Canadian home prices hit new records in February as a dearth of properties for sale continued to fuel buyer competition. But with borrowing costs on the rise and more homeowners listing their properties for sale, Canada’s national real estate association said price growth could start to slow.
The national home price index, which tracks the price of a typical home and adjusts for pricing volatility, rose a record 3.5 per cent to $868,400 from January to February on a seasonally adjusted basis, according to the Canadian Real Estate Association (CREA). Compared with February of last year, the home price index is 29.2 per cent higher, breaking January’s record 28 per cent year-over-year price jump, with prices soaring in communities outside of the major city centres.
Over all, CREA said the volume of resales across the country increased 4.6 per cent from January to February.
Homeowners are now more motivated to list their homes after observing the heated bidding wars that occurred in January. The number of newly listed properties rose 24 per cent from January to February, with the biggest increases in the Toronto region, Calgary and British Columbia’s Fraser Valley.
CREA said the jump in new listings could be the beginning of a trend. “Combined with higher interest rates and higher prices, we could be at a turning point where price growth begins to slow down and easing the competition among buyers,” Shaun Cathcart, CREA’s senior economist said in a news release.
Realtors in some of the country’s tightest markets said they are already starting to observe a shift with buyers growing weary of the competition. In the Chilliwack region of B.C., the home price index reached $896,400 last month. That is 70 per cent higher than February, 2020.
“Some people just don’t want to compete any more because we’ve been going through competing offers for 18 months,” said Kristina Legault, realtor with Century 21 Creekside Realty, which serves the Chilliwack area. Ms. Legault said she noticed a change about four to six weeks ago. At the time, a property could draw up to 20 offers. Now, homes are pulling in two to five bids.
In the Durham region, east of Toronto, the typical price of a home hit $1,137,800 in February, an increase of 90 per cent over two years.
Jennifer Pearce, owner of Re/Max Rouge River Realty Ltd., also observed a drop in multiple offers. Ms. Pearce has been selling homes in the Durham region for just over two decades. She said the market was not as hectic as it was in January, when a home could get upward of 100 showings and 50 offers. Now, she said, properties have been drawing about 50 showings and a handful of offers.
In the Hamilton and Niagara regions in southern Ontario, home prices are up more than 70 per cent in two years. “We are starting to see home inspection conditions coming back and there’s a bit of negotiation now,” Conrad Zurini, owner of Re/Max Escarpment Realty, who oversees about 850 realtors in the area.
The sharp spike in home prices, along with higher inflation and the spectre of even higher mortgage rates, could dissuade would-be home buyers. “When you see everything going up so quickly it’s, like, hold on, wait a minute, slow down and re-evaluate what’s happening,” said Samantha Brookes, CEO of Mortgages of Canada. “People are in that really re-evaluating mode right now.”
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.