An unprecedented real estate frenzy leaves Canada's supply depleted

An unprecedented real-estate frenzy has left Canada with the fewest houses for sale in at least a quarter century.

The country had about 86,000 houses left for sale at the end of December on a seasonally-adjusted basis, according to data from the Canadian Real Estate Association. That’s all that was left after buyers purchased a record 667,000 homes over the course of 2021, about 20 per cent more than the previous annual record.

With supply depleted, benchmark home prices rose 2.5 per cent in December from the previous month, and were up a record 26.6 per cent from the year before.

“There are currently fewer properties listed for sale in Canada than at any point on record,” Shaun Cathcart, the real estate board’s senior economist, said in a press release accompanying the data.“So unfortunately, the housing affordability problem facing the country is likely to get worse before it gets better.”

The national numbers follow trends seen earlier this month in Canada’s most expensive housing markets, Toronto and Vancouver, where available housing stock has fallen to unprecedented low levels. That has reinforced views that a national shortage is underpinning price increases that have sent the cost of housing spiraling out of reach for many working Canadians in the largest cities, regardless of whether they buy or rent.

What’s increasingly being called a housing crisis is starting to prompt politicians to start to look for answers. The benchmark home price in Canada is now $811,700 (about US$648,000)

“Policy makers are starting to say the right things, but now they have to act to change this course we’re on,” said the real estate board’s Cathcart. “An aggressive national push to build more homes is what will address the issue, but it will probably have to be a greater amount of building than anything we’ve ever undertaken. A touch over the status quo won’t cut it.”

In the meantime, with so little left to buy across Canada, the pace of sales is slowing down. The number of monthly transactions was little changed in December compared with November, though that was still enough for the second highest number of sales on record for that final month of the year.