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Home prices reached a record high in November

Home Prices Rose to a Record High in November

The average price of a home in Canada reached a new all-time high in November as inventory levels remain near record lows.

The average selling price in November was $720,854, up 19.6% year-over-year on an unadjusted basis, according to the Canadian Real Estate Association’s latest monthly report. The MLS Home Price Index, which takes out some of the volatility from the monthly figures, was up 2.7% on a monthly basis and a record 25.3% from a year ago.

Removing the high-priced markets of the Greater Toronto and Vancouver areas, the average price stands at $562,850, up 17% year-over-year.

There were 54,222 home sales in November up 32.1% from a year earlier, but down 1.6% on a monthly basis.

“Even at what is traditionally the slow time of year for housing, conditions and price trends are at the same record levels we saw this spring,” noted CREA chair Cliff Stevenson. “Things may calm down a bit through the balance of December and January, but next year’s spring market will no doubt be an interesting one.”

Near record-low housing inventory continues to be a major factor keeping prices higher. In November, there were just 1.9 months of inventory available, unchanged from October and well below the long-term average of five months. One positive, however, was the fact new listings were up 3.3% from October, which helped ease the sales-to-new listings ratio slightly to 77% from 79.1%.

 

Cross-Country Roundup of Home Prices

In just the past month, existing homeowners in some markets have seen the value of their homes rise by tens of thousands of dollars. Compared to October, average prices are up nearly $23,000 in Barrie and District, $29,613 in B.C., and over $44,000 in the Greater Toronto Area.

Here’s a look at some more regional and local housing market results for November:

  • Ontario: $922,580 (+23.9%)
  • Quebec: $471,195 (+14.1)
  • B.C.: $992,844 (+21.9%)
  • Alberta: $429,543 (+6.4%)
  • Barrie & District: $809,400 (+36.8%)
  • Halifax-Dartmouth: $488,382 (+24%)
  • Victoria: $884,700 (+22.4%)
  • Greater Montreal Area: $512,400 (+20.8%)
  • Greater Toronto Area: $1,172,900 (+28.3%)
  • Ottawa: $651,200 (+16.6%)
  • Greater Vancouver Area: $1,211,200 (+16%)
  • Winnipeg: $323,100 (+12.8%)
  • St. John’s: $289,400 (+7.2%)
  • Calgary: $446,300 (+9.3%)
  • Edmonton: $337,100 (+4%)

2022 Outlook for Home Prices

Record low housing supply, which is at least partly to blame for rising prices, will continue to pose an affordability challenge for new buyers in 2022, CREA noted.

“The fact is that the supply issues we faced going into 2020, which became much worse heading into 2021, are even tighter as we move into 2022,” wrote Shaun Cathcart, CREA’s senior economist.

“Interest rate hikes will make it even harder for new entrants to break into the market next year, even though activity may remain robust as existing owners continue to move around in response to all of the changes to our lives since COVID showed up on the scene,” he added. “As such, the issue of inequality in the housing space will remain top of mind.”

Some analysts continue to believe part of the renewed market “vigour” will be temporary, caused as buyers rush to make their purchase ahead of looming rate hikes.

“We believe many buyers are rushing in before higher rates take purchasing budget room away from them,” wrote RBC economist Josh Nye, adding that this trend could have a little longer to run, potentially into the first few months of the new year.

“We still think, though, that rapidly deteriorating affordability and easing pandemic restrictions will gradually cool demand and moderate price growth over the course of the coming year,” he added.

TD Bank economist Rishi Sondhi agrees, saying home sales will likely drop in the first half  of 2022 as the “pull-forward effect” unwinds and higher rising interest rates start to weigh on activity.

“However, a solid macro backdrop, favourable demographic trends, elevated household savings rates, and improving population growth should keep sales above their pre-pandemic levels,” he wrote. “This view is not without risks however, as investors have comprised a rising share of the market, thus potentially making sales more sensitive to rising interest rates.”