The headline of Douglas Porter’s analysis of the Canadian housing market conjures images of a fiery disaster.
It appears to be a take from the 1970’s Hollywood movie Towering Inferno, which was about a fire that engulfs a new skyscraper.
“Canada's Towering Inferno”, was how Porter, chief economist with BMO, titled his piece Thursday (April 15).
But it was just Porter’s playful way of summing up how the Canadian real-estate market has defied expectations amid a raging pandemic.
To put it simply, the housing market is on fire.
“The pace of Canadian home sales and prices is simply in unchartered [sic] territory,” the BMO economist wrote.
Porter referenced sales in March 2021, which he said rose 5.2 percent to a “record high”, and 72.6 percent above year-ago levels.
“You don't like the comparison to a year ago, because that marked the start of the shutdowns?” he asked.
Answering his own question, Porter said that sales last month were more than 80 percent above the March 2019 level.
Sales in March 2021 were also 66 percent above the average monthly pace of the past decade.
Porter said that it was the “same story on prices”.
Average prices were up a record 31.6 percent year-over-year in March 2021.
In addition, average prices last month were 48.1 percent above March 2019.
Want to hear about a favourite word that starts with the letter ‘b’?
It’s often used to refer to the Canadian housing market, and many are waiting to see it pop.
“That two-year jump absolutely shatters the prior record gain, seen back in the bubble days of the late 1980s,” Porter wrote.
Porter also noted that “new listings hit their highest level on record in seasonally adjusted terms in March”.
However, there was an “extraterrestrial level of demand”, which means listings got “vapourized by scalding demand”.
Here in B.C., the Real Estate Board of Greater Vancouver has reported that March 2021 sales beat the May 2016 tally, setting a new record of best monthly record.
It's the same story with the Fraser Valley Real Estate Board, which described March 2021 sales as the best monthly count in a century since 1921.
Expect further price increase.
“Given the extreme market imbalance currently at play—almost entirely due to fiery demand—look for the record pace of price gains to spread far and wide beyond Ontario,” BMO's Porter concluded his piece.