Market Watch - Demand For Ownership Housing Remains Strong

February home sales were down compared to the all-time record in 2021 but represented the second-best result for the month of February in history. New listings dropped, but by a marginally lesser annual rate than sales, pointing to a modest move to a slightly more balanced market. Competition between buyers, however, remained tight enough to support double-digit price growth year-over-year.

Undoubtedly, the recent interest rate increase along with the higher rate of inflation will weaken potential Buyers’ purchasing power. And even though average price growths are not as acute as they were in the past two years, we are still seeing significant increases that are without question a result of the unrelenting high demand and current housing stock scarcity.

The Bank of Canada Raises its Overnight Rate to .50%

Ottawa, 2nd March 2022 - The Bank of Canada announced today that it has raised the overnight rate by .25% to .50% to help curb a worsening inflation picture owing to global supply chain bottlenecks, labour shortages and rising energy costs. Canada's surging inflation rate moved to a 30-year high of 5.1% recently, driven by high gas prices, soaring housing and automobile costs, and rising food prices – this is well above the Bank of Canada's target rate of 2% that it had hoped to maintain.

The Bank of Canada owns approximately 42% of Canada's sovereign debt and has also signaled it will start to shrink its balance sheet by allowing maturing bonds to roll off without reinvesting the funds. This is called quantitative tightening.

Expect more rate hikes from the Bank of Canada throughout 2022. Recall that just over three years ago, in October of 2018, the overnight rate was 1.75%. The next rate-setting day is April 13, 2022.

Now is the time to get in touch for a review of your mortgage strategy. It's important to get advice and a professional assessment of your situation if you want to switch your mortgage for a new rate, need a new mortgage, are renewing, or looking to refinance for debt consolidation, renovations, or other large expenditures.

Ontario - Demand For Ownership Housing Remains Strong

Toronto, 02 March 2022 - February home sales were down compared to the all-time record in 2021 but represented the second-best result for the month of February in history. New listings dropped, but by a marginally lesser annual rate than sales, pointing to a modest move to a slightly more balanced market. Competition between buyers, however, remained tight enough to support double-digit price growth year-over-year.

Greater Toronto Area (GTA) REALTORS® reported 9,097 sales through the Toronto Regional Real Estate Board's (TRREB) MLS® System in February 2022, representing a 16.8% decrease in the number of sales compared to February 2021. The supply of listings for low-rise home types (detached, semi-detached and townhouses) was also down year-over-year, but not by as much as sales. In the condominium apartment segment, particularly in Toronto, new listings were up in comparison to February 2021.

“Demand for ownership housing remains strong throughout the GTA, and while we are marginally off the record pace seen last year, any buyer looking in this market is not likely to feel it with competition remaining the norm. Many households sped up their home purchase and entered into a transaction in 2021, which is one reason the number of sales was forecasted to be lower this year, and trending towards higher borrowing cost will have a moderating effect on home sales. Substantial immigration levels and a continued lack of supply, however, will have a countering effect to increasing mortgage costs,” said TRREB President Kevin Crigger.

The MLS® Home Price Index Composite Benchmark was up by 35.9% year-over-year in February. The average selling price for all home types combined was up by 27.7% to $1,334,544. The pace of price growth varied by home type and region, but there was relative parity between low-rise and condominium apartment growth rates. “We have seen a slight balancing in the market so far this year, with sales dipping more than new listings.

However, because inventory remains exceptionally low, it will take some time for the pace of price growth to slow. Look for a more moderate pace of price growth in the second half of 2022 as higher borrowing costs result in some households putting their home purchase on hold temporarily as they resituate themselves in the market,” said TRREB Chief Market Analyst Jason Mercer.

Has Spring Sprung Early in Ottawa’s Resale Market?

Ottawa, March 3, 2022 - Members of the Ottawa Real Estate Board sold 1,421 residential properties in February through the Board’s Multiple Listing Service® System, compared with 1,385 in February 2021, an increase of 3%. February’s sales included 1,095 in the residential-property class, up 7% from a year ago, and 326 in the condominium-property category, a decrease of 10% from February 2021. The five-year average for total unit sales in February is 1,184.

“Although February’s resales were only 3% higher than last year at this time, we saw a 52% increase in the number of transactions compared to January’s figures (936). While a month-to-month increase is typical for this time of year, the gradation of this increase is higher than previous years, which could be an indication that our spring market may ramp up earlier this year,” states Ottawa Real Estate Board President Penny Torontow.

