Average Home Prices Rise by 20% Since Last Year

It has been reported by The Canadian Real Estate Association that the average home price has increased to $816,720 in February which is a 20.6% increase since last year. Last year the average prices of homes were about $677,435, and as the supply demands are being fulfilled for the current market, sales activity has increased as well. Furthermore, such high numbers are associated with the real estate market of Vancouver and Toronto, and if these markets were removed from the calculation, the average drops by about $178,000.

Adjusting the average for seasonal based calculations, the average price totaled roughly $795,000 which is a 2% increase from last month’s $777,000 average. A group representing nearly 100,000 realtors across the country highlighted that Tuesday was the second-busiest February for home selling. In the last month, nearly 58,209 homes were purchased by new home-buyers and considering the supply of new listings, it has been estimated that in March the sale of new homes will be strong as well.

It is imperative to consider that the average home price could be misleading due to the fact that Toronto and Vancouver real estate markets are skewing the price of homes. Since these two markets are the most expensive markets for real estate, the realtor group has emphasized that it has tabulated a second number which is known as the Home Price Index in order to adjust the volume and the type of housing being sold.

The beginning of the pandemic has had a counterintuitive impact on the Canadian housing market. The sales volumes and the price growth in March and April 2020 slowed down as buyers reacted to the uncertain situation which resulted in them closing their wallets for expensive purchases. Now, after two years, the average home prices are surging at a substantial rate because of record-low cost of borrowing which has stimulated the economy throughout the pandemic. Consequently, this strategy fueled the insatiable demand for housing.

Amy Youngren who is the founder of Toronto real estate firm North Group said, “Every property that you sell, especially if you’re on the listing side, you think we’re going to start to see some king of normality from these numbers, but I feel like every property we sell, it still surprises us,”. Furthermore, analysis from Robert Kavcic, who is a senior economist at BMO Capital Markets, revealed that the aggregate composite home price index was increased by 3.5% on a year-over-year basis last month which is the strongest monthly gain on record. In a note to investors, he said, “That blows through the pace seen a year ago, and also the fastest clip 1/8 since 3/8 the early-2017 period.”.

Moreover, the resale prices continue to surge in many provinces of the country, including Southern Ontario and increasingly in Alberta. In the previous month, the average home prices have risen by $80,100 in the Greater Toronto Area, $60,300 in Barrie, ON and district, $58,200 in the Greater Vancouver Area and $40,600 in Ottawa. Furthermore, Calgary also saw an increase in average home pricing by $25,200 and Edmonton saw a monthly gain of $9,300.

Robert Kavcic also highlighted, “Calgary’s market has exploded to the upside, with the benchmark price up 34.6% annualised over the past three months, the fastest clip since the heady days of 2006,”.