Home Costs in Canada Reach a New Record: Current Scenario and Predictions.

  • by Amy
  • May 1, 2022

The year 2022 has witnessed several instances of the rise in prices of housing units in Canada. Considering that the year 2022 has just begun, the first three months saw the prices reach a new benchmark, especially in the Toronto area. The price of the average Canadian housing unit hit a new benchmark, reaching the $800,000 mark. It seems that for the first time in February 2022 the pricing of the homes hit a new record. However, few experts and critics in the previous year predicted that the housing market in Canada had already reached its highest mark. According to some, the housing market was supposed to cool down. Did this really happen? Read more to learn more about the situation.

It has been a tough and harsh period from 2020 to 2022 in Canada and its housing industry. From small to large housing units in urban regions to even minor rural neighborhoods, the sales, and prices of houses have been increasing to unparalleled heights. There are numerous factors that led to this housing crisis in Canada, they include low-interest rates, increasing demand, reducing supply, and more. With the onset of the coronavirus pandemic, numerous people estimated the collapse of the housing crisis, but that was not so. The housing industry grew even more intensely which affected the suburbs, small towns, and the cottage industry. 

In the year 2020, a small home in the area of Toronto reached the housing market value of about $1 million and sold for around $800,000. The house was a tiny unit comprising one bathroom and two bedrooms. The house was located on Euclid Street in Little Italy. The tiny housing unit went up for sale in the month of July. It received loads of attention due to its high cost. The reason for its high asking price is probably because of its location and features. The house also has a detached garage. It is located near stores, restaurants, parks, shops, bars, schools, transit stations, and more. The house is a tiny bungalow that was advertised as a ‘one of a kind’, ‘unique sized’, ‘numerous avenues’, and ‘rare housing unit’ situated in the heart of Toronto city. 

According to the data given by the Canadian Real Estate Association, homebuyers across all of Canada can start to expect prices to rise to $816,720- up 20% from the same period the previous year. That is an estimated 3.5% boost from January onwards. This data is in spite of the fact that recently the housing market is, at last, enjoying some much-needed housing supply. It seems that house buyers are beginning to purchase. A total of around 77,350 new listings have reached the housing market in just one month. This turnout has led to an enormous increase of about 23%, which is a turnover from the 10% decrease witnessed in the month of January.

It seems that the coronavirus pandemic has also led to the high prices in the Canadian housing industry. According to the data given by the Canadian Real Estate Association, numerous housing units were sold in July 2022 that any other month that year. The sales in July went up to approximately 62,300 which reached the highest sales in the year on record. Due to the heavy demand amongst homebuyers, the prices reached a whole new level. The sales activity in the month of July 2020, moved up 30.5% as compared to the sales in 2019 in the same month. 

Coming to the year 2022, the increase in homebuyers and their purchases helped relax the harsh and tough situation in the housing market in the past few months. The Greater Toronto Area, Calgary, and the Fraser Valley region had the highest demand for newly constructed listings for sale. The demand for newly constructed housing units amongst buyers was still prevalent as dozens of buyers came up to purchase the recently-available listings. The number of houses and units that were traded in only the last month was around 58,200. It went up 4% from January but was still behind an 8% decrease as compared to previous years' February's historical benchmark activity. The Canadian Real Estate Association reported that sales of housing units were up 60% in all markets. There was a large growth in the regions of Calgary and Edmonton, especially in the Greater Toronto Area. 

By observing the interior of the Canadian housing market or Canadian real estate market, we can examine the individual performances of different markets:

  • Edmonton- Sales of residential units: -14% and the benchmark cost: +2.6% to $1,152,600
  • Vancouver- Sales of residential units: +17% and the average cost of residential units: -0.4% to $389,773.
  • Halifax- Sales of residential units: -12% and the average cost: +2.57% to $363,300
  • Toronto- Sales of residential units: -12% and the average cost: 0% to $1,090,992
  • Montreal- Sales of residential units: -14% and the costs for single family house: +3% to $496,000

Due to the boost in purchases and supply of housing units, the Canadian Real Estate Association had to alter its prediction for the years 2022 and 2023. The association expects a number of houses to be sold this year, which would be almost the second highest in terms of purchases. 2023 is expected to be the third-highest year on record. The price is expected to increase annually, before rising even more in the year 2023. Other factors that might alter the sudden change in the housing market include changes in fuel prices, Russian Ukraine issues, housing policies, inflation, and more. 

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