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Average home price hit record $816,720 last month as supply began to rebound: CREA

The Canadian Real Estate Association said the national average home price climbed by more than 20 per cent since last year to hit a record $816,720 in February, driven by exceptional growth across the country.
The Canadian Real Estate Association says February's national home sales ticked up by 4.6 per cent from the month before as supply slowly returned to the market, but sales were still down by more than eight per cent since last year. A real estate sold sign is shown in a Toronto west end neighbourhood May 16, 2020. THE CANADIAN PRESS/Graeme Roy

The Canadian Real Estate Association said the national average home price climbed by more than 20 per cent since last year to hit a record $816,720 in February, driven by exceptional growth across the country.

The growth in home prices has come as people flocked to suburbs and rural regions to buy more spacious homes they could work remotely from, but that has also not dampened demand in the Greater Vancouver and Toronto areas.

The average price excluding two of the most expensive and active markets in the country drops by about $178,000 but it still increased 21 per cent to $638,958, from $589,490 a year ago.

The steep price increases offered a window into a heated real estate market that has seen the cost of buying a home soar, even over the course of the COVID-19 pandemic. 

"Every property that you sell, especially if you're on the listing side, you think we're going to start to see some kind of normality from these numbers, but I feel like every property we sell, it still surprises us," said Amy Youngren, founder of Toronto real estate firm North Group.

"Sellers are just in the most phenomenal position right now."

Robert Kavcic, BMO Capital Markets' senior economist, made a similar observation. He pointed out that the aggregate composite home price index was up 3.5 per cent on a year-over-year basis last month, the strongest monthly gain on record.

"That blows through the pace seen a year ago, and also the fastest clip [since] the early-2017 period," he said in a note to investors.

"Prices are going parabolic at a near-50 per cent annualized clip, expectations have rooted, investors are driving most of the incremental demand, and Canadians are buying pre-sale condos halfway across the country."

In recent months, prices have been driven upward by fierce bidding wars coupled with a lack of homes being listed as people wait for the lifting of pandemic restrictions and fear of not finding another affordable place to live when their property sells.

"Not everybody has access to unlimited money," Youngren said. "Not everybody has access to just pay whatever number … and be prepared with cash or financial support from family or whatever."

CREA predicts the national average home price will reach $786,000 this year, up 14.3 per cent from $687,873 in 2021. It expects the average to rise to $810,934 in 2023.

The full-year numbers are lower than the February average because they account for seasonal and regional trends, and CREA believes the current pace of price gains is likely temporary.

CREA predicted in December that prices would hit an average $739,495 this year, but upped its forecast to reflect an "unprecedented imbalance" of housing supply and demand. It has cautioned that the forecasts are "conservative" given recent surges in prices.

However, Youngren sees some small signs of optimism on the horizon for those buyers. In the last few weeks, she noticed showings have been down and fewer bids are made on offer nights, which typically indicate cooling.

The association also detected a rebound in new listings, which climbed by more than 23 per cent on a seasonally-adjusted basis to 77,352 last month from 62,539 in January.

On a non-seasonally-adjusted basis, listings reached 69,744, a roughly one per cent hike from 68,981 in February 2021.

"As expected, after a bit of a lull in January, we saw the first batch of spring 2022 listings come to market in February, and they were quickly scooped up by buyers," said Cliff Stevenson, CREA's chair, in a news release. 

"It’s unclear if this is the beginning of a re-emergence of some of the many would-be sellers who have been dormant for the last two years, or if the supply will fade towards the summer like it did in 2021."

The change of course being seen in new listings came as seasonally-adjusted home sales in February ticked up by 4.6 per cent to 58,209 last month from 55,654 in January.

Non-seasonally-adjusted sales totalled 49,403 in February, a more than eight per cent fall from 53,806 during the same month last year.

CREA believes national home sales for the full year will drop eight per cent from 2021 to 612,800 and then edge back a further 2.7 per cent to 596,150 in 2023 — still the third-best year on record. 

It expects this easing to be most prominent in British Columbia, Ontario and Quebec and thinks Alberta and Saskatchewan will buck the trend with moderate sales gains in 2023.

This report by The Canadian Press was first published March 15, 2022.

Tara Deschamps, The Canadian Press