MLS sales to climb in 2021, CREA forecast says
OTTAWA – In what will turn out to be good news for this country’s furniture, mattress and major appliance retailers, the Canadian Real Estate Association (CREA) believes sales through its Multiple Listing Service (MLS) will continue to climb in 2021. And, in good news for sellers, home prices will also continue to rise, or at least remain steady, in most regions across the country.
In a statement, the realtors’ group said it believes economic activity will continue to improve slowly following the initial stages of the pandemic. “Over the past several years, record levels of international immigration, low interest rates and an increasing share of millennials entering their home buying years have helped make the housing market a significant source of strength for the Canadian economy,” the association said, noting recent government support programs for individuals and businesses have also helped the overall economy through the most severe parts of the pandemic to date.
Mortgage interest rates declined to record lows in 2020 and with the Bank of Canada committing to keep interest rates low into 2023 mortgage interest rates are expected to remain near current levels through 2021, which will continue to support sales activity.
Recent national sales trends improved more than anticipated over the second half of 2020. “However, while sales activity rebounded to record-high levels, new listings only recovered to about their five-year average in most markets,” CREA said. “The relative strength of demand for homes compared with supply has meant sales activity has been eroding active inventory, which was already scarce in many markets pre-pandemic. That said, this has been a trend since 2015.”
The forecast also noted while the upward price pressure hasn’t been as great as seen in other parts of the country, demand is strengthening across the Prairies and in Newfoundland & Labrador and prices have started to increase.
Despite the historic setback by the pandemic, CREA projects national sales to hit a record of 544,413 units in 2020, representing an 11.1% increase from 2019 levels. The strength of the Canadian housing market was broad-based, with every province except Alberta registering a year-over-year increase in sales. British Columbia and Quebec stand out as large contributors to the overall gain.
The national average price in 2020 is on track to rise by 13.1% on an annual basis to just over $568,000. This reflects the current balance of supply and demand, which heavily favours sellers in many local markets.
On a monthly basis, sales are forecast to ease back to more typical levels throughout 2021; however, presuming there’s a more normal spring market in 2021, the year as a whole is expected to see more home sales than 2020. National home sales are forecast to rise by 7.2% to around 584,000 units next year. All provinces except Ontario are forecast to see increased sales activity in 2021, as low interest rates and improving economic fundamentals allow people to get into the markets where homes are available for sale.
Several years, CREA published a study which revealed that every house sold generated furniture, mattress major appliance sales averaging $6,500 over the first 36 months of occupancy. That’s approximately $3.8 billion. This suggests housing sales account for about 33% of furniture store sales in any given year.
The association’s forecast pointed out Ontario has seen strong demand for several years, particularly outside of Toronto, which has eroded active supply in the province. This shortage is expected to limit sales activity in Canada’s largest province next year. “The strength of demand, particularly for larger single-family properties, will drive the average price higher as potential buyers compete for the most desirable properties,” CREA said.