‘Unhinged’: Real estate prices in Canada shoot up as supply hits all-time low
Canadian real estate prices broke a 21-year record in 2021 as the supply of homes for sale hit an all-time low.
The Canadian Real Estate Association says prices were up 26.6 per cent nationally year over year in December, 2.5 per cent month over month.
Ontario was up around 30 per cent year over year. Prices in the Greater Toronto Area mounted a comeback after lagging other parts of the province that were less well known before the extraordinary run-up in prices drove more home-seekers outside major urban centres.
Rising prices in Ontario are nothing new, but even New Brunswick was up 30 per cent year over year, led by Greater Moncton.
British Columbia prices were up more than 25 per cent.
Sales were down 9.9 per cent year over year and basically flat month-over-month.
The number of newly listed homes fell 3.2 per cent month over month. The sales-to-new-listings ratio tightened to 79.7 per cent; the long-term average is 54.9 per cent. There were 1.6 months of inventory at the end of December 2021, the lowest level ever.
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Canadian real estate in 2022
“With the housing supply issues facing the country having only gotten worse to start 2022, take any decline in sales early in the year with a grain of salt because the demand hasn’t gone away, there just won’t be much to buy until a little later in spring,” said Cliff Stevenson, Chair of CREA.
“But when those listings eventually start to show up, the spring market this year will almost certainly be another headline grabber.”
Cailey Heaps, President & CEO, Heaps Estrin Team says buyers were giving up at the end of the year but are ready to try again.
“Every indication is that 2022 is off to a strong start. My feeling is that the sellers who choose to list in the first quarter of 2022 will be met with enthusiasm from the market, and will be rewarded accordingly,” said Heaps.
BMO senior economist Robert Kavcic says 2021 was the year Canadian real estate “became unhinged.” He expects the Bank of Canada will act in 2022.
“Expectations and investor appetite took over Canadian housing in 2021. We know it, and policymakers now know it too,” said Kavcic.
“Look for 100 bps of tightening by the Bank of Canada this year to help clean out some of the froth.”
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
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