Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Canadian home prices rose the fastest since 1989 in February and sales climbed 6.6% to another record, with families eager for more space met with a lack of supply as the pandemic makes others reluctant to sell.
The Canadian Real Estate Association's report Monday said the 25% price jump reflects a rush of buyers trying to get into the market before it becomes unaffordable and taking advantage of record low mortgage rates. Evidence of speculation could pressure governments to look at imposing restrictions similar to those deployed around 2015 to prevent another housing bubble.
A record 85% of regions are now "seller's markets" to shatter the previous record of 55%, a contrast with the last housing boom that focused on condos in downtown Toronto and Vancouver. This time the hottest markets are in "cottage country" several hours outside of Toronto as people seek bigger space to work remotely.
Bank of Canada Governor Tiff Macklem has said the economy needs all the growth it can get for now and doesn't need new restrictions on homebuying, and he told MNI last month his biggest focus is major slack in the overall economy. But federal and provincial governments have authority to set new restrictions after imposing a mortgage rates stress test on buyers a few years ago.
The sales gain to 65,303 units in February is well above the 10-year average of about 40,000, and transactions surged 39% from a year earlier. That demand isn't being fully met with supply, with the sales-to-new-listing ratio of 84% above the long-term average of 54% and the inventory of homes for sale at a record low 1.8 months.
CREA on Monday also raised its 2021 sales forecast to an even higher all-time record of 701,000 units, and a 17% rise in the average price.
"Demand that is being pulled forward from the future either in search of a home base to ride out the pandemic, or to lock down a purchase amid rapidly rising prices while securing a record low mortgage rate," said Shaun Cathcart, CREA's senior economist.
Source: CREA
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.