The last quarter of the year is traditionally the slowest in real estate. But last year’s record sales and prices defied tradition to the last, according to the Royal LePage House Price Survey.
It shows that more than half of Canadian housing markets, 61 per cent, saw a quarterly increase of 3 per cent or more in the last quarter, including a 4.1 per cent increase in the Toronto area. Among the 62 regions surveyed, 87 percent experience double-digit annual house price growth in the fourth quarter of 2021.
That bodes well for a busier-than-usual spring, CEO Phil Soper said. Thanks to the reinstatement of pandemic restrictions, he expects next season to look a lot like a less hectic version of last year: “Too many buyers, not enough homes, multiple offers, upward pressure on prices.”
Some of that would have happened regardless given the lack of supply and rising demand for properties, he said. But if people were suddenly free to go back to restaurants, the office and their usual activities, “savings would start to return to normal and you wouldn’t have cash burning a hole in your bank account, which seems to be finding its way into renovations or new properties, if you can find a home.”
Soper said this winter’s market feels calmer than last year.
“There was a strange desperation in the air as 2021 began. People were going out in the middle of snowstorms to see cabins that weren’t winterized because they felt that if they didn’t, the door would close on the chance of a lifetime.” , He said.
Royal LePage forecasts a 10.5% increase in home prices nationally by 2022: 11% for the Toronto area.
Soper says that an anticipated increase in interest rates this year will not be enough to deflate the market.
“We are going from almost free money to very low interest rates. Even a material increase in the cost of borrowing will leave us in very low interest rate territory,” he said.
With the introduction of the mortgage stress test since the last expansionary period of 2016-2017, consumers have a buffer zone, since The mortgage stress test requires loans to qualify at a higher rate than the loan they actually need to repay.
“Somewhere in the 90 per cent range of new mortgages issued last year, people had to qualify at the full 5.25 per cent that the Bank of Canada specifies, which is more than twice the best rates that can get. So we’re seeing… a large group of buyers that have proven capable of handling these increases,” he said.
When the market corrects, Soper expects in the second half of this year or next year, he says the change will be muted by new household formation by newcomers and adults moving out of their parents’ homes, the housing shortage and the reality that people will continue to need a place to live, whether they rent or buy.
The home price survey released on Friday is based on proprietary data.
It shows that the average GTA home price rose 17.1 percent year over year in the fourth quarter to around $1.12 million. The percentage increase matches the national average, but the Canadian average price is much lower, at $799,000.
The aggregate price of housing, including all houses and condominiums, was less dramatic in the city of Toronto than in surrounding communities. While Toronto homes rose 8.1 percent year over year to $1.4 million in the fourth quarter, Markham, Oakville, Oshawa and Richmond Hill saw year-over-year median price increases closer to 30 percent.
The median price of a condo in the GTA rose 14.8 percent year over year to $665,400 in the latest quarter.
Brampton posted the highest GTA profit, up 29.5% in the fourth quarter compared to last year, with an average price of $1.08 million.
It also showed the largest annual increase in single-family homes, the most valued property of the pandemic. The median home price in Brampton in 2021 was $1.28 million, an increase of 34.3 percent from 2020. Milton followed with a gain of 29.9 percent to $1.34 million; Vaughan, up 28.9 percent to $1.6 million; and Oshawa, where single-family homes cost 28.7 percent more last year at $906,600.
Within Toronto city limits, where prices still top most of the surrounding 905 at an average of $1.59 million last year, the annual increase was 12.5 percent.
Kingston posted the highest aggregate year-over-year home price gain of 38.1 percent. A home there that cost $523,000 in 2020 rose to $722,100 in 2021. A single-family home in Kingston soared 44.3 percent to an average of $780,600.
Reference-www.thestar.com