The national housing market ended 2019 on the strong rebound that defined the second half of the year, setting the stage for continued improvement in 2020, according to the latest data from the Canadian Real Estate Association.

While sales fell between November and December by -0.9%, breaking an eight-month streak of gains, activity was up strongly year-over-year measuring 22.7% above December 2018 levels. That’s 18% above the six-year low recorded this February and just 7% below the market’s 2016-2017 peak.

The supply of new MLS listings in Canada continued to shrink in December, down 1.8% from the previous month, amping up pressure on buyers and fueling price growth. As a result, the average national home price rose 9.6% year over year to $517,000, while the MLS Home Price Index – which measures the overall value of homes sold – rose 3.4% annually and 0.8% m-o-m. That’s the seventh consecutive month of index gains, and 5.7% higher than its May low. According to the data, it was up in 14 of the 18 markets that CREA tracks.

Home Sales Uneven Across Nation

However, while sales were up from a national perspective, there was an “almost even split” between the markets that saw improvements, and those that did not; this month, BC’s Lower Mainland, Calgary, and Montreal led the pack in terms of increases, while the Greater Toronto Area and Ottawa experienced declines. Year-over-year sales were up across Canada, though, in almost every major urban market.

Too Few Homes for Sale Pushing Prices Higher

Lack of supply continues to be an issue in these hot markets and will continue to push price growth to new highs, say CREA’s analysts. Stated President Jason Stephen, “Home price growth is picking up in housing markets where listings are in short supply. Meanwhile, the mortgage stress test continues to sideline potential home buyers where supply is ample.”

Gregory Klump, CREA’s chief economist, says that the rebound in prices experienced in the second half of the year is likely to continue in 2020, with the strongest markets to lift the national average despite hard-hit areas, such as the Prairies, failing to see growth.

“The momentum for home price gains picked up as last year came to a close. If the recent past is prelude, then price trends in British Columbia, the GTA, Ottawa, and Montreal look set to lift the national result this year, despite the continuation of a weak pricing environment among housing markets across the Prairie region.”

READ: Rising Condo Prices in Toronto Could Have Negative Impact on Investors: Report

More Cities Are Becoming Sellers’ Markets

In fact, new supply is close to its lowest level in a decade, while total available listings are at a 12-year low. Combined with an uptick in sales in most cities, that’s creating new sellers’ market conditions. This was most pronounced in the GTA and Ottawa, though more markets are starting to experience a shortage.

As a result, the national sales-to-new-listings ratio (SNLR) hit 66.9% in December – the highest level since spring 2004, and well above its long-term average of 53.7%. This metric, which gauges the level of buyer completion in a market, is calculated by dividing the number of home sales by the number of new listings brought to market over the course of the month. A percentage ranging between 40 – 60% indicates a balanced market, while below and above that threshold indicate buyers’ and sellers’ markets, respectively. “Barring any unforeseen change in recent trends for the balance between the supply and demand for homes”, these sellers’ conditions will linger throughout 2020, and will accelerate price growth, stated CREA.

According to SNLRs, just over half of local markets could be considered balanced in December, including the Greater Vancouver Area. The GTA, however, has officially entered sellers’ territory. From a provincial perspective, buyers’ markets remain prevalent across Alberta and Saskatoon, while Ontario, Quebec and the Maritimes are experiencing sellers’ conditions.

Total months of inventory – the length of time it would take to completely sell off all available homes for sale – is also sitting at its lowest since summer 2007, at 4.2 months, well below the long-term average of 5.3. However, CREA points out that there are significant regional variances; inventory remains much higher than usual in the Prairies and Newfoundland, while Ontario, Quebec and the Maritimes remain much lower than is average. BC remains balanced for the time being, though is rapidly approaching sellers’ territory once again.

Price Growth Split Between Eastern and Western Canada

The same can be said for price growth, which CREA reports remain largely split between eastern and western Canada.

In British Columbia’s biggest markets such as the GVA and Fraser Valley, prices are still down year over year, though the gap is shrinking, down -3.1% and -2%, respectively. Prices in the Okanagan rose 4.2%, while Victoria saw gains of 2.3%, with gains of 4.2% elsewhere on Vancouver Island.

Prices are also stabilizing in the Prairies, following lengthy declines – Calgary, Edmonton, and Saskatoon saw decreases between 1 – 2%, while Regina values fell -4.6%. Meanwhile, “In Ontario, home price growth has re-accelerated well above consumer price inflation across most of the GGH. Meanwhile, price gains in recent years have continued uninterrupted in Ottawa, Montreal and Moncton.”

Check out the infographic below to see how home prices performed in Canada’s largest markets in December:

READ: Average GTA Home Prices Rose More Than $55,000 in 2019: Report

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