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Heading into the end of 2021, the Canadian housing market reported an uptick in sales as available inventory remained extremely low.
Today, the Canadian Real Estate Association (CREA) released its national statistics for November, which highlight the ongoing supply and demand issues the country is experiencing. As monthly sales and the average national sale price climbed last month, the number of newly listed properties nudged upwards slightly.
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“November provided another month of evidence that the housing supply/demand issues facing the country have not gone away,” said Cliff Stevenson, chair of CREA, in the monthly report.
“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. 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,” he added.
Here’s what we know from the latest from CREA, including its forecast for 2022.
Home sales rise less than one per cent from October
Between October and November, home sales recorded over the MLS system increased by 0.6 per cent. Declines in activity within the Greater Toronto Area and Montreal were offset by gains seen in smaller communities like Calgary, Edmonton, Saskatoon and the British Columbia interior.
The actual — not seasonally adjusted — number of transactions logged in November 2021 was “very strong historically,” falling by 0.7 per cent annually and missing the November 2020 record by just a few hundred transactions, CREA said.
Year-to-date, approximately 630,634 residential properties have been transacted through MLS between January and November, which now far exceeds the previous all-time record of 552,423 sales for all of 2020. Last month, the record was officially shattered with 581,275 homes having been bought and sold up until October.
New housing supply creeps up a little over three per cent
The quantity of newly-listed homes hitting the market rose 3.3 per cent from October to November. About half of local markets drove supply gains, including the GTA, Montreal, several markets within the Greater Golden Horseshoe and the Lower Mainland. About two-thirds of local markets were seller’s markets, while the other third was in balanced territory.
The sales-to-new listings ratio eased 77 per cent, down slightly from October when it was recorded at 79.1 per cent.
By the end of November, there was just 1.8 months of inventory available, an amount that tied with March 2021 as the lowest level ever recorded.
“Housing cycles can be very long, so market trends do not care that we’ve put new 2022 calendars up on our refrigerator doors,” said Shaun Cathcart, CREA’s senior economist, in the report. “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.”
National average home price rises to over $720,000
In November, the Aggregate Composite MLS Home Price Index (MLS HPI) rose 2.7 per cent on a monthly basis. The non-seasonally adjusted Aggregate Composite MLS HPI increased by a record 25.3 per cent year-to-year for November.
CREA noted that the MLS HPI provides the best way to gauge price trends as averages are “strongly distorted by changes in the mix of sales activity from one month to the next.”
The actual — not seasonally adjusted — national average home price hit $720,850 in November, an increase of 19.6 per cent compared to the same month in 2020. When removing Greater Vancouver and the GTA from the equation, the national average price falls $158,000 to $562,850.
In British Columbia, annual price growth climbed to nearly 25 per cent in November, but remains lower in Vancouver and higher in other areas of the province.
Meanwhile in Ontario, the GTA reported a 30 per cent rise in prices year-to-year after sluggish growth was seen throughout most of the pandemic.
Annual price increases in Montreal remain just over 20 per cent. Quebec City reported half of this growth.
Alberta and Saskatchewan reported yearly price increases within the mid-to-high single-digit range while prices in Manitoba have jumped 13 per cent.
2022 home sales to drop, but prices will continue to climb through spring
In a separate quarterly report released today, CREA updated its forecast for next year, stating that national home sales are expected to fall 8.6 per cent to around 610,700 units in 2022. The national average home price is also predicted to increase by a further 7.6 per cent annually to $739,500.
However, CREA noted that this is a conservative estimate given that November’s national average price was almost $721,000.
“Limited supply, higher prices and higher interest rates are expected to tap the brakes on activity in 2022 compared to 2021; although, increased churn in resale markets resulting from the COVID-19-related shake-up is expected to continue to boost activity above what was normal before COVID-19,” stated the report.