Canada’s housing market rebound firmed up in April, with sales increasing across the country and home prices soaring in parts of Southern Ontario.
The national home price index, which excludes the priciest homes, climbed 1.6 per cent to $723,900 from March to April, according to the Canadian Real Estate Association (CREA). That was the second consecutive monthly increase after higher mortgage costs triggered a year-long slump in prices.
Since the Bank of Canada put its interest-rate hiking plan on pause in January, prospective homebuyers have been racing back into the market. Home sales climbed by 11 per cent from March to April, the third consecutive month of rising sales.
At the same time, homeowners have remained reluctant to put their properties up for sale, in part because of concern that they will not find another place to buy and because they have been hoping that peak prices will return. As a result, the number of new listings was at a two-decade low last month, according to CREA.
The turnaround in the housing market has been swift. Real estate agents say competition is back and multiple offers have returned in the Toronto region and nearby cities.
“The market has definitely picked up,” said Krishan Nathan, a real estate broker in Kingston, where the home price index increased by a record 5.7 per cent from March to April. Mr. Nathan said the pool of buyers includes military personnel, Torontonians looking for more affordable properties and retirees downsizing.
In the Hamilton-Burlington region west of Toronto, the home price index rose by a record 5.4 per cent from March to April. In the Toronto suburbs of Mississauga, Oakville and Milton, the home price index was up by 4.7 per cent. In Simcoe, north of the city, prices were up by 5.2 per cent. And in some smaller Ontario cities such as Cambridge, the home price index was up by more than 5 per cent.
“It’s incredible how fast it has rebounded,” said Lori VanDinther, who has sold homes in the Hamilton-Burlington area for three decades.
Ms. VanDinther said multiple offers started returning about six weeks ago. However, she said she is not seeing the same level of “desperation” from buyers that was present during the height of the COVID-19 real estate boom in early 2022, when home prices were quickly accelerating.
Ms. VanDinther said that some of today’s buyers are those who were waiting for the Bank of Canada to stop raising interest rates, but there is also a new group who are trying to move into bigger properties.
Daren King, economist with National Bank of Canada NA-T, attributes the rise in demand to the stabilization of interest rates and increase in new permanent residents. The federal government has been raising its immigration targets to help fill labour shortages and compensate for an aging population. The current plan calls for 1.45 million more new permanent residents over the next three years, which is equivalent to 3.8 per cent of the country’s population.
“This increase in population is particularly stimulating the market in large cities such as Toronto and Vancouver, which receive a large share of immigration,” Mr. King said in a research note. But he added that relatively higher borrowing costs and slowdown in the country’s economy “should limit the recovery.”
As of the end of April, there were 3.3 months of inventory remaining, according to CREA. That is a measure of the amount of time it would take to sell all the listed properties if the pace of sales remained the same. That was lower than March’s 3.8 months of inventory. The long-term average has been just over five months.