Benjamin Thompson Kirk has specialist knowledge of the Canadian, US, and UK real estate markets, helping clients from all over the world(1). This article looks at Canada’s real estate sector, and how an influx of new properties being added to stock inventories has driven a surge in property sales.(2)
One month does not make a trend. Nevertheless, if February 2022 is anything to go by, more sellers do finally seem to be making their way into the Canadian housing market. Early results for local real estate boards indicate notable month on month increases across all major markets in the country. This was particularly true of Edmonton and Calgary, where a wave of properties were put up for sale, setting the stage for the largest number of transactions ever recording in a February. Meanwhile, the impact on activity was positive on the whole, albeit more muted. Buyers continue to face a lack of supply, placing intense upward pressure on property prices.(2)
Sellers appear to be the driving force shaping this year’s spring season. Should a critical mass of homeowners list their properties for sale in the coming months, this could culminate in an easing of supply constraints, boosting near-term activity and reducing pressure on prices.(2)
In Toronto, buyers dug deeper into their purchasing budgets to trump bidding wars in February 2022, triggering a hefty 6.4% jump in Toronto’s composite MLS Home Price Index from January, equating to an $80,000 increase in just a month. This came in the wake of material gains over several months driving the index up $354,000 since February 2021, representing a 35.8% increase. Hovering around the $1.34 million-mark, Toronto’s benchmark price is the most expensive in Canada today, having exceeded Vancouver’s benchmark in January.(2)
In Montreal, activity has been moderate over the last few months, partly reflecting dwindling supply through demand combined with deteriorating affordability. A modest increase in new listings in January and February 2022 was met by a slight monthly decline in resales, suggesting potential buyer fatigue. Demand-supply conditions have eased slightly, though still remain extremely tight. Upward pressure continues to drive surging prices in both single detached homes and condos.(2)
In Vancouver, realtors have seen a step towards market balance, with activity slowing somewhat, despite more homes being offered for sale in February 2022. Nevertheless, prices remain far from stable, with a combination of historically low inventories and solid demand keeping the heat on property values, a trend tipped to continue in the near-term.(2)
Calgary and Edmonton stood out among Canada’s major housing markets in February 2022. Resales continued to soar, with an estimated month on month increase of 19%, coming hot on the heels of 10%, 9%, and 15% in the preceding three months. With 3,300 transactions throughout the month, Calgary saw the strongest ever tally for a February this year. All of this was made possible by a surge in new listings, up by a staggering 69% month on month, providing many buyers with the options they have lacked for some time amid shrinking inventories. Although the wave of new homes added to inventories helped temper severe supply shortages, it by no means eliminated it. Housing market experts predict further market appreciation in Calgary and Edmonton, at least in the near term, with a booming energy sector stoking buyer confidence.(2)
Analysts predict that Canadian home prices will remain elevated in 2022, with affordability continuing to decline over the next few years. Released on April 21, 2022, Canada Mortgage and Housing Corporation’s Housing Market Outlook predicted that price growth will remain elevated throughout 2022 compared to long-term averages, with the average price for homes in 2022 ranging between $740,700 and $782,400.(3)
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