Ever since the pandemic started, the country’s housing market is showing some astonishing results. The number of buyers is rising, home sales are pacing up, and so is the average home price.
The national statistics from the Canadian Real Estate Association (CREA) also depict the same. The authority started off their recent publication for January 2021 with a factual statement:
... national home sales set another all-time record in January 2021.
This release from CondoPoint is the shorter version of CREA’s recent statistics update. We have sorted the data into portions to make it easier to read and understand.
It was a fantastic start when the actual sales activity (not seasonally adjusted) went up by 35.2% compared to January 2020. The month’s sales gain was a trendsetter where the activity boosted significantly all around the country.
Based on historical data, CREA predicted a sales activity of 583,635 for January 2021. Whereas the actual (seasonally adjusted) activity was much higher than this prediction. According to the association, 736,452 units were sold in the month.
The increase in sales between December and January was due to a blend of factors, including low interest rates.
However, it is suspected that this rise in sales activity might start declining if the supply continues to remain low.
According to CREA, some markets around the country witnessed a dip in sales due to a lack of available houses. Nine of these markets were in Ontario.
Comparing the two years back to back, Costa Poulopoulos, Chair of CREA, said:
2021 started off just like 2020 ended, with a number of key housing market indicators continuing to set records. The two big challenges facing housing markets this year are the same ones we were facing last year – COVID and a lack of supply. It’s looking like our collective efforts to bring those COVID cases down over the last month and a half are working.
With luck, some potential sellers who baulked at wading into the market last year will feel more comfortable listing this year. As lockdowns are once again easing and the spring market begins to ramp up, we will remain vigilant in adhering to all the latest government and health officials’ directives to keep our clients safe.
Now as always, REALTORS® remain the best source for information and guidance when negotiating the sale or purchase of a home,
During Jan’21, the Aggregate Composite MLS® Home Price Index (MLS® HPI) witnessed a surge of 1.9% month-over-month. Of the total 40-indexed markets, home prices in 36 markets went up during the month.
Whereas year-over-year growth in the Aggregate Composite MLS® HPI (non-seasonally adjusted) was 13.5%.
In addition to this, CREA also shared the average home price in the country, where it recorded an increase of 22.8%, reaching $621,525 in the month.
It is further said that Greater Vancouver and the GTA are two of the most active markets contributing immensely to uplifting average home prices in the country. Excluding these two markets will cut down the average home price by $1259,000, as said by CREA.
On the other side, the housing market witnessed a drop in inventory of 13.3% in January 2021 compared to the previous month. Most of the drop in inventory was seen in the GTA, Hamilton-Burlington, London and St. Thomas, Ottawa, Montreal, Quebec and Halifax Dartmouth.
This drop-in listing resulted in an unfavourable outcome in the national sales-to-new listings ratio by 90.7% - the highest level of sales-to-new listings ratio in the past five years. Previously, it was 81.5%.
Only about 20% of the national housing market remained balanced in January 2021.
This shortfall of supply is one of the many reasons causing a hike in home prices after the pandemic outbreak.
Hoping for a better supply of houses, Shaun Cathcart, CREA’s Senior Economist, said:
The problem with this time of year is that the buyers and sellers that will, in time, define the Canadian housing story of 2021 are mostly all still waiting in the wings. It’s the dead of winter and we’re only just starting to get the second wave of COVID under control.
We’re unlikely to see a rush of listings until the weather and public health situations improve, and we won’t see buyers until those homes come up for sale. 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.
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.
Talking more about the supply, the housing market in January 2021, according to CREA, had only 1.9 months of inventory left. This is termed as the lowest level of inventory period compared.
Read these guidelines if you are buying your first home: tips for first-time homebuyers.