Having median price gains in excess of $15,000 dollars for homes across the country would be an incredulous possibility to consider for most countries, but here in Canada there is a unique multi-way equation that is pushing up home prices unlike anywhere else on the planet and the stories of housing unaffordability in Canada are as real as they could ever be. Price gains are welcome news for homeowners and realtors working with them, but even these people know there’s a threshold for what can be considered beneficial without being too harmful to citizens of the country as a whole.
This is exactly the reality that’s occurring in Canada. We spent much of last year using this same communication channel to talk about how without addressing the supply / demand gulf all these sort-of measure to attempt to cool the Canadian real estate market are going to go nowhere, and that’s as true as ever based on data recently released that talks about how – based most on demand vastly outpacing supply for decades – the average price of a home in Canada went up $16, 700 in December 2021.
Further, prices overall are now showing the fastest annual growth ever, and economists and industry experts are pretty much all in agreement that this trend isn’t likely to be slowing down anytime in 2022 or the foreseeable future either. This is uncharted territory for realtors working in the industry in many ways, but one thing this always does is remove buyers that would otherwise be qualified from the market. If that make the business tough for new realtors then our online real estate lead generation service
Fastest All-Time Rise of Composite Benchmark Price
And that rather surprising number is not all – the composite benchmark price reached $798,200 in December, and if you compare it to the one for last year (2021) at the same time we are seeing prices now 26.6% higher. In a number value that’s around $167K more on average for a home.
Further the annual rate of growth for a benchmark home across Canada is now at an all-time high too. It went to 26.6% in December, that is a 1.3 point jump from the month before. It is also interesting to note that this all-time record pace of growth came after the Liberals’ vanity election in September and was primarily a function of Q4. Who knows what is to be read into that but the government’s semi-measures to reign in housing prices are what they are.
More short-term growth is expected too, according to analysts who benchmark growth rates with short periods of data. Let’s do that ourselves with the same 3-month annualized period that the Bank of Canada would have used for Q4 2021 and highlighting the most notable points.
- The 3-month (annualized) rate of growth cleared the 12-month trend for the first time in six months
- The 3-month rate hit 27.8% in December, 1.3 points above the 12-month rate
- First time since June 2021 that the 3-month accelerated at a faster pace than the 12-month one
Without sharp downward pressure, annual growth is likely to continue to rise.
Easy Money Continuing to Boost Demand
Yes, the BOC interest rate is expected to go up 6 basis points sometime this year. But that will not make much difference in the here and now, and some economists doubt it will even after that. There are plenty of reasons why that is, but let’s focus more on how low interest rates over the years have factored into this.
Long and short the low cost of borrowing money has lead to a tight market, and there is no tight market in the world with anything that will not promote price increased based primarily on competition for an insufficient supply of product. This is bang-on with where we are in Canada, and countering it is not something that’s going to be easily done.
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