Monday Market Minute | Jul 6, 2020

Bidding wars return — Canada's pandemic housing boom is no longer anecdotal

What Moved

By early July, the Canadian housing market had moved from recovery to boom. CREA data showed June sales up 63% month-over-month and above prior-year levels for the first time since the pandemic began. The national average sale price hit $539,000, up 6.5% year-over-year. Bidding wars had returned in earnest across the GTA, Greater Vancouver, and Ottawa. Properties in desirable suburban markets routinely sold above asking with multiple offers. Inventory remained critically low — a supply-demand imbalance that was intensifying weekly. MIC lenders reported origination volumes exceeding pre-pandemic levels.

Why It Matters

The housing boom created a favourable backdrop for private real estate and mortgage investors. Rising prices reduced loan-to-value ratios across existing portfolios, strengthening collateral positions. MIC distributions, which had been impacted by deferrals, were normalizing as origination activity surged. However, the speed of the price acceleration raised its own risks — underwriting to current values carried the assumption that gains would hold, which was not guaranteed in a pandemic economy.

Signal to Watch

Monitor the sales-to-new-listings ratio. Ratios above 70% indicate a strong seller's market — sustained readings at this level would signal continued price acceleration.

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