Canadian Home Sales See Record 2% Rise in January as Prices Also Post Record High

Canadians didn’t let COVID-19 or a lack of housing supply stop them from flocking to the real estate market in January as they snatched up a record number of homes and shelled out more than they had in previous years. On February 16, the Canadian Real Estate Association said that January sales were up 35.25% compared with a year earlier and up 2% when compared to December.

The increase came as the national sales-to-new listings ratio rose to 90.7% — the highest level on record. The previous monthly record was 81.5% set 19 years ago. The actual national average price of a home sold also soared to a record $621,525 in January, up 22.8% from the same month last year.

CREA said market conditions were pushed to record levels in January because people have held off putting their homes up for sale in the middle of the pandemic, leaving fewer options for people to fight over. “The buyers and sellers that will in time define the Canadian housing story of 2021 are mostly all still waiting in the wings,” Shaun Cathcart, CREA’s senior economist, said in a statement.

However, Cathcart believes the market is unlikely to see a rush of listings until the public heath situation improves and the dreary winter weather subsides. “The best case scenario would be if we see a lot of sellers who were gun-shy to engage in the market last year making a move this year,” he said. “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 found the Greater Vancouver and the Greater Toronto Area, two of the country’s most active and expensive markets, were heating up very quickly in January. The average seasonally adjusted price of a home in the GTA was $941,100 and in Vancouver, was just over $1 million. When the associated removed data from both those regions from the $621,525 national price average, it found the average price was slashed by $129,000.

But that doesn’t mean that conditions eased up outside the city centres, said Wins Lai, a Toronto real estate broker. Prices in areas like Vaughan and Markham, Ont., have reached levels she is shocked by. “Outside of the city in somewhere like Barrie, we are seeing 40 offers on something that’s $750,000 which is insane,” she said.

CREA said year-over-year price increases between 25% and 30% were seen many regions in Ontario including Barrie, Niagara, Grey-Bruce Owen Sound, Huron Perth, Kawartha Lakes, London and St. Thomas, North Bay, Simcoe and Southern Georgian Bay. However, the largest year-over-year gains — above 30% — were recorded in the Lakelands region of Ontario cottage country, Northumberland Hills, Quinte, Tillsonburg District and Woodstock-Ingersoll.

Urban sprawl and the pandemic are responsible for part of this phenomenon, Lai said. “People want to be outside of the city, they want to have their own homes and they don’t want to be in elevators.” she said.

While the downtown core may be less attractive because many people are working from home, young professionals and couples are still trying to snatch up homes there and bidding wars on condos are plentiful.

CREA said January price gains were in the 10% to 15% range in the GTA, Mississauga, Chilliwack, B.C., B.C.’s Okanagan Valley, Winnipeg and on Vancouver Island. Montreal’s average prices reached $434,200, 16.6% compared to last January. They rose by as much as 10% in Victoria, Greater Vancouver, Regina and Saskatoon and by about 2% in Calgary and Edmonton.

Source: Globe and Mail
Source: Toronto Star

Housing Starts Surge 23.1% in January With Suburbs Leading the Way in Housing Completions

Canada Mortgage and Housing Corp. says the annual pace of housing starts rose 23.1% in January, as single-family home starts reached their highest level since February 2008. The national housing agency says the seasonally adjusted annual rate of housing starts rose to 282,428 units in January.

“The national trend in housing starts increased in January,” said Bob Dugan, CMHC’s chief economist. “Both single- and multi-family SAAR starts rebounded strongly in January from declines in December, driving the overall trend higher. Single-family starts were particularly strong in Montréal, reaching their highest level since February 2008.”

Urban starts were up 27.7% to 266,877 units, as starts of multi-unit buildings in cities rose 24.1% to 193,328 units, and starts of single-family homes in cities rose 38.1% to 73,549 units. CHMC’s report says rural starts were estimated at a seasonally adjusted annual rate of 15,551 units.

This month’s figure includes housing starts from Kelowna, after the region wasn’t surveyed in December due to the COVID-19 pandemic. CHMC says the annual pace of housing starts excluding Kelowna was 281,389 units in January, up 22.7% from 229,350 units in December.

The six-month moving average of the monthly seasonally adjusted annual rates of housing starts was 244,963 units in January, up from up from 238,747 units in December.

Suburbs Drive Growth

CHMC says that the suburbs surrounding Toronto, Montreal and Vancouver’s are fuelling an uptick in homes beginning construction and properties ready for occupancy. 

In two reports released on February 15, the federal housing agency said that the number of homes in Toronto, Montreal and Vancouver ready for tenants owners has begun soaring the farther one is from those city’s centres, while the number of urban properties starting construction is also edging up.

The availability of lots to build on and affordable prices are pushing up housing completions in a roughly 30-kilometre radius outside these city centres, according to CMHC. The number of housing completions has peaked in areas between 20 and 30 kilometres from Toronto and Vancouver’s city centres, while Montreal’s peak is even further, at above 30 km, the agency said.

“Montreal has seen the strongest pattern for suburbanization, with the level of housing supply increasing with distance from the city centre and decreasing with population density,” said CMHC’s report. “Like Montreal, Toronto has experienced urban sprawl with a high level of housing development in remote suburbs. However, Toronto has also seen a boom in housing construction in its active core.”

Urban sprawl is more limited in Vancouver because the area has a relatively stable level of construction in its urban areas, said CMHC. Its study found that construction activity was the lowest between 5 and 10 kilometres outside the city centres it studied.

Condos were responsible for the bulk of completions close to the city centre, in comparison to single-family, semi-detached, row houses and rental units, which dominated elsewhere. As one moves further away from the city centre, the condominium supply mainly decreases in Toronto and Montreal, CMHC said.

The trends it found are leading to two challenges:

“First, the increasing trend toward suburbanization may accelerate housing external costs (infrastructure investments, roadway congestion and greenhouse gas emissions),” said the report.

“Second, the relatively low level of housing development in low-income areas in Montreal (and to a lesser degree in Toronto) may indicate affordability challenges in those neighbourhoods.”

The average family income in the Toronto, Vancouver and Montreal areas were respectively $98,635, $89,300 and $78,400, said CMHC. When income rises in a city, so does the desire to relocate, CMHC found. Since housing per square foot is cheaper at greater distances, consumers have an incentive to move to less central locations in order to buy a bigger dwelling, it said. This leads to the richest families living in the suburbs, despite longer travel times.

Source: CP24
Source: News Wire
Source: Toronto Star