Record-Low Supply and Price Gains: How Canada’s Housing Market Fared in 2021
Monday Jan 31st, 2022
The last two years have had many Canadians feeling like they’re stuck in Groundhog Day, as two stories continued to dominate headlines: COVID-19 and Canada’s housing markets.
The year 2021 was another record-breaker for both home sales and price growth, according to data from the Canadian Real Estate Association (CREA).
This trend kicked off in January as the sales-to-new listings ratio hit an all-time high of 90.7%. Home sales started strong, 35.2% higher than January 2020. By April 2021, home sales skyrocketed a whopping 256% compared to the same time in 2020 (which was when most of Canada was under some kind of lockdown).
Markets seemed to be calming down as we welcomed summer’s warmer weather back. Home sales fell 8.4% in June on a month-over-month basis but were still up 13.6% on a year-over-year basis.
In August, markets continued to stabilize. While levels were more normal compared to earlier in the year, they were still quite active compared to any other point in history.
By the end of October, Canadian home sales had set a new annual record.
National home sales remained historically high in December 2021, yet Canada’s housing supply hit an all-time low, meaning home buyers were left feeling the squeeze heading into the new year.
CREA recently reported the actual (not seasonally adjusted) number of transactions in December 2021 was the second-highest level on record for the month, with only December 2020 coming in higher.
Because of short supply and high demand, the actual (not seasonally adjusted) national average home price climbed to $713,500 in December 2021, up 17.7% from the same month last year. Excluding the Greater Vancouver Area and the Greater Toronto Area, which heavily affect Canada’s national numbers, the national average price comes in closer to $560,000.
The MLS® Home Price Index (HPI), which uses more than 15 years of MLS® System data and sophisticated statistical models to gauge a neighbourhood’s home price levels, rose 2.5% month-over-month in December 2021. This is on top of similar gains to the MLS® HPI seen in October and November.
“Those are big gains,” said CREA’s Senior Economist and Director of Housing Data and Market Analysis Shaun Cathcart during CREA’s monthly housing market report. “Taken together, that’s about a $60,000 increase on the national benchmark price just in those three months.”
The MLS® HPI was up 26.6% on a year-over-year basis in December.
Overall, home sales increased 20.7% across Canada in 2021, compared to 2020. Meanwhile new listings were down 8.9%.
“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 this spring” said Cliff Stevenson, Chair of the Canadian Real Estate Association. “But when those listings eventually start to show up, the spring market this year will almost certainly be another headline grabber. If you’re thinking about jumping into the market as either a buyer, seller or both, your local REALTOR® has the information and guidance you’ll need to navigate the market in these unprecedented times,” continued Stevenson.
Stay tuned for our monthly Housing Market Snapshot to keep a pulse on the market.
Remember, contact a REALTOR® for detailed information about your neighbourhood and its price trends.