Last Updated on October 24, 2023 by Neil Sharma
The latest Canadian Real Estate Association (CREA) statistics revealed that precious new supply made its way into the country’s housing market last month, and while that should theoretically quell runaway price growth, proposed government intervention to cool the market has rendered that new supply inconsequential.
“I have noticed more supply coming out on the market in the last week and a half or two weeks, so spring supply is here—it hasn’t been delayed—but we can also see the increased demand due to the test [which would raise the minimum qualifying rate to 5.25%],” said Toronto-based Alex Balikoti, SVP of sales with Balikoti Real Estate Group, referring to the Office of the Superintendent of Financial Institutions’ proposed stress test.
“Everyone is trying to purchase with the lower stress test qualification on their mortgage. Come June, when the new stress test is introduced, qualification for purchasers will be very different. We do have spring supply, but it’s not enough, and this year it’s not enough for a different reason—the OSFI proposal.”
According to the CREA data, new listings increased across the country in March, with the sales-to-new-listings ratio falling to 80.5% from 90.9% in January when it peaked. Compared to the Canada-wide long-term sales-to-new listings ratio average of 54.4%, it hasn’t lowered nearly enough. There were only 1.7 months of inventory countrywide at the end of March, which is the lowest on record considering that the long-term average is slightly over five months.
“Seeing how many homes were bought and sold in March 2021, one could be forgiven for thinking the market just continues to strengthen, and maybe to some extent it is,” said Cliff Stevenson, CREA’s chair. “The real issue is not strength in housing markets but imbalance. That demand has been around for months, but with the we have across so much of Canada, a lot of that demand has been pressuring prices. So the big rebound in new supply to start the spring market is the relief valve we need the most to get that demand playing out more on the sales side of things and less on the price side.”
The data also revealed that March set another sales record by increasing 76.2% year-over-year to 76,259 transactions, which is also 5.2% higher than February, and almost 14,000 more sales than in July 2021, the previous peak.
Additionally, noted CREA, the actual average price of a Canadian home hit a record $716,828 in March, a 31.6% increase over the same month last year.
Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
