The number of homes sold in September rose a whopping 45.6% compared to the same month last year. And average prices reached an all-time record of $604,000 — up 17% since the beginning of the year. All this during the worst economic crisis in decades.
The Jan. 12-29 poll of 15 property market analysts showed house prices would rise 5 per cent on average this year nationally. That was the highest prediction since Reuters began polling for 2021 in February 2019.
The price of a typical home in Greater Vancouver made a sharp monthly move higher. The composite benchmark across REBGV reached $1,056,600 in January, up 0.9% from the month before. This works out to an annual increase of 5.5%, bringing the 3-year price movement to a virtually flat 0.1% decline. Monthly gains have been amplified in the media, but growth was only 0.1 point bigger than last year at this time. It certainly does feel bigger during a recession though.
The lowest quintile, the bottom 20% of households by income, have few options for housing. Both Toronto and Vancouver have only had 0.2% of rentals affordable for this demographic. Montreal is a little better with 15.3% of rental affordable to this quintile. Calgary has a drop off, with only 10.7% of housing affordable for their lowest income level. In all cases, there’s insufficient housing for this particular demographic. In Toronto and Vancouver, don’t even bother moving there if you’re going to be at this income level.
The number of months to save a downpayment for a home across Canada has reached a record high. The median household needs 60 months of savings for the minimum downpayment. According to NBC data, this beats the 57 months briefly experienced around 1989. By 1992, that number had dropped down to 26 months. Now it’s up to 60 months, increasing by almost 58% since the Great Recession. Remember, this is at the national level. It’s faster to save in some markets, and much worse in others.
“That carries potentially strong policy implications for the Bank of Canada that is increasingly looking as if it over-committed itself to keeping rates on hold until 2023,” wrote Scotiabank economist Derek Holt in a recent research note.
Just over two-thirds of Toronto real estate investors are looking to sell this year. The survey found 67% of investors were either “very likely” or “somewhat likely” to sell within the next year. This number is up slightly from the 66% in 2019, and the 61% in 2018. Intention and reality tend to be two different things though. In many markets, investors don’t sell until they see returns pull back a little. Now that rental arrears rates are rising, and condo apartment prices are falling, it might be time.
Canadian real estate prices made one of the biggest jumps in history. Prices in the 6-City index increased 2.5% in Q4 2020, the fastest acceleration since Q2 2017. Virtually all gains are from single-family homes, which increased 3.5% in the quarter. Condo apartments increased just 0.16% over the same period. The trend of single-family homes outperforming in price growth is consistent.