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Canadian real estate tops record year with months to spare: CREA

·2 min read
A home is seen for sale in the tourist destination in Picton, Ontario, Canada May 8, 2021. Picture taken May 8, 2021. REUTERS/Lars Hagberg
Home prices have gone up the most in smaller cities and towns in Ontario. (REUTERS/Lars Hagberg)

As Canadians sat down for Thanksgiving dinner, real estate already notched the most sales in a year ever, with two months to spare.

The Canadian Real Estate Association (CREA) says 581,275 homes were sold from January to October 2021. The previous record was 552,423 sales for all of 2020.

Home prices are up 23.7 per cent nationally as measured by the MLS Home Price Index.

After a slight breather in the summer, housing activity is heating up again. Sales rose 8.6 per cent month-over-month in October, and prices were up 2.7 per cent.

While sales were down 11.5 per cent year-over-year, it was still the second-highest tally for the month of October.

"After a summer where it looked like housing markets might be calming down a bit, October's numbers suggest we might be moving back towards what we saw this spring, with regard to current market demand and supply conditions," said CREA chair Cliff Stevenson.

"That said, one month of data is not a trend, so we'll be watching closely how the balance of this memorable year plays out."

New listings were up 3.2 per cent but higher sales meant the sales-to-new-listings proportion tightened to 79.5 per cent. The long-term average is 54.8 per cent.

Also See: The latest real estate news for housing prices, mortgage rates, markets, luxury properties and more at Yahoo Finance Canada.

Higher interest rates

BMO senior economist Robert Kavcic says the recent strength shouldn't come as a surprise given the current conditions.

"The market is still drum tight, and demand is still feasting thanks to low mortgage rates, a strong job market, expectations of continued price gains, and probably some additional activity ahead of mortgage rate hikes (especially for those with a contract in hand)," he said.

"Indeed, the level of sales volumes in October sat 32 per cent above the 2019 (pre-COVID) run rate; the dollar-value of sales was a cool 86% above that mark; and the benchmark price has now surged 40 per cent (70 per cent or more in some markets)—and that baseline reflected strong later-cycle conditions, not a period of weakness that would make for an easy comparison."

Kavcic says the housing market is well overdue for higher rates, something the Bank of Canada says could come sooner than previously expected. Unless that happens, Kavcic says real estate's momentum will likely continue.

Prices are up around 30 per cent year-over-year in Ontario and New Brunswick. Alberta and Saskatchewan haven't experienced huge price gains; Each market is up mid-to-high single digits.

Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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