Canada’s housing market finished off a record-breaking 2020 on a strong note, as potential homebuyers continued to flood the market in December amid historically-low mortgage rates.
According to monthly data released by the Canadian Real Estate Association (CREA), December’s national home sales rose by 7.2% from the prior month, causing total transactions for 2020 to skyrocket to 551,392 units. As a result, benchmark home prices increased by 1.5% in the final month of the year, bringing them 13.1% above levels observed a year ago. Meanwhile, average home prices across Canada soared to a record $607,280 — the highest results for December the agency noted.
With 2020 being an anomaly year as a result of the pandemic, mortgage rates sunk below 1% for the first time ever, prompting Canadians to enter the real estate market in search of cheaper and more spacious accommodations. Even despite the resurgence of Covid-19 and additional lockdowns across the country, the scarcity of housing supply will likely cause the bustling trend in real estate to continue well into the new year.
With strong housing market competition in some of the country’s largest cities, potential home buyers have been speculating that remote work policies will continue even after the pandemic. As a result, they’ve begun to flood real estate markets in the suburbs and surrounding rural areas. This has caused December benchmark prices in agricultural districts two hours away from Toronto to accelerate by more than 30% from last year’s levels.
Although there have been some price discrepancies in some regions of Canada’s housing market, there was still a vast increase in sales activity across the country. According to Bank of Montreal chief economist Doug Porter, the skyrocketing sales levels are the result of a broad shift in economic factors, rather than local changes. Specifically, the decline in interest rates, coupled with a shift in consumer preferences, has led to an increasing number of Canadians searching for houses with more room – and away from heavily populated areas.
Information for this briefing was found via CREA and Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.