House Price Index rose 26% in 2021, fastest pace on record - Action News
Home WebMail Sunday, November 10, 2024, 11:57 PM | Calgary | 0.4°C | Regions Advertise Login | Our platform is in maintenance mode. Some URLs may not be available. |
Business

House Price Index rose 26% in 2021, fastest pace on record

The Canadian Real Estate Association's House Price Index rose at the fastest annual pace of gain on record last year, with the average selling price in December topping $713,000.

Average home price hit $713,500 in December, Canadian Real Estate Association says

The average price of a Canadian home that sold in December was $713,500. (Larry Downing/Reuters)

The Canadian Real Estate Association's House Price Index rose by 26.6 per cent in the 12 months up to December, the fastest annual pace of gain on record.

The group, which represents more than 100,000 realtors and tabulates sales data from homes that listed and sell via the Multiple Listings Service, said the supply of homes for sale at the end of the month hit an all-time low.

After pausing for a few weeks in the early days of the pandemic, Canada's housing market has been on an absolute tear for the past two years, as feverish demand from buyers wishing to take advantage of rock-bottom interest rates has drastically outpaced the supply of homes to buy.

That imbalance is a major factor contributing to higher prices, as buyers have to pay more and more to outbid others because of the lack of alternatives.

Various experts are suggesting that parts of the country are showing signs of being in a speculative bubble, and CREA says the biggest reason for runawayprice increases is that there aren't enough homes being put up for sale.

"There are currently fewer properties listed for sale in Canada than at any point on record," CREA's chief economist Shaun Cathcart said. "So unfortunately, the housing affordability problem facing the country is likely to getworse before it gets better."

High prices not denting demand

CREAsays the average price of a Canadian home that sold on MLS in December went for $713,500. That's actually down from the record high of more than $720,000 in November, but still well up on an annual basis.

In the past, feverish bidding wars were mostly confined to Canada's two most expensive housing marketsin Toronto and Vancouver. But now a combination of factors have come together to make the market the tightest its ever been, just about everywhere across the country.

Montreal-area realtor Emmanuel Samedy saysbuyers are having a harder time than he's ever seen in his 10-year career right now. Buyers often have as little 15 minutes to view a home before deciding whether or not they want to make an offer, he said in an interview.

"The market is hot right now, but it doesn't mean that you need to jump on every opportunity that's out there and payany amount," he said.

WATCH| Realtor Emmanuel Samedy describes what things are like for buyers:

Realtor describes feverish bidding wars

3 years ago
Duration 0:50
Montreal area realtor Emmanuel Samedy says he's never seen the market this tight, and it's pushing buyers to do things they may regret.

Smaller markets are feeling it, too. The average price of a home in New Brunswick that sold last month was more than $278,000. A year ago, it was barely $200,000, according to CREA.

Vanessa Coates has been looking for a home in the Shediac area for about a year and a half, and says she's getting frustrated. "Houses advertised sell within hours of listing," she told CBCNews in an email."We are now facing the fact we may have to move out West to find more availability."

"One house I looked at sold for almost double the assessed value," she said. "That is just something I cannot keep up with."

Busiest year for home salesever

High prices don't seem to be slowing demand, however, as 2021 was the busiest year for home sales ever. Some 666,995 residential properties traded hands on MLS last year, smashing the previous annual record by 20 per cent.

TD Bank economist Rishi Sondhi said that there was a less than two-month supply of homes for sale during the month, which means at the current sales pace, all listings would be gone in less than two months. Under normal conditions, there's a five-month supply of homes for sale, and Sondhi says that supply and demand imbalance is a major factor in eye-popping price gains.

WATCH | Housing supply at record low in Canada:

Canadas housing supply hits record low as prices climb

3 years ago
Duration 1:52
The number of homes for sale in Canada has hit a record low, while the price of homes sold rose by more than 26 per cent in 2021.

"With interest-rate pull-forward behaviour keeping demand so strong, and supply struggling to keep up, it's little wonder why prices are continuing their relentless upward march," he said. "Buyers pulling forward demand ahead of looming interest rate hikes kept sales at unsustainable levels last month. How long this effect will last is uncertain, but it should eventually fade."