The October Canadian Real Estate Association (CREA) release shows national existing-home sales rose a whopping 8.6%. The actual (not seasonally adjusted) number of transactions in October 2021 was down 11.5% on a year-over-year basis from the record for that month set last year. That being said, this is still the second-highest October sales figure, by a sizeable margin.
“The basic story hasn’t changed, even with the rise in fixed mortgage rates: Housing demand remains well more than supply. Inventories of unsold properties are at historic lows,” said Dr. Sherry Cooper, Chief Economist of Dominion Lending Centres. She goes on to say “while the Trudeau government promised to address the massive supply shortage, in reality, housing construction is under the auspices of provincial and local government planning and zoning bodies. Moreover, the resurgence of immigration will widen the excess demand gap for homes to buy or rent.”
The number of newly listed homes rose by 3.2% in October, out of which 70% were driven by the potential gains in the local markets. It’s no surprise that with the shortage of supplies, sales go up when new listings rise. By the end of October, inventory dropped again, down to only 1.9 months on a national basis, back to the all-time lows recorded in February and March of this year (See chart below).
As Canada opens the border for new immigrants, excessive housing demands will mount. Municipal governments are trying to address the shortage of housing supply, both for rental and purchase. However, these are still primarily in the planning stages.
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