Canadian real estate sales may be slowing, but home prices are still rising at a mind-blowing rate. Canadian Real Estate Association (CREA) data shows the benchmark, or typical home, price hit a record in April. There was a little more inventory last month, but that didn’t do much to slow price growth. A typical home across the country jumped by $18,000 over just the month.
Canadian Real Estate Prices Jump $18,000
Canadian real estate prices are soaring, with the typical (benchmark) home reaching a new all-time high. The composite benchmark reached $731,600 in April, up 2.54% ($18,100) from a month before. Compared to the same month last year, prices are now 23.12% ($137,400) higher. Homeownership has a steep entry point across the country now, not just in big cities.
The monthly trend is cooling, while the annual trend is accelerating. Home prices made a monthly increase about two-thirds the size of the month before. Still, the annual increase made a new record high, surpassing the history of the benchmark. There’s some base effect, but don’t let that discount the recent acceleration of home prices. The recent month-over-month gains have been huge by themselves.
Canadian Composite Benchmark Change
The 12-month change of a typical home price across Canada, in Canadian dollars. Source: CREA; Better Dwelling.Canadian Real Estate Markets See A Monthly Climb of Up To $43,000 In April
The largest monthly dollar increases weren’t in Toronto or Vancouver but in the region’s far suburbs. Southern Georgian Bay reached a benchmark price of $635,600 in April, up 7.47% ($43,100) from a month before. It was the biggest gain in the country. Fraser Valley followed with a benchmark price hitting $1,020,700, up 4.03% ($39,500) over the same period. Kawartha Lakes came in third at $591,200, up 6.83% ($37,800) from a month before. Each one of these markets saw a monthly price increase nearly the size of the annual after-tax income of a median worker.
Canadian Monthly Home Price Change
The monthly change in home prices for April 2021. Source: CREA; Better Dwelling.Home Prices Increased By Up To $245,000 Over The Past Year
The largest annual dollar increases were located in cities surrounding Greater Toronto. Oakville printed the biggest gain with a benchmark hitting $1,342,300 in April, up 22.37% ($245,400) compared to the same month a year before. Hamilton was in second with a benchmark of $866,900, up 32.94% ($214,800) over the same period. Kitchener-Waterloo came in third $742,800, rising 40.42% ($213,800) from last year. The next 13 biggest annual gains are also seen in Southern Ontario real estate markets.
Canadian Annual Home Price Change
The annual change in home prices for April 2021. Source: CREA; Better Dwelling.Greater Toronto Real Estate Prices Are Soaring, But Underperforming
Home prices in Greater Toronto are rising incredibly fast, but in this environment, it isn’t even close to the top gainer. The benchmark home in the region increased to $1,025,200 in April, up 1.75% ($17,600) from the month before. Compared to a year before, prices are 17.83% ($155,100) higher. Even with those incredibly large numbers, the monthly dollar gain ranked 23rd, and the annual 21st.
Vancouver Real Estate Prices Increased $29,000 Last Month
Greater Vancouver real estate also experienced monster dollar gains, that didn’t register at the top. The benchmark price hit $1,152,600 in April, up 2.61% ($29,300) from a month before. Compared to a year before, prices are 12.03% ($123,800) higher. This was the 8th largest dollar gain for both the monthly and annual increase. Prices jumping nearly $30,000 in a month isn’t enough to reach the top of the chart.
Southern Ontario typically gets all of the attention, but home prices are growing everywhere. Even regions where the population is shrinking have seen home price growth. Weird things happen when the government gives you cheap debt and says they won’t let prices drop.
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Glad I bought a condo, and will never have to work again. Bring me my equity, peasants.
Genuinely can’t tell if you’re joking at this point.
Is everyone really assuming wage inflation is going to make up the difference here? 20 year old kids making $300,000/year to live 3 hours from the city?
History shows prices adjust or wages adjust. In both cases older home owners get more than they bargained for, because their fixed income doesn’t rise as much as income does for the youngest adults, and they end up having to live off their home equity.
In a less than ideal situation though, demographic shift moves. I believe this is why the CMHC had been saying they think the Prairies are going to be the growth market, and Ontario is past its population peak.
A recent article highlighted an interview with Adam Vaughan:
“Housing Adam Vaughan has made a slip of the tongue, on a recent episode of “The Agenda with Steve Paikin.” Vaughan admitted that the market is designed for foreign investors, and doesn’t meet the needs of Canadian income earners.”
Not surprised given this has been happening for a while in BC, and seems to have spread across North America (big problem in the US too). Sickening our governments are standing by doing absolutely nothing. They could mandate you must be a Canadian citizen for residential purchases, or tax brackets for owning multiple properties, or a plethora or other options. Instead, they do nothing. They are failing miserably at their job of representing Canadians and should be removed from office. I feel for anyone in this country trying to get by on honest work and purchasing a home for themselves / family, especially if they don’t have outside help for down payments.
https://www.thestar.com/opinion/contributors/2021/05/17/the-bank-of-canada-is-charting-a-path-toward-a-real-estate-crash.html
As absurd as housing has become in this country, what’s most troubling to me is that despite the risks, the Feds are fine with it and actually using it as a tool to hit GDP and inflation targets. If you strip out this one sector from Canada’s economy, am I wrong to think we would already be in a deep recession?
I guess everyone’s supposed to start tapping their HELOCS and start spending to get the economy going.
You hit the nail on the head. PM Trudeau refuses to slow immigration or bring back manufacturing. Infinitely expanding labour pool and non existent value added manufacturing means wages will never meaningfully increase. Only way to promote spending is for BOC to inflate every house to a trillion. #tittmacklem
Except Canada didn’t even need immigrants for home prices to make their biggest climb yet. It did it with just a lot of credit, and the belief that some sucker will come after you and buy your home at a higher price.
Respectfully, I mentioned mass immigration as one of the reasons for little to no meaningful wage growth. I then laid the blame for housing inflation at the feet of the BOC. #tittmacklem.
I see this argument trotted out by people who lack critical thinking skills.
Mass immigration in ONE factor, but not the only one, in the housing bubble. Just because immigration briefly declined in 2020 and lower rates picked up the slack, doesn’t mean that mass immigration wasn’t (or isn’t) a factor.
You really think there will be no consequence for housing if Trudeau gets his wish and brings in 1.3 million people by 2023?
It seems I need a job only to qualify for a mortgage, my living expenses can easily be covered off by the yoy equity increase in the house and that too tax free.
Rob;
That’s already been happening in Canada for the past 5 yrs. It’s called Lifestyle Inflation, and has made Canada the most personally indebted country on the planet!
Oh how fortunate we are in Canada with exceptional BOC & Fed leadership …. where else in the world can you buy a house and live completely off the equity gain. No real need to work (except for renters, of course). Soon every Canadian homeowner will join that illustrious millionaire status – it does indeed look like the perfect model and what could go wrong, right?