February ushered in another month of extremely strong annual sales and price growth for the Canadian housing market, as the supply of homes improved in some major cities.
Home transactions rose a whopping 26.9% year over year reports the Canadian Real Estate Association, a big improvement from the decade-low experienced last February, with action on the rise in 80% of all markets. It also increased from a short-term perspective, with sales clocking a 5.9% increase from January – the biggest month-over-month jump seen in the past 10 years. The bulk of sales growth was seen in the southern Ontario markets, with the demand for Greater Toronto real estate listings posting gains of 15%.
As a result, home prices also surged, with the national average increasing by 15.2% from last year to $540,000 (removing the Greater Toronto and Vancouver markets from the equation would reduce that total to $410,000). The Home Price Index – a measure of the value of homes sold, also rose 5.9% y-o-y and 0.7% m-o-m.
Supply Up Modestly in Some Housing Markets
While new home supply improved in some markets, pulling the national number up by 7.3%, supply and demand imbalances continue to be a driving factor in the hottest markets, while inventory glut is keeping others amid softer buyers’ market conditions.
Stated CREA President Jason Stephen, “Home prices are accelerating in markets where listings are in increasingly short supply, specifically in Ontario, Quebec, and the Maritimes, which together account for about two-thirds of national sales activity.
“Meanwhile ample supply across the Prairies and in Newfoundland and Labrador means increased competition among sales.”
That short-term surge in new inventory in some markets could also have tapped the appetite of buyers who have been long waiting on the sidelines of the market, says CREA’s Chief Economist Shaun Cathcart. CREA recorded the largest increases in the Fraser Valley, Calgary, Edmonton, the GTA, Hamilton-Burlington, Kitchener-Waterloo, Windsor-Essex, Ottawa, and Montreal.
“Following a quieter than normal December / January period, February saw a burst of new listings in some of Canada’s most supply-starved markets so it was not a surprise that sales were up alongside that increase in new supply,” he stated.
“There is some question about how much pent-up demand remains in parts of the country where listings have been low for some time now. That said, it will take more than one month of increased new listings to even start to turn some of these markets towards some semblance of balance. In the meantime, expect competition among buyers for available listings to continue to drive prices higher.”
Slightly Chiller Sellers’ Conditions on a National Scale
The uptick of available homes for sale in some markets helped ease the national sales-to-new-listings ratio down to 64%, from the 64.9% it sat at last month. This ratio, which helps gauge the level of buyer competition in a market, is calculated by dividing the number of home sales by the number of new listings over the course of the month. A range between 40 – 60% indicates balanced conditions, says CREA, while below and above that threshold indicate buyers’ and sellers’ conditions, respectively.
While the national picture remains a sellers’ market, 60% of all markets could be considered balanced in February, CREA reports, with buyers’ conditions noted in Alberta and Saskatchewan.
Months of inventory, which measures how long it would take to completely sell off all available homes for sale, currently sits at 4.1 months, the lowest level since the summer of 2007, and a full month below the long-term average of 5.2 months, indicating Canadian home markets continue to tighten. However, as has been the long-term developing trend, inventory still sits well above the average in the Prairies and Newfoundland and Labrador, while remaining below average in Ontario, Quebec and the Maritimes, while BC – including Vancouver real estate – is balanced – all of which will have differing impacts on price trends in the near future.
Check out the infographic below to see how home prices performed in markets across Canada in February: