Despite COVID-19 lockdowns and much of the country blanketed by snow, Canadians still couldn’t be kept out of the real estate market in January.
The Canadian Real Estate Association (CREA) says sales were up 35.2 per cent year-over-year nationally — a record for the month. And since there are so few homes available to satisfy the demand, prices as measured by the MLS Home Price Index rose 13.5 per cent.
The number of newly listed homes fell 13.3 per cent. Rising sales and falling supply meant the national sales-to-new listings ratio tightened to 90.7 per cent – the highest level on record. To put that in perspective, the previous record was 81.5 per cent set 19 years ago. The long-term average is 54.3 per cent.
Considering lockdowns and frigid weather, CREA doesn’t expect sellers to suddenly start putting their homes up for sale, but says that’s what it will likely take to start to put a lid on rapidly rising prices.
“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,” said CREA's senior economist Shaun Cathcart, in a release.
“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.”
Greater Toronto Area markets were particularly tight, with double-digit declines in sales-to-new listings in Hamilton-Burlington, London and St. Thomas, Ottawa, Montreal, Quebec and Halifax Dartmouth.
Prices up across the map by varying degrees
Unlike previous boom periods, it’s not only a Toronto and Vancouver story. Prices are up in almost all major markets of the country. Regina is an outlier with a 3.1 per cent year-over-year decline.
The trend of more rapid price growth outside of the biggest urban markets like Toronto continued.
The largest price gains were in places that don’t typically see that type of appreciation. The Lakelands region of Ontario cottage country, Northumberland Hills, Quinte & District, Tillsonburg District and Woodstock-Ingersoll were up more than 30 per cent.
Barrie, Niagara, Grey-Bruce Owen Sound, Huron Perth, Kawartha Lakes, London & St. Thomas, North Bay, Simcoe & District and Southern Georgian Bay were up 25-30 per cent.
Toronto is up a more modest, but still strong 11.9 per cent.
To help understand the price growth discrepancy, BMO senior economist Robert Kavcic points out the Barrie benchmark price was only 60 per cent of Toronto’s prior to the pandemic.
“If a household sells a typical house in Toronto to buy one in Barrie, they could offer 10 per cent over asking and still only pay 66 per cent of what they’re selling for,” he said in a note.
“With very limited supply, it’s easy to see how a lot of new buyers entering a particular region can be insensitive to prices, and therefore push them up quickly. Of course, this becomes a more serious issue if speculators pile on.”
More evidence of an urban exodus can be seen in a far weaker 3.1 per cent increase in condo prices.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.