A what’s what of Canada’s fast-moving real estate sector from real estate expert and founder of Crescendo Equity, Mathew Moxness. For more news and insights on Canadian real estate and the factors that shape the sector, explore the Crescendo Equity blog.
Following the unprecedented real estate conditions throughout 2020 and thus far in 2021, Canada’s housing bubble is now the second-largest housing bubble in the world. Additionally, home prices in smaller Canadian cities are rising much faster than home prices in major metropolitan areas, such as Toronto and Vancouver.
Buying and Selling
Statistics released by the Canadian Real Estate Association indicate that national home sales and new listings are cooling off, following record-breaking numbers in March 2021. With that said, experts from the Toronto Regional Real Estate Board caution that this recent slowdown will be short-lived due to the resumption of immigration and foreign buyers in the coming month.
Investors currently account for 20 percent of home purchases in Canada, with a slightly higher share in Toronto and Hamilton. Investor-induced market activity is being driven by low vacancy rates and the nationwide housing shortage.
In Canada, the vaccine rollout is well underway, economic activity is rebounding, and there are signs of national inflation. As such, analysts believe the Bank of Canada will start raising its record low-interest rate as soon as next year.
In Canada, commodities linked to construction have registered moderate to drastic cost increases across the board. The most dramatic costs increases include softwood lumber (169.4 percent year-over-year and 30.5 percent over the past three months), veneer and plywood (126.5 percent/year-over-year and 38.1 percent/over three months), and motor gasoline (128.5 percent/year-over-year and 22.6 percent/over three months).
Today, more than two-thirds of the Canadian population have received at least one dose of the COVID-19 vaccine. This bodes well for the Canadian economy. As Canada’s employment sectors, university system, and tourism industry all begin to rebound from the effects of the pandemic, immigration into Canada is expected to pick up. This will no doubt intensify the need for both short-term and long-term housing, as foreign investors, buyers, and renters enthusiastically return to the Canadian market.