Inventory, meaning the number of homes for sale, is at a record low across the country.
According to statistics from RBC Economics, the majority of Canada is experiencing tighter demand versus supply conditions than the country has seen in nearly two decades.3 And at the end of September, there were just 2.6 months of inventory on a national basis. That restricts supply, which increases prices if demand remains unchanged.4
There has been a bit of relief in terms of inventory. New-home construction hit levels in August that the country had not seen since 2007, but then waned somewhat in September with housing starts down in eight of 10 provinces.5 Doug Porter, chief economist at Bank of Montréal, also predicts some “building headwinds” that will further cool the influx of new inventory coming on the market.6
Fewer listings creates a housing market that is advantageous for sellers for several reasons. For one, buyers have to act fast to snap up available homes. The median number of days listings now spend on the market is 26 days.7
Another benefit is that sellers are enjoying higher net returns on their listings. This is thanks to the tough competition for homes, which often results in bidding wars between buyers. The average price of a home sold on the Canadian Real Estate Association's (CREA’s) MLS service went for a record $604,000 (17.5% more than last year).8 Continued home-price growth is anticipated for the remainder of the fourth quarter, and the median national home price is expected to rise 7% over last year.9
This sellers’ market is not simply a product of the pandemic. In fact, Cathcart cited the steady decline in home inventory over the past five years—not COVID-19—as the cause for higher prices. “Heading towards records and record type conditions was something that we had already expected for 2020,” he said. This means that even if construction was to ramp back up, buyers can’t simply wait for things to go back to normal before reentering the market. Rather, all signs indicate that this is the new normal.10
What It Means for Homeowners:
These higher home prices show that buyers are willing to spend more on a home right now than they did last year. So, if there ever were a time to list for top dollar—and expect to receive asking price quickly—that time is now. Ask us for a free consultation of your home’s value today.
What It Means for Homebuyers:
Due to low inventory, buyers could easily find themselves in a bidding war. Time is of the essence in a seller’s market, so you’ll need to get your financing in order and be preapproved for a loan before you begin your home search. We can connect you with a trusted mortgage professional to get you started.