of many factor, but fundamentals are a huge part of it. In particular there’s just not enough housing in many parts of the country, but ever-increasing demand for it. This certainly applies to any major metro area of the country.
The fact here is that the number of new listings on the Canadian MLS (Multiple Listings Service) could be quite paltry this spring, and what is very possible is seeing record demand clashing with record-low supply. You don’t need to be an economics major to know which direction prices go in any such scenario, and given the current ongoing pandemic situation and all sorts of other concerns this really looks like it will be furthering Canada’s housing crisis.
Of course that is something the Federal Government is to address if they’re to earn the enviable salaries they do. The good news for anyone who makes a living in the real estate business or in new home construction is that home prices will increase and there looks to be continuing record numbers of new home starts in Canada as we move through Q1 of 2021. The other side of that coin of course is that fewer MLS listings means fewer of those same listings for working realtors in any city or town in Canada.
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Watch for Springtime
Industry experts say the smart eyes should be on how many existing owners put their homes up for sale come springtime. We’re already seeing record-setting sales, but it’s also known that demand is much stronger than those numbers suggest because prices are being impacted positively. On January 1st there were fewer than 100,000 residential listings on the Canadian MLS, and it hasn’t been that low for more than three decades now. And if we go back to New Years day just 5 years ago there were 250,000 sales listings on the MLS.
How this plays out within record-high demand and record-low supply to start the year. How that plays out in the sales and price data will depend on how many homes become available to buy in the months ahead. Ideally, we’d like for households to be able to find and acquire the homes that best suit their needs and for housing to remain affordable, but the fact is we’re facing a major supply problem in 2021.”
Sales activity was nevertheless robust in Greater Toronto and Vancouver last month, helping set a national record for the month, according to CREA data. Transactions rose by 7.2% last month from November, but the country’s two most expensive markets witnessed monthly gains of 20%.
Moreover, actual sales activity in Canada surged by 47.2% year-over-year in December—an 11-year high—as CREA recorded more than 12,000 transactions in the country. December also marked the sixth consecutive month of year-on-year sales increases.
In 2020, there were 551,392 home sales recorded in Canada’s MLS, which broke the previous record set in 2016 by 2.3%, for a 12.6% increase over 2019. According to Costa Poulopoulos, CREA’s chair, the national housing market will carry the momentum it has built into this year.
However, as Cathcart alluded to, inventory is dwindling. At the beginning of this month, there were only 2.1 months of inventory nationwide, which is an all-time low, and 29 Ontario markets had under a month’s worth of inventory. “While momentum continues into 2021, surging COVID cases and a return to April-like lockdowns in some provinces means we’ll be revisiting some of those virtual technology solutions to process deals in the first few months of the year,” said Poulopoulos. “Hopefully we’ll have the current wave more under control by the time the spring market rolls around, which is shaping up to be a very active one.”
