The year is not yet over, but the Canadian Real Estate Association says 2021 was the busiest year ever for Canada’s housing market, with average selling prices climbing to new highs, too.
The group that represents more than 100,000 realtors across the country said in a release on Monday that the average selling price for a home that sold on the group’s Multiple Listings Service was $716,585, an increase of 18 per cent compared to the same month a year earlier.
It’s not just prices that are heating up, either. Sales increased by more than 8 per cent in October from September’s level. The selling surge means that 581,275 homes have changed hands during the month. That’s already more than the previous annual record of 552,423 — and there’s still two months to go.
“After a summer where it looked like housing markets might be calming down a bit, October’s numbers suggest we might be moving back toward what we saw this Spring, with regards to current market demand and supply conditions,” CREA chair Cliff Stevenson said.
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New listings are being snapped up almost as fast as they come up, “which is why it’s not surprising prices are also re-accelerating,” Stevenson said. “We need to build more housing.”
Low interest rates continue to fuel boom
In the early days of the COVID-19 pandemic, fear and uncertainty slowed the housing market to a crawl. But ever since the summer of 2020, Canada’s real estate market has been on fire, shattering numerous records along the way.
Policy-makers at the Bank of Canada slashed interest rates to record lows to stimulate the economy, and one of the biggest impacts of that move has been to cause mortgage debt to explode.
October’s average selling price is within a hair of the all-time monthly record of $716,828 set in March of this year, when activity was at a frenzied pace. Right around then, the country’s financial regulator proposed to tighten the so called stress test level which makes it hard to get approved for a home loan. And things have cooled down a little since then, but both selling prices and sales overall are still well above pre-pandemic levels.
Jivan Sanghera, principal broker at Circle Mortgage Group in Burlington, Ont., says the buying frenzy is starting to change the way buyers and sellers fundamentally think about the market.
“There was a time and a place that some people may remember where you were able to see a house more than once before you even considered making an offer,” he said in an interview with CBC News. But in many markets across the country, that mentality has been replaced by one where buyers who have already lost out on multiple previous offers are coming in with all they’ve got.
“It’s really like an inferno where people are just either running to the flame or away from it.”