Fewer Properties Listed for Sale Than Ever Before
Demand for housing skyrocketed throughout the COVID-19 pandemic, and by the beginning of 2022, the housing supply across Canada reached a new record low.
According to Canadian Real Estate Association (CREA) senior economist Shaun Cathcart, in the middle of January, fewer properties were listed for sale in the country than at any point previously recorded. He also indicated that it would likely increase home prices shortly.
The Canada Mortgage and Housing Corporation (CMHC) also revealed that the annual speed of housing starts across Canada had dropped 22% in December compared to November. According to the agency, the seasonally adjusted annual rate dropped from 303’813 units in November to 236’106 in December.
Senior economist for the Royal Bank of Canada (RBC) Robert Hogue shared that the number of new starts in the country must triple to alleviate the ongoing inventory issues. Jean-François Perrault, RBC’s senior vice president and chief economist, said that the problem was especially significant in Ontario, where more than 650’000 units are required for the ratio of dwellings to the population to become proportionate with the other provinces.
According to Perrault, however, it is not all bad news. Housing starts increased remarkably in 2021 despite the sharp decline at the end of the year. Unfortunately, he also shared that the current housing shortages relative to the population's needs would continue to inflate prices and rents and reduce affordability, with action required by policymakers to help bridge the supply-demand gap.
Interest Rates and Investors Impacting the Market
For more information on the factors contributing to the housing crisis in Canada and what to expect next, go to MPAMag.com:
“Speaking with Canadian Mortgage Professional, BMO Financial Group chief economist and managing director Doug Porter (pictured top) also said it was important to recognize that despite the current lack of inventory, housing construction had proceeded at a strong pace in 2021.
CMHC said that the number of housing starts had risen 21% year over year to just over 244,000, signalling the highest-ever level of new home construction in Canada.
That had been spurred by condos and apartment buildings, which made up around 60% of new construction, with multi-residential starts increasing by 19% and detached starts rising about 28%.
Rather than supply, Porter said that the real issue was the demand for housing that had become supercharged in recent years, with the investor side particularly strong of late due to the rock-bottom interest rates that have been a prominent part of the COVID-19 era.
That was also partly a result, he said, of the fact that many people have been seeking to make investments due to balance sheets being strong during the pandemic and plenty of cash on hand.”
From Canada's Housing Supply Crisis – How Bad Is It? - MPA Magazine
Photo Source: WIX - (www.wix.com)
Do you think the government’s current initiatives are enough to address the housing crisis in Canada?
Written by S2A Modular & Associates Inc.
February 11th, 2022