“Whether this has to do with the easing of government pandemic restrictions and the opening up of the economy or perhaps due to apprehension of the (then) upcoming interest rate increase, which is now in effect, we can’t entirely be sure,” she adds. “We are watching intently to see how the 2022 spring market will play out considering not only the higher interest rates and inflation but also other macro factors in our global environment that could affect our local economy.”

“Undoubtedly, the interest rate increase along with the higher rate of inflation will weaken potential Buyers’ purchasing power. And even though average price growths are not as acute as they were in the past two years, we are still seeing significant increases that are without question a result of the unrelenting high demand and current housing stock scarcity.”

The average sale price for a condominium-class property in February was $466,682, an increase of 15% from 2021, while the average sale price for a residential-class property was $837,517, increasing 17% from a year ago. With year-to-date average sale prices at $812,813 for residential and $458,107 for condominiums, these values represent a 16% increase over February 2021 for both property classes. *

“The number of new listings in February (1,762) offers a slight glimmer of hope for prospective Buyers. At 4% higher than the five-year average and 12% higher than February 2021, it resulted in an almost 10% increase in residential-class property inventory compared to last year at this time. Condominium supply, however, is down 20%. Overall, we are now at a 0.7 month’s supply of inventory which means that most listings that enter the market are going to be snapped up very quickly, as evidenced by the continuous decline in Days on Market (DOM). We certainly hope this trend of increased new listings will continue to supplement the housing stock going forward,” Torontow acknowledges.

“Ottawa is a beautiful city with a healthy, stable economy and is a utopic place to work, live and play. It attracts Canadians from other cities and people from all over the world. But it is deeply entrenched in a Seller’s Market. This means homebuyers need to have all their ducks in a row and are prepared to move expeditiously. A REALTOR® will have the knowledge to ensure you are making your best offer at the optimal time. Sellers also need the experience and resources a REALTOR® brings to ensure they are strategically positioning their homes given the conditions of their neighbourhood and property type. Don’t gamble with what is likely your biggest asset – contact a professional REALTOR® today!”

In addition to residential sales, OREB Members assisted clients with renting 800 properties since the beginning of the year compared to 674 by February 2021.

British Columbia - Listings Inch up While Demand Remains Steady And Price Gains Continue in

Vancouver,  March 2, 2022 – The Metro Vancouver* housing market saw steady home sales activity, modest increases in home listings, and continued upward trends in pricing in February.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 3,424 in February 2022, an 8.1% decrease from the 3,727 sales recorded in February 2021, and a 49.8% increase from the 2,285 homes sold in January 2022.

Last month’s sales were 26.9% above the 10-year February sales average.

“As we prepare to enter what’s traditionally the busiest season of the year, the Metro Vancouver housing market is seeing more historically typical home sale activity and a modest uptick in home listing activity compared to last year,” Taylor Biggar, REBGV Chair said.

There were 5,471 detached, attached, and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in February 2022. This represents an 8.4% increase compared to the 5,048 homes listed in February 2021 and a 31.2% increase compared to January 2022 when 4,170 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 6,742, a 19.3% decrease compared to February 2021 (8,358) and a 19.1% increase compared to January 2022 (5,663).

“Despite having a higher volume of people listing their homes for sale in February, the region’s housing market remains significantly undersupplied, which has been pushing home prices to new highs month after month,” Biggar said.

For all property types, the sales-to-active listings ratio for February 2022 is 50.8%. By property type, the ratio is 34.9% for detached homes, 64.3% for townhomes, and 62.2% for apartments.

Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12% for a sustained period, while home prices often experience upward pressure when it surpasses 20% over several months.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,313,400. This represents a 20.7% increase over February 2021 and a 4.6% increase compared to January 2022.

“A lack of housing supply is at the heart of the affordability challenges in Metro Vancouver today. We need more coordinated action from stakeholders at all levels to help create an ample, diverse supply of housing options for residents in the region today and into the future,” Biggar said.

Sales of detached homes in February 2022 reached 1,010, an 18% decrease from the 1,231 detached sales recorded in February 2021. The benchmark price for detached properties is $2,044,800. This represents a 25% increase from February 2021 and a 4.7% increase compared to January 2022.

Sales of apartment homes reached 1,854 in February 2022, a 5.4% increase compared to the 1,759 sales in February 2021. The benchmark price of an apartment property is $807,900.

This represents a 15.9% increase from February 2021 and a 4.1% increase compared to January 2022. 

Attached home sales in February 2022 totalled 560, a 24% decrease compared to the 737 sales in February 2021. The benchmark price of an attached unit is $1,090,000. This represents a 27.2% increase from February 2021 and a 5.9% increase compared to January 2022. 

