First National Financial LP

Residential Market Commentary - Hot in February, but cooling in the forecast

  • First National Financial LP

Canada’s real estate market continued its record setting ways in February.  The Canadian Real Estate Association reports the average price of a home hit a new, all time high of $816,720.  That is a 20.6% increase from a year earlier, and up 9.1% from January.

With the country’s two hottest and most expensive markets – Toronto and Vancouver – factored out of the calculation the average price drops by $178,000 to $638,720.

CREA prefers calculate costs using its own Home Price Index, which adjusts for the volume and type of homes being sold.  But even this measurement is posting record breaking increases.  The HPI is up 29.2% over last year and up 3.5% from January.

Some market watchers suggest there has been a surge in demand as buyers try to get in ahead of rising interest rates and expectations of even higher prices.  But there are also forecasts that call for an easing of the market as rates rise and more homes go up for sale.

February saw a surge in new listings, up nearly 24% compared to January.  That pushed the sales-to-new listings ratio down to 75.3%, after it jumped to 89% in January.

CREA expects to see brisk sales activity though March, as the spring buying season gets underway, and then a potential easing.

“Ideally, listings will continue to come out in big numbers in the months ahead. Combined with higher interest rates and higher prices, we could be at a turning point where price growth begins to slow down and inventories finally begin to recover after seven years of declines,” said Shaun Cathcart, CREA’s Senior Economist.