Monday Market Minute | Feb 17, 2020

Canadian housing posts strongest January in years as demand outstrips supply

What Moved

CREA's January data confirmed what the market had been sensing: Canadian housing was back. National home sales surged 11.5% year-over-year, with the sales-to-new-listings ratio tightening to levels not seen since 2017. Toronto's GTA reported a 15.4% jump in sales, while Vancouver showed its first sustained recovery after nearly two years of correction. New listings remained constrained, creating competitive conditions in desirable markets. MIC lenders reported brisk activity in bridge financing as developers raced to secure inventory.

Why It Matters

For private real estate investors and MIC holders, the supply-demand imbalance was a favourable setup. Tight inventory supported property values, reducing LTV risk across mortgage portfolios. The strength of the rebound also suggested that the B-20 stress test's dampening effect had fully run its course. Developers with approved projects in supply-constrained markets were well-positioned for margin expansion.

Signal to Watch

Track CMHC housing starts data for February. If starts did not accelerate in response to surging demand, the supply gap would widen further — bullish for existing inventory holders.

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