Canadian real estate had its busiest year ever, even though a pandemic led to record high unemployment as millions were forced to rely on government programs like the Canada Emergency Response Benefit (CERB) and the Canada Recovery Benefit (CRB).
Record low interest rates and a desire to upgrade led to 551,392 homes trading hands over MLS, according to the Canadian Real Estate Association (CREA), which is 12.6 per cent higher than last year and 2.6 per cent higher than the previous record set in 2016.
The national average price rose 17.1 per cent year over year in December to a record $607,280. Taking Toronto and Vancouver out of the equation chops $130,000 off that average.
The MLS Home Price Index aims to smooth out distortions from the outsized effect of larger markets and housing types. It was up 13 per cent in December compared to the same period last year.
Detached homes led the way, especially in areas outside of urban cores. The biggest year-over-year price gains of 30 per pent or more were in Quinte & District, Simcoe & District, Woodstock-Ingersoll, and the Lakelands region of Ontario cottage country. Bancroft and Area, Grey Bruce Owen Sound, Kawartha Lakes, North Bay, Northumberland Hills, and Tillsonburg District were up between 25-30 per cent.
Gains were widespread across the country. Edmonton and Calgary lagged but managed to eke out gains of 1.9 and 0.7 per cent respectively, despite economic challenges brought on by falling oil prices.
Will home prices fall in 2021?
CREA's senior economist Shaun Cathcart, says new listings will be the stat to watch.
"We already have record-setting sales, but we know demand is much stronger than those numbers suggest because we can see it impacting prices,” he said.
“On New Year's Day there were fewer than 100,000 residential listings on all Canadian MLS systems, the lowest ever based on records going back three decades. Compare that to five years ago, when there was a quarter of a million listings available for sale. So we have record-high demand and record-low supply to start the year.”
December homes sales were up 47.2 per cent year-over-year, which is a record for the month.
BMO senior economist Doug Porter says he expects the market to lose a little bit of a steam.
“We expect the market to lose some momentum in the months ahead, as tighter mobility restrictions, the small back-up in long-term yields, the ongoing absence of immigration, and still-soft employment conditions will weigh,” he said.
“To be clear, we don't look for a reversal in the broader market, just some moderation from these extraordinary results. After all, stay at home doesn't translate to don't buy a home”.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.