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As Canada enters the third year of COVID-19, the housing market’s underlying conditions remain essentially the same as they have been from the pandemic’s beginning.Justin Tang/The Canadian Press

Canada’s housing market ended the second year of the pandemic with record highs in price growth and home values, suggesting the country’s affordable-housing problem now extends beyond major metropolitan areas and into smaller cities.

The typical price of a home across the country rose 26.6 per cent in December compared with a year earlier – the fastest pace on record – hitting a new high of $811,700, according to the Canadian Real Estate Association’s home price index, which adjusts for pricing volatility.

Typical home prices in the Toronto region are well above $1-million, and many cities in Southern Ontario have topped $800,000. In less populated regions such as Chilliwack, in British Columbia, and Cambridge and Brantford in Ontario, the home price index is up about 40 per cent, with the typical value of a property at least $200,000 higher than a year ago.

Eight charts that provide insight into the housing market for the year ahead

As the country enters the third year of the COVID-19 crisis, the housing market’s underlying conditions remain essentially the same as they have been from the pandemic’s beginning: The cost of borrowing is close to zero, there is strong demand from domestic residents and there is a shortage of houses for sale.

There are now 1.6 months of housing inventory remaining across the country, assuming the pace of sales remains the same as it was in December. The dearth of properties on the market persisted even after more homeowners put their homes up for sale last year, compared with 2020.

“There are currently fewer properties listed for sale in Canada than at any point on record,” Shaun Cathcart, CREA’s senior economist, said in a news release. “The housing affordability problem facing the country is likely to get worse before it gets better.”

Across the country, there were 666,995 home resales last year. That was 20 per cent higher than the previous record for resales, according to CREA – and that previous record was set in 2020.

In the first few weeks of this year, realtors have described a hectic market, even as buyers and sellers deal with the latest stay-at-home measures and other pandemic-related restrictions.

“I see no end to the demand side as there seem to be multiple buyers for every listing that goes up, and rural areas are also affected,” said Donna Harding, a broker with Engel & Volkers who has sold homes in the Halifax region for nearly two decades.

Ms. Harding said she has seen constant investor demand for homes that can be rented.

In the Toronto region, homes continue to sell well over listed prices. The region’s home price index is up 31 per cent in December compared with a year earlier.

“The 2021 demand has continued to 2022,” said Cailey Heaps, who has been selling homes in Toronto for more than two decades. Within the first two weeks of this year, one of her clients’ homes had 54 viewings. It drew six offers and sold $500,000 over asking at $2.7-million.

Canadian home prices hit record high in November

It’s not just Toronto that has seen affordability deteriorate. In Ontario’s cottage country, home prices have nearly doubled in two years, according to CREA data.

In Oakville, the home price index is up $550,000 since December, 2019. In other cities in Southern Ontario, the home price index has increased at least $300,000 over the same period. That includes Hamilton, Guelph, Kitchener, Cambridge, Brantford and Mississauga.

Not much has been done to curb demand. Despite tougher mortgage qualification requirements enacted in mid-2021, Canadian residents continue to take out big home loans. CREA, other real estate industry groups, the federal housing agency and some economists have all said the problem is the lack of housing supply, not demand.

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