We’re in the last month of 2021. Let’s see how this year’s real estate market has fared.
According to CREA,
The MLS® Home Price Index (MLS® HPI) rose 2.7% month-over-month and was up a record 25.3% year-over-year.
The actual (not seasonally adjusted) national average sale price posted a 19.6% year-over-year gain in November.
On a year-to-date basis, some 630,634 residential properties have traded hands via Canadian MLS® Systems between January and November 2021, far surpassing the annual record 552,423 sales for all of 2020.
“November provided another month of evidence that the housing supply/demand issues facing the country have not gone away,” said Cliff Stevenson, Chair of CREA. “Even at what is traditionally the slow time of year for housing, conditions and price trends are at the same record levels we saw this spring. Things may calm down a bit through the balance of December and January, but next year’s spring market will no doubt be an interesting one. If you’re thinking about jumping into the market as either a buyer or a seller or both, your local REALTOR® has the information and guidance you’ll need to navigate the market in these challenging times,” continued Stevenson.
With new listings up by more than sales in November, the sales-to-new listings ratio eased a bit to 77% compared to 79.1% in October. The long-term average for the national sales-to-new listings ratio is 54.9%.
Looking around the country, year-over-year price growth has crept back up to nearly 25% in B.C., though it remains lower in Vancouver, on par with the provincial number in Victoria, and higher in other parts of the province.
Year-over-year price gains are still in the mid-to-high single digits in Alberta and Saskatchewan, while gains have risen to about 13% in Manitoba.
Ontario saw year-over-year price growth hit 30% in November with the GTA continuing to surge ahead after having trailed most other parts of the province for most of the pandemic.
Greater Montreal’s year-over-year price growth remains at a little over 20%, while Quebec City was only about half that.
Price growth is running above 30% in New Brunswick (higher in Greater Moncton, lower in Fredericton and Saint John), while Newfoundland and Labrador is now at 10% year-over-year (lower in St. John’s).
The actual (not seasonally adjusted) national average home price was $720,850 in November 2021, up 19.6% from the same month last year. The national average price is heavily influenced by sales in Greater Vancouver and the GTA, two of Canada’s most active and expensive housing markets. Excluding these two markets from the calculation in November 2021 cuts $158,000 from the national average price.
Some major changes that happened in 2021 are a lending guideline reversal which makes insurance more accessible and borrowers to qualify for CMHC insured mortgages. However, there was an increase in the benchmark rate for the mortgage stress test.
What to expect in 2022?
Shaun Cathcart, CREA’s Senior Economist says, “The fact is that the supply issues we faced going into 2020, which became much worse heading into 2021, are even tighter as we move into 2022. Interest rate hikes will make it even harder for new entrants to break into the market next year, even though activity may remain robust as existing owners continue to move around in response to all of the changes to our lives since COVID showed up on the scene. As such, the issue of inequality in the housing space will remain top of mind. One wildcard will be what policymakers decide to do with the national mortgage stress test, which could act as a kind of cushion against rising rates for young and/or first-time buyers. It could also make things that much harder for them.”
According to the 2022 Canadian housing market outlook report,
There’s an anticipation of steady price growth across the Canadian real estate market in 2022, with inter-provincial migration continuing to be a key driver of housing activity in many regions. The ongoing housing supply shortage is likely to continue, putting upward pressure on prices. As a result of these factors, RE/MAX Canada estimates a 9.2-per-cent increase in average residential sales prices across the country.
“Based on feedback from our brokers and agents, the inter-provincial relocation trend that we began to see in the summer of 2020 still remains very strong and is expected to continue into 2022,” says Christopher Alexander, President, RE/MAX Canada. “Less-dense cities and neighbourhoods offer buyers the prospect of greater affordability, along with liveability factors such as more space. In order for these regions to retain these appealing qualities and their relative market balance, housing supply needs to be added. Without more homes and in the face of rising demand, there’s potential for conditions in these regions to shift further.”
According to a Leger survey conducted on behalf of RE/MAX Canada, 49 per cent of respondents believe Canadian real estate will remain one of their best investment options in 2022 (59 per cent of homeowners vs. 34 per cent non-homeowners which included renters, those not looking buy, and those currently looking to purchase). Additionally, 49 per cent of respondents are confident the Canadian real estate market will remain steady next year.
“Canadians recognize the value and investment potential in their homes. However, market challenges such as rising prices and limited supply have impacted local markets from coast-to-coast, causing angst this past year among those looking to get into the market and those hoping to move up in it,” says Elton Ash, Executive Vice President, RE/MAX Canada. “Despite this, it’s encouraging to see that many are feeling confident in the housing market in 2022 and view Canadian real estate as a solid investment.”
Additional findings from the 2022 Canadian Housing Market Outlook Report
Two-in-five Canadians trust their agent to advise them during the current real estate landscape (43 per cent)
23 per cent of Canadians now have a greater desire to build their own home or buy pre-construction
26 per cent of Canadians have the desire to purchase a home while mortgage rates remain low
62 per cent of Canadians currently own a home. This is higher among those ages 35+ (70 per cent) compared with Millennials, ages 18-34 (42 per cent)
The majority of Canadians (72 per cent) said rising home prices did not impact their purchasing decisions in 2021.