Alberta - Sales Continue to Surge as Listings Rise

City of Calgary, March 1, 2022 – Thanks to a surge in new listings, sales activity reached a record high for the month of February with 3,305 sales. The rise in new listings caused adjusted inventories to rise above last months levels. However, with only one month of supply, the market continues to favour the seller. 

“Sales have been somewhat restricted by the lack of supply choice in the market. While sellers did respond with a record level of new listings this month, the demand has been so strong that the housing market continues to remain undersupplied causing further price gains,” said CREB® Chief Economist Ann-Marie Lurie.

The total residential benchmark price for the city rose by nearly six% over January levels and was over 16% higher than levels recorded last February. Much of the growth has been driven by the detached segment of the market which has not seen conditions this tight in over 15 years. 

This is the fourth consecutive month that the market has dealt with conditions that are far tighter than what the city experienced last spring. While the gains in new listings will help provide choice to purchasers and eventually support more balanced conditions, it will take some time to work through the demand in the market. 

Detached - For the third consecutive month, the months of supply in the detached sector has remained below one month. The limited supply and persistently strong demand has placed significant upward pressure on prices. As of February, the benchmark price reached $596,400, which is nearly $50,000 higher than prices seen at the end of 2021 and over $90,000 higher than February 2021 prices. Price gains have occurred in every district of the city with year-over-year gains pushing above 20% in the North, South and South East districts. 

After the first two months of the year, sales growth has been the strongest in the $600,000 to $1,000,000 price range, as this is where there was the largest gain in new listings. Overall, conditions remain exceptionally tight across all price ranges, with less than one month of supply occurring for all homes priced under $1,000,000 over the first two months of the year. 

Semi-Detached - The record number of new listings for February were met with record high February sales, doing little to ease the pressure in this segment of the market. The months of supply dropped to one month, something that has not happened in February since 2006.

The persistent and exceptionally tight conditions caused further upward pressure on prices. Thanks to gains across every district, the semi-detached unadjusted benchmark price reached $461,400 in February, which is nearly five% higher than last month and 16% higher than levels recorded in February 2021.

Row - Lack of supply choice in competing property types drove many consumers to consider row style properties. However, following several months of strong sales relative to new listings, inventory levels have also trended down relative to what we traditionally see at this time of year. With 537 sales in February and 535 units in inventory, the months of supply dropped to one month for the first time since early 2007.

The persistent sellers’ market conditions caused steep monthly price gains across most districts of the city. The largest month gains occurred in the North East, North and West end of the city. Despite recent gains, prices remain shy of previous highs in all districts except the West.

Apartment Condominium - After falling behind other property types, the apartment condominium sector recorded a surge in sales this month, reaching record highs for February. New listings also improved but did little to cause any significant change to inventory levels. The months of supply dipped below two months and was the tightest seen in the apartment condo sector since 2007.

The recent tightness has supported some upward pressure in prices this month. However, price gains are significantly lower than the other property types and prices continue to remain over 14% below previous highs. While this segment of the market has not experienced the same supply constraints as other property types, if conditions remain this tight, we could see more substantial shifts toward price recovery.

REGIONAL MARKET FACTS

Airdrie - Record high new listings in February enabled sales to reach a record high. With 385 new listings and 289 sales, the sales to new listings ratio fell to 75%, which is the first time it dropped below 80% since spring of last year. While the recent gains provided some monthly uplift in inventory levels, supply remains exceptionally low, and the months of supply has remained below one month for the fourth consecutive month.

Persistently tight market conditions especially in the detached and semi-detached sector has driven significant price growth in the market. In February, the unadjusted detached price reached $490,800, nearly six% over last month and 22% higher than last year’s levels. 

Cochrane - New listings reached a record monthly high in February. However, sales nearly matched the levels of new listings causing inventories to face further declines and the months of supply to fall to the lowest levels ever recorded at less than half of month of supply. This is the fourth consecutive month with the months of supply has been below one month and the sellers’ market conditions are placing significant upward pressure on prices especially for detached and semi-detached properties.

In February, the unadjusted detached benchmark price reached $548,400, nearly seven% higher than last month and over 21% higher than levels recorded last February. Price gains have occurred across all property types; however, apartment style properties continue to record prices below previous highs seen back in 2007. 

Okotoks - Like other markets, gains in new listings helped support record levels of sales for February. However, the gains in new listings were not enough to support any substantial change in the low inventory situation. With only 56 units in inventory at the end of the month, this is the lowest February inventory seen since 2006. Strong sales combined with low inventory caused the months of supply to ease further and remain below one month for the third consecutive month. 

The persistent tight market conditions caused a surge in prices. In February, the benchmark price for a detached home reached $554,900, nearly eight% higher than last month and over 15% higher than last February.