Home prices continue to surge with no cooling on the horizon

Homebuyers in Canada are trying to deal with the poorest real estate supply in history, and COVID-19 has led to an activity boom at the market with no signs of a possible slowdown on the horizon.

According to the recent report by the Canadian Real Estate Association (CREA), housing sales were up by 2% last month, while prices reached another record level. Meanwhile, new listings fell by 13%, leading to only 1.9 months of housing inventory by the end of January. It’s the lowest number on record.

Extremely low mortgage rates combined with a strong demand for larger homes drove Canada’s real estate market to record heights over the previous year. Canada’s benchmark home price was up by 1.9% from December and up by 13.5% from a January 2020.

In addition to it, sales to new listings ratio rose to 91%, marking another record.

BMO Economics says Canada’s housing demand is red hot.

The bank released its new report recently, pointing to extremely hot sales across the country.

Robert Kavcic, a senior economist at BMO, says the Canadian real estate market is boiling right now.

“Just imagine it: almost all new listings in Canada are getting sold within a month,” – he noted.

“And the rest of inventory would be all sold in less than two months,” – the economist added.

He says we can see this trend in case of about 60% of Canada’s markets.

“It’s not difficult to imagine where the prices are going,” – Kavcic noted.

In his opinion, home prices are growing at an accelerating pace across almost all of the country.

“In case there is no sudden wave of listings (which is quite unlikely, especially for detached houses) or a sudden slowdown in demand, we’ll see the prices going up even higher”, – he said.