February home sales were down compared to the all-time record in 2021 but represented the second-best result for the month of February in history. New listings dropped, but by a marginally lesser annual rate than sales, pointing to a modest move to a slightly more balanced market. Competition between buyers, however, remained tight enough to support double-digit price growth year-over-year.
Undoubtedly, the recent interest rate increase along with the higher rate of inflation will weaken potential Buyers’ purchasing power. And even though average price growths are not as acute as they were in the past two years, we are still seeing significant increases that are without question a result of the unrelenting high demand and current housing stock scarcity.
The Bank of Canada Raises its Overnight Rate to .50%
Ottawa, 2nd March 2022 - The Bank of Canada announced today that it has raised the overnight rate by .25% to .50% to help curb a worsening inflation picture owing to global supply chain bottlenecks, labour shortages and rising energy costs. Canada's surging inflation rate moved to a 30-year high of 5.1% recently, driven by high gas prices, soaring housing and automobile costs, and rising food prices – this is well above the Bank of Canada's target rate of 2% that it had hoped to maintain.
The Bank of Canada owns approximately 42% of Canada's sovereign debt and has also signaled it will start to shrink its balance sheet by allowing maturing bonds to roll off without reinvesting the funds. This is called quantitative tightening.
Expect more rate hikes from the Bank of Canada throughout 2022. Recall that just over three years ago, in October of 2018, the overnight rate was 1.75%. The next rate-setting day is April 13, 2022.
Now is the time to get in touch for a review of your mortgage strategy. It's important to get advice and a professional assessment of your situation if you want to switch your mortgage for a new rate, need a new mortgage, are renewing, or looking to refinance for debt consolidation, renovations, or other large expenditures.
Ontario - Demand For Ownership Housing Remains Strong
Toronto, 02 March 2022 - February home sales were down compared to the all-time record in 2021 but represented the second-best result for the month of February in history. New listings dropped, but by a marginally lesser annual rate than sales, pointing to a modest move to a slightly more balanced market. Competition between buyers, however, remained tight enough to support double-digit price growth year-over-year.
Greater Toronto Area (GTA) REALTORS® reported 9,097 sales through the Toronto Regional Real Estate Board's (TRREB) MLS® System in February 2022, representing a 16.8% decrease in the number of sales compared to February 2021. The supply of listings for low-rise home types (detached, semi-detached and townhouses) was also down year-over-year, but not by as much as sales. In the condominium apartment segment, particularly in Toronto, new listings were up in comparison to February 2021.
“Demand for ownership housing remains strong throughout the GTA, and while we are marginally off the record pace seen last year, any buyer looking in this market is not likely to feel it with competition remaining the norm. Many households sped up their home purchase and entered into a transaction in 2021, which is one reason the number of sales was forecasted to be lower this year, and trending towards higher borrowing cost will have a moderating effect on home sales. Substantial immigration levels and a continued lack of supply, however, will have a countering effect to increasing mortgage costs,” said TRREB President Kevin Crigger.
The MLS® Home Price Index Composite Benchmark was up by 35.9% year-over-year in February. The average selling price for all home types combined was up by 27.7% to $1,334,544. The pace of price growth varied by home type and region, but there was relative parity between low-rise and condominium apartment growth rates. “We have seen a slight balancing in the market so far this year, with sales dipping more than new listings.
However, because inventory remains exceptionally low, it will take some time for the pace of price growth to slow. Look for a more moderate pace of price growth in the second half of 2022 as higher borrowing costs result in some households putting their home purchase on hold temporarily as they resituate themselves in the market,” said TRREB Chief Market Analyst Jason Mercer.