There are always going to be those who discredit anything said about real estate by someone who works in real estate, and often saying they’re a ‘shill’ for their industry and profession. Is that more common coming from someone who’s never engaged in the financial prudence and hard work required to buy a home? Not always, but it still is fairly common unfortunately. There’s a lot of people who are earnestly wishing the ‘very’ hot nature of the real estate market in Canada wasn’t that way at all.
We’ll leave that there, but what we are going to talk about today is how an indisputable statistic recently released from the Bank of Montreal’s economists is proving very clearly that the market is indeed super hot in Canada and that being a homeowner in this country is definitely the way to be. We know that realtors will relate to this, and not only because the majority of them will be homeowners themselves. It is something of a double-edged sword though, and that goes without saying. Real estate can be a well-paying career choice, but a strong market means more and more realtors trying to get that same slice of the pie.
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But back to our topic for this week, and that sizzling 91.6% number and all the significance behind it.
New Listings Being Absorbed Quickly
New listings fell 13.3 percent in January across Canada, and this brought up the national sales-to-new listings ratio to a number – over 91% – that would have seemed absurd to ever think possible if you would have taken a consensus at this time last year. From one coast to the other, what we’re seeing is that nearly all new listings are getting absorbed within a month and based on projections around that number it can be forecast that the standing inventory of homes available for sale at any time would all be all gone in less than 2 months.
And probably much less. We know that this metric usually is in the vicinity of 60% for the whole country, and so by adding half that number on top of it there’s a situation now where home prices are almost guaranteed to rise further. Prices are indeed currently on the rise nationwide, and are accelerating at quite a rate. The effect is somewhat twofold with this, meaning there becomes a smaller pool of qualified buyers for homes in certain areas. And particularly for detached homes.
But what realtors should be doing with their qualified buyers is telling them to be aggressive with making offers on homes that appeal to them, as what might be an acceptable offer to the current owners at this time might not be in, say, a month’s time given what their realtor might advise them about what their home is worth at that time.
January’s National Home Price Index Rise
Last month the national home price index rose 13.5% year over year, and that amounted to the fastest it has done so since Mid-2017. That date is noteworthy for the following reason – that’s when policymakers were working overtime trying to calm markets in Canada’s two perennially hottest ones – Toronto and Vancouver.
So where we are with all of this is unless there’s a sudden surge of homes listed for sale (which isn’t going to happen in Canada – anywhere – given the fact there’s not enough inventory as it is. People need roofs over their heads) we are going to see prices going higher still.
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