Canada’s red hot housing market exceeds expectations, with sales up 70 percent in March compared to a year earlier and average prices up more than 30 percent.
The Canadian Real Estate Association said on Thursday that more than 70,000 homes had been sold, shattering the previous month’s record by 22,000 transactions. This figure was 76 percent higher than the same month a year ago, which was slower because it was the first month of COVID-19-related restrictions.
Those restrictions caused a temporary chill in the market, but things started to warm up in May 2020 and then did not cool down.
On the price side, the average selling price of a home sold in CREA’s MLS system is 16,716,828. This is an increase of 31.6 percent in one year, and is the largest annual fast track record.
While sellers and owners are undoubtedly with record prices, the tense pace among economists and policymakers is worrying, with first-time buyers worried that they will be locked out of the market. Buy if interest rates rise.
Last week, Canada’s best bank regulator It is proposed to raise the level of stress testing on mortgages To ensure that borrowers can afford higher rates. That move would reduce buyers’ purchasing power by about five percent.
CREA President Cliff Stevenson said the biggest factor in raising prices was the imbalance between supply and demand, adding that the market was showing signs of finding a balance.
“Deficits we have across much of Canada are putting a lot of pressure on that demand. So the big rejuvenation in the new supply to start the spring market is the relief valve that we need most to get that demand high on the sales side and the price side,” he said.
“It’s said it will take more than a month for new listings, but in these highly unbalanced housing market conditions it looks like we are finally getting around the corner.”
Mortgage rate fall
When supply and demand fluctuations play a role, there is a rapid decline in mortgage rates, which makes it easier to borrow more and more. Outbreaks appear to be exacerbated during epidemics, and as they begin to creep in, they are still a long way off from becoming a contributing factor in any recession.
According to Rishi Sondhi, an economist with DT Bank, it should be interesting to look at the numbers for April and May because measures to raise the stress test will not take effect until June, which means that people are rushing to borrow and buy before new regulations come into force, which could have the unintended consequences of further warming the market. Period.
“It simply came to our notice then [and] Because the markets have historically been tight, long-term gains are on the cards, “he said.” This lung price background is likely to get a response from policymakers in the coming months. “