Canada’s housing market jumped in December, closing out the year with record sales and prices as buyers competed fiercely for larger properties during the pandemic.
There were 551,392 home resales last year, a 13-per-cent increase over 2019, with suburbs and smaller markets recording some of the biggest gains, according to the report from the Canadian Real Estate Association. That topped 2016, the previous record-setting year for resales, when demand surged in Toronto and Vancouver.
Although those two cities, the two most expensive markets in the country, had higher sales and prices last year, remote work pushed city residents to the suburbs and further afield. As a result, price increases were steeper in places like the Quinte region of Ontario compared with the rest of the country.
Over all, the home price index, which corrects for expensive transactions, was up 13 per cent year-over-year to a record high of $661,700 in December. In Quinte (located about two hours east of Toronto), Simcoe County, Woodstock-Ingersoll and the Lakelands region in Ontario’s cottage country, the index was up more than 30 per cent.
The residential real estate market was one of a few sectors that benefited from the pandemic, with interest-rate cuts pushing mortgage rates to record lows. The common five-year fixed mortgage rate has been below 2 per cent for months, making it easier for homeowners to borrow and pay down their mortgages.
Every province recorded higher sales, with Saskatchewan up 25 per cent year-over-year, followed by British Columbia at 21.6 per cent and Quebec at 17 per cent. Newfoundland and Labrador, New Brunswick and Nova Scotia all increased between 13 per cent and 15 per cent. Sales in Ontario, the most populated province, were up 9 per cent.
A shortage of properties for sale has contributed to the rise in prices. Across the country, new listings were 4 per cent lower than 2019. The combination of tight supply and low mortgage rates is expected to push prices higher this year. The Canadian Real Estate Association has forecast the average selling price to rise 9 per cent this year to $620,400.
Months of remote work and stay-at-home requirements pushed homebuyers to seek more space and backyards. Working from home made it possible for buyers to move to more affordable areas such as Moncton and the Okanagan Valley, B.C. Restricted foreign travel also enticed wealthier residents to buy properties in vacation locations across the country, such as Whistler, B.C., and Kawartha Lakes, Ont.
Over all, that sent up prices of detached houses and depressed the value of condos. The price index for houses in Canada was up 16 per cent year over year, while the index for condos was up 4 per cent, according to CREA.
Since the pandemic started, the migration out of major cities has accelerated. A record number of residents in Toronto and Montreal left for the nearby suburbs in the 12 months to July, according to StatsCan. The movement is reflected in falling condo rent and rising condo listings in both cities. In Toronto, condos were the only property type to lose value over the year, according to the local real estate board.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.