a

Canadian Benchmark Home Price Up $120,000, Fraser Valley Rose by $31,000


Under Market Updates

Written by

May 6th, 2021

The spring market certainly hasn’t failed to meet expectations, but unlike years past the largest gains in March were in Canada’s smaller cities, says an RBC research paper.

Canadians’ exodus from large urban centres in 2020 didn’t dissipate through the first quarter of the year, as evidenced by the month-over-month price gains in small Ontario and British Columbian housing markets. Woodstock-Ingersoll’s property values increased by $42,000 in March from February, while Southern Georgian Bay, the Niagara region and Cambridge each saw increases of $37,000, and Fraser Valley homes rose by $31,000. In Ontario, year-over-year price gains topping 30% were present in 75% of the province’s markets, while 20% saw prices increase north of 40%.

In March, new listings set a record by reaching 1 million across Canada, a 7.5% increase from the month prior, while Victoria was the sole market in which new listings didn’t climb. However, the surge of new listings isn’t at all cooling prices because demand, driven by low interest rates and surplus cash in Canadian households, is arguably hotter than it has ever been. As a result, noted RBC, heavier supply won’t temper prices in the short term because too many markets are badly imbalanced.

“A gradual rise in longer-term interest rates, deteriorating affordability and the resumption of office work will eventually restrain demand but it’s difficult to know when that will be,” said the report from Robert Hogue. “OSFI’s [Office of the Superintendent of Financial Institutions] proposal to tighten the stress test for uninsured mortgages on June 1—by raising the qualifying rate from 4.79% to 5.25%—will reduce the purchasing budget of some of the most financially-stretched buyers by a little more than 4%.”

In fact, despite a record-number of coast-to-coast sellers, bidding wars were commonplace and inventories fell to their lowest in decades. With such tight supply and demand conditions, the benchmark price of a Canadian home increased by $21,000 in March, up 3.1% from February, which had set a record increase of $22,000. Compared to a year ago, the benchmark price of a Canadian home increased by 20.1% to $120,000.

Home sales in the country also set a record at 833,100 in March, with a pace of over 50% above the record of 550,300 recorded in all of last year. Manitoba, BC, Central and Atlantic Canada, and individual markets in Alberta and Saskatchewan, including Edmonton, Calgary, Regina and Saskatoon, either had record-high activity or approached it, but the paucity of single-family homes for sale in Toronto, Montreal and a few other markets resulted in small month-over-month decreases. Although the frenetic energy in Canada’s housing market during the ongoing COVID-19 pandemic is driven by evolving household needs, RBC warns that surging price appreciation may occur for a decidedly different reason.

“Rapidly-rising prices have also likely opened the door to speculative activity in several markets.”

Benchmark Price of Canadian Home Up $120,000 in March by Neil Sharma | Canadian Real Estate Wealth

Comments are closed.

 

Back To The Top