Demand for housing remains sky-high across the country
Chief among the factors behind Canada’s current housing supply crisis is the accelerated demand for particular asset classes, RE/MAX said in a recent market analysis.
“The COVID-19 public health crisis might have permanently altered how or why people purchase residential properties,” RE/MAX noted. “The coronavirus pandemic led many families to buy larger spaces to accommodate working and studying remotely, and spending more time in a busy home.”
The shift also spurred a trend of inter-provincial migration that is expected to remain strong for the foreseeable future.
“Many households also ditched the big cities, selling their homes at a substantial profit and moving to smaller towns and rural communities, absorbing limited inventory of affordable three-bedroom homes,” RE/MAX said. “With exceptional equity on hand and favourable mortgage rates, these ‘move-over’ homebuyers could – and did – outbid their rivals.”
Read more: Poll: FHSA impact on first-time buyers’ purchases will likely be muted
Another important market dynamic is the slump in new home construction, as housing starts remain unable to keep up with demand.
“For more than a decade, single-family housing units completed have been below the 50-year average. Construction activity has been subdued since hitting a peak in 2006, although it is gradually on the rise again,” RE/MAX said. “Canada’s housing starts have only cracked the 300,000 mark once in the last year (305,512 in November).”
This is further amplified by the fact that active listings are hovering below established five- and 10-year averages.
“This is prevalent throughout many real estate industries, affirming that two-thirds of the country’s housing markets are tilted in favour of sellers,” RE/MAX said. “Indeed, prospective homeowners are scooping up any residential property they can find, leading to bidding wars and elevated prices.”
