Low mortgage rates, a lack of inventory, and a shift in preferences during the COVID-19 pandemic helped propel Canada’s housing market to yet another record month in February.
Prices, as measured by the MLS Home Price Index were up a record 3.3 per cent month-over-month according to the Canadian Real Estate Association (CREA).
Sales were also up a record 6.6 per cent led by the Greater Toronto Area (GTA) and other Ontario markets along with Calgary, and a number of B.C. markets. Montreal saw a slowdown as new listings fell.
Compared to last year, sales jumped 39.5 per cent for the busiest February on record by a wide margin. The MLS Home Price Index is up 17.3 per cent for the biggest gain since April 2017
The largest year-over-year prices gains (more than 35 per cent) were in the Lakelands region of Ontario cottage country, Tillsonburg District and Woodstock-Ingersoll.
Barrie, Niagara, Bancroft and Area, Grey-Bruce Owen Sound, Kawartha Lakes, London & St. Thomas, North Bay, Northumberland Hills, Quinte & District, Simcoe & District and Southern Georgian Bay were up between 30 and 35 per cent.
"The two big challenges that continue facing Canadian housing markets are the same ones we’ve been facing for months – COVID-19 and a lack of supply,” said CREA chair Costa Poulopoulos.
“With luck, potential sellers will feel more comfortable listing their homes in the short-term.
A housing supply and demand imbalance
Supply constraints did ease in February with the number of newly listed homes rebounding by 15.7 per cent, but CREA says everything that becomes available sells. The national sales-to-new listings ratio dropped to 84 per cent from 91.2 per cent in January, but is still the second-highest on record.
Phil Soper, president and CEO of Royal LePage, says even though prices are rising rapidly, the imbalance means the current market isn't good for realtors because there are so few listings available.
He says representing clients who get caught up in bidding wars is also costly because it's a commission-based business
"if you're representing a buyer in today's market, where again and again you could be thwarted by multiple offer situations where you go through the work of understanding the property, advising your clients, visiting the property and then putting together a formal offer, submitting it and losing," Soper told Yahoo Finance Canada, "If you have to do that a dozen times, your costs soar."
The pace of new construction slowed in February compared to January according to Canada Mortgage and Housing Corporation (CMHC). In a separate release, the agency said starts fell to 245,922 units compared with 284,372 in the previous month.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
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