Toronto, Vancouver housing markets close out pandemic’s second year with record high sales, prices

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Toronto and Vancouver housing markets closed out the second year of the COVID-19 pandemic with record sales and record-high home prices, as the race to buy properties accelerated in the country’s two most expensive areas.

Home values in the Toronto region were 44 per cent higher in December than in January, 2020, prior to the start of the pandemic. In the Vancouver area, prices were 22 per cent above prepandemic levels. Low mortgage rates continued to boost purchases as many buyers sought new homes to live in during the health crisis.

“This was record breaking in every way, in terms of number of sales and price points in pretty much every market,” said Brendon Cowans, vice-president of sales for Property.ca, a Toronto-based brokerage. “I don’t see it slowing down at all.”

In the Toronto region, the largest residential market in the country, the home price index reached $1,208,000 in December, according to the Toronto Regional Real Estate Board or TRREB. That is a 31-per-cent increase from the same month in 2020, and 44 per cent higher than January, 2020. (The home price index adjusts for price and sales volatility.)

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The number of new listings was 6 per cent higher in 2021 compared with the previous year. But that was not enough to meet demand, leading buyers to bid up prices throughout Toronto and its suburbs. In Durham region, to the east of the city, the home price index climbed 42 per cent in December compared with a year earlier. In Simcoe, to the north, the index rose 38 per cent.

“It’s so easy for people to get priced out of the market,” Mr. Cowans said. “I have seen the massive jumps in a short period of time. People are nervous.”

Charlene Ann Williams, a broker with Real Estate Homeward Brokerage, who has sold homes in the Greater Toronto Area for more than a decade, described 2021 as “extremely chaotic.”

“There are people out there who would like to purchase and there is very, very low inventory, especially when you get into the range of what people can afford,” she said.

Ms. Williams said many buyers have been looking in the $750,000 to $1-million range. But with home prices rising so quickly, she said her clients have had to quickly change their criteria and look further out of the city or at condos, which are generally cheaper than houses.

The lack of affordable houses has pushed up sales of condos in the Toronto region. There were 52 per cent more condo purchases in 2021 compared with 2020, according to TRREB.

Across all types of properties, a record 121,712 homes sold in the region last year. That was 28 per cent higher than 2020 and 8 per cent above the previous record set in 2016.

It was a similar trend in and around Vancouver, the country’s priciest market, where 43,999 homes sold last year. That was 42 per cent more than the first year of the pandemic in 2020 and 4 per cent above the previous record reached in 2015, according to the Real Estate Board of Greater Vancouver.

The home price index for the greater Vancouver region reached $1,230,200 last month. That was a 17-per-cent increase over December, 2020, and 22 per cent higher than prepandemic days.

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The real estate board’s economist, Keith Stewart, said he expects Vancouver area prices to continue rising given that the number of properties for sale is at its lowest point in more than 30 years. “Residents shouldn’t expect home price growth to relent until there’s a more adequate supply of housing available to purchase,” he said in a release.

Although the Bank of Canada has indicated that it could raise its benchmark interest rate as soon as the spring, the real estate industry does not expect that to slow demand.

There will be interest from newcomers to Canada after the federal government upped its immigration targets to make up for 2020′s shortfall. Millennials are increasingly getting into the market. As well, more Canadians are seeking to invest in real estate. Investor buying has doubled during the pandemic and accounts for at least 20 per cent of all home purchases, according to the central bank’s latest research.

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