Canada’s national association representing Realtors is forecasting big price gains… but those gains are lower than last month’s average price. The Canadian Real Estate Association (CREA) released a forecast with February sales data. The association sees absolutely mind blowing growth for home prices in every province. Just one minor detail most analysts didn’t catch. The big growth? It’s lower than last month’s prices, indicating things may cool later this year.
Canadian Home Prices Forecast 2% Lower Than Last Month
Canada’s average sale price is forecast to be much higher than last year. The average price is expected to reach $665,329 in 2021, up 16.5% from last year. In 2022, they see prices climbing an additional 2.1%, bringing the average to $679,341. This is huge price growth, especially at the national level. Advanced economies often enact cooling measures when home prices rise higher than 5%.
Canadian Real Estate Price ForecastThe forecast average sale price for 2021 and 2022, compared to the average sale price in February 2021. Source: CREA, Better Dwelling.
One thing that’s easy to miss in the ambitious forecast — it’s lower than today’s average price. The 2021 full year forecast is 1.88% lower than the average for February sales. The 2022 average is only 0.18% higher than February, showing virtually no growth. This is largely due to the expectation things will normalize and cool a little later this year.
Ontario Real Estate Prices Forecast Lower
In Ontario, the average sale price is expected to rise more than a fifth this year. The average sale price is expected to reach $855,218 in 2021, up 21.2% from last year. In 2022, they expect prices to rise another 3.9%, bringing the average to $888,658. It would have been way too lucky if it was $230 higher, I guess.
Canadian Real Estate Price Forecast ChangeThe forecast change in average sale price for 2021 and 2022, compared to the average sale price in February 2021. Source: CREA, Better Dwelling.
The rest of the year is forecast to average out lower than last month, with a more modest increase in 2022. The average sale price in 2021 is forecast to be 1.03% lower than it was in February. The forecast for 2022 is 2.84% higher than last month. Expect action to taper a little later in the year.
BC Real Estate Prices Will Still Be Lower In 2022
BC real estate is forecast to see double digit growth, but it will be slower than the national average. The average price is expected to reach $861,286 in 2021, up 10.2% from a year before. In 2022, they forecast prices will rise another 1.1%, to an average of $870,480. The average for 2021 is 2.98% lower than last month’s average, and 2022 is still 1.94% lower. This is one of the few provincial forecasts where the average is lower next year than in February. The only other province is PEI.
Quebec Real Estate Prices Expected To Move Much Higher
Quebec real estate is forecast to be an outlier, with prices much higher than last month. The average price is expected to rise to $439,396 in 2021, up 16.6% compared to last year. In 2022, the average is expected to rise another 5.3%, bringing it to $462,685. Compared to February, the 2021 total forecast is 5.06% higher. The 2022 forecast is 10.63% higher than the average that was reported last month.
CREA expects the market to be very tight in the first half of the year, due to low inventory and interest rates. Pressure on prices are expected to ease into the year, as the market is better supplied. Next year is forecast to be a fairly routine year, with much more typical and stable price growth.
The forecast isn’t a negative one, and they are saying they expect prices much higher than last year. Most of the growth appears to already be baked in. The view is similar to what banks and the government have been saying recently. Once the shift of demand to smaller regions normalizes, so should price growth. That’s probably really hard to believe if you’re trying to buy a home, and seeing annualized 1-month price growth at 40%.
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