Canada’s housing market heats up

Article content

Article content

Article content

Normally when the days get colder, the housing market goes into hibernation, but apparently not this year.

Spring was in the air yesterday when the Canadian Real Estate Association posted a second month of strong home sale gains, leading some economists to boost their forecasts for the year ahead.

“Normally we might expect this market rebound to take a pause before resuming in the spring; however, the Bank of Canada’s latest 50-basis point cut together with a loosening of mortgage rules could mean a more active winter market than normal,” said CREA senior economist Shaun Cathcart said in a news release.

Article content

The number of homes sold in November jumped 26 per cent from a year ago, following a 30 per cent gain in October. On a monthly basis, sales rose 2.8 per cent in November and 7.7 per cent in October, putting the housing market back to levels last seen before the pandemic in late 2019.

New listings have fallen over the past two months, tightening market supply and putting the sales-to-new-listings ratio in the upper reaches of balanced territory.

“In fact, no outright buyers’ markets remain among 23 major cities we track,” said Robert Kavcic, senior economist at BMO Capital Markets.

Home prices are also on the rise, with the national average for November up 7.4 per cent from a year ago to $694,411.

The MLS Home Price Index rose 0.6 per cent in the strongest monthly gain since July 2023 and benchmark prices in Toronto and Vancouver rose at the fastest pace in more than a year, said Robert Hogue, economist at Royal Bank of Canada. 

Economists expect sales and prices will continue to rise as borrowing costs ease further and new government policies clear the path for more homebuyers to enter the market.

Article content

Article content

The new rules, effective this past Sunday, allow first-time homebuyers to take out 30-year amortizations and raises the insured mortgage cap to $1.5 million.

“Given the snapback in the sales-to-new-listings ratio and the rebounds in prices in Toronto and Vancouver, where prospects had looked most worrisome, it no longer makes sense to forecast a brief period of house price declines ahead of the spring buying season,” said Stephen Brown, deputy chief North American economist at Capital Economics.

Capital is now predicting average monthly price gains of 0.4 per cent between now and June. Overall, it expects home prices will rise 4 per cent this year and next.

 Sign up here to get Posthaste delivered straight to your inbox.

National home sales hit their highest level for November since 2021 last month, climbing 26 per cent over last year. But as always in real estate, it’s location, location, location.

Seven out of 10 provinces saw month-over-month sales increases, but three provinces fell into the red. Quebec led the way for gains with a 5.2 per cent jump in sales, followed by British Columbia, up 4.9 per cent and Alberta, up 2.9 per cent, said National Bank of Canada.

Article content

Sales in Newfoundland, however, plunged 14.5 per cent, fell 4.4 per cent in Nova Scotia and 2.7 per cent in Prince Edward Island. New Brunswick sales were up, but just barely with a 0.4 per cent increase.

• Peter Routledge, superintendent of financial institutions, will make an announcement regarding the domestic stability buffer.

   

• Canada Mortgage and Housing Corporation releases Fall 2024 Rental Market Report

   

• Alberta Premier Danielle Smith and Newfoundland and Labrador Premier Andrew Furey join discussion on energy, resources and climate at Empire Club of Canada
• Today’s Data: Canada inflation, United States retail sales and industrial production

Recommended from Editorial

1. 

   Many Canadians can’t afford to travel this holiday

2. 

   How long before $1 million condos are the norm?

---

The current levels of market euphoria reminds investing pro Martin Pelletier of what he saw in 1999 and 2007. However, while everyone is cheerleading the strong returns from bitcoin, Pelletier prefers investment strategies that, as investing guru Howard Marks would say, deliver “regular solid returns rather than erratic highs and lows.” Find out more

Article content

As inflation and the cost of living soar for Canadians, consumers are getting ‘justifiably angry’ about junk fees — We look at what the problem is, and what are some solutions. Read more 

McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

Financial Post on YouTube

Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Pamela Heaven, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com.

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here

Article content