Yahoo Finance Cottage country boom helps push Canadian home prices up 11.6 per cent, with room to run in 2021
Canada’s real estate market is on pace for its strongest year ever, led by a boom in cottage country regions, and rising prices could continue in 2021.
The Canadian Real Estate Association (CREA) says new data for November show year over year prices are up in every major market it tracks and sales were the highest ever for the month, up 32.1 per cent from last year.
“If I had to sum up the Canadian housing story in 2020, I would say it’s gone from weakness because of COVID, to strength despite COVID,” said Shaun Cathcart, CREA’s senior economist, in the report.
“It will be a photo finish, but it’s looking like 2020 will be a record year for home sales in Canada despite historically low supply.”
The 74.8 per cent sales-to-new-listings ratio is among the highest levels on record, and well above the long-term average of 54.2 per cent.
The aggregate composite MLS home price index is up 11.6 per cent for the biggest year over year gain since 2017.
The largest price gains were in Quinte & District, Tillsonburg District, Woodstock-Ingersoll and a number of Ontario cottage country areas up, between 25 and 30 per cent.
Barrie, Bancroft and Area, Brantford, Huron Perth, London & St. Thomas, North Bay, Simcoe & District, Southern Georgian Bay and Ottawa are up between 20 and 25 per cent.
Even economically hard-hit Calgary and Edmonton are up between 1 per cent and 2 per cent.
CREA expects more of the same story in 2021, forecasting the average price to rise by 9.1 per cent to $620,400. That’s counter to Fitch Ratings’ call last week for a reduction in prices and even more aggressive than Royal LePage’s forecast Monday.
“Much like this virus, I don’t see it all turning into a pumpkin on New Year’s Eve, but at least vaccination is a light at the end of the tunnel.” said Cathcart.
“Immigration and population growth will ramp back up, mortgage rates are expected to continue to remain very low, and a place to call home is more important than ever. On top of that, the COVID-related shake-up to so much of daily life will likely continue to result in more people choosing to pull up stakes and move around.”
BMO senior economist Robert Kavcic says next year likely won’t be as hot as 2020, but conditions are in place for another strong year with a high-paying-job recovery, low rates, and shifting preferences.
“Markets outside the core of the major cities remain extremely tight, and price growth should carry into 2021,” he said in a note.
“It remains to be seen how the ravenous acquiring of rural/vacation properties plays out later in 2021 and into 2022, assuming the vaccine is effective. It would be reasonable to expect those markets to plateau or even give back some (but not nearly all) of the recent price gains.”
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
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