Canada’s residential housing market has exploded as the pandemic’s confinement measures have eased across the country. All the transactions that were put on hold during the traditionally busy spring market have shifted to summer and the strong volume and prices seen in July are expected to continue through August and September.

What happens next? As the leafs begin to turn it is expected that the residential housing market will return to a lower baseline. At present, it is very much seller’s who are reaping the benefit of pent-up demand, low interest rates and lower inventory.

Low inventory is possibly the strongest driver of the current market. The sales-to-new listings ratio has hit its highest level in 18 years at 0.74 which is a supply and demand condition that sees the sellers in control in many markets. If inventory does not begin to enter the market, near term price acceleration is very likely.

Interest rates are likely to stay low in the short term and the Bank of Canada has gone so far as to say that the target overnight rate will stay low into 2022. Subsequently, people choosing variable term rates should begin to consider locking in at a low fixed rates as 2022 approaches as the variable rates could jump quickly as the target overnight increases when the worst of the economic stress brought on by the pandemic begins to work itself out of the economy.

If you are an investor, be leery as this could well be the top of the current market. If you are buying a home and your horizon is 10-15 years, do not let that opportunity for the house of your dreams pass you by but make sure it really is the home you want as you might feel a bit of buyer’s remorse in the medium term.