Canada’s housing market was so hot in February that it forced the Canadian Real Estate Association (CREA) to revise its national home sales forecast for 2021 significantly higher.
In an update published today, CREA says it now expects 701,000 homes to sell across Canada this year. If this forecast plays out, that will mean nearly 150,000 more homes will have changed hands this year than the national total for 2020, the current annual home sales record-holder.
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This update represents a substantial increase to CREA’s previous 2021 forecast published at the end of 2020. At that time, the realtor association said it expected about 583,600 homes to sell in 2021.
Since then, homebuying activity across the country has continued to soar, with both January and February setting all-time records for sales. Along with its updated forecast, CREA announced today that home sales in February were up nearly 40 percent from a year ago and were 6.6 percent higher on a month-over-month basis. February 2021 beat the previous all-time sales high for the month by over 13,000 transactions.
CREA Senior Economist Shaun Cathcart speculated in a media release that accompanied the new data that there are a few factors contributing to the long streak of record-breaking monthly sales totals.
“We are right at the start of the first undisturbed (by policy or lockdown) spring housing market in years and we also have the most extreme demand-supply imbalance ever by a large margin,” Cathcart said.
“I think part of it is demand that built up as a result of regulatory changes in the years leading up to COVID that is playing out now. Part of it is demand that is being pulled forward from the future either in search of a home base to ride out the pandemic, or to lock down a purchase amid rapidly rising prices while securing a record low mortgage rate,” he added.
Another big factor, according to the CREA economist, is the increasing number of long-time homeowners with substantial equity deciding to move because of COVID-related preference changes. First-time buyers are having to compete with more of these big-budget buyers, which is only ratcheting up the competitiveness in the market.
Even as 2021 is shaping up to be another record-breaking year for Canada’s housing market, the experts at CREA don’t believe the sales numbers are sustainable through the entire year. The association is forecasting a gradual decline to more typical activity levels by the second half of the year and into 2022.