Average Canadian house expected to hit $620K next year, real estate group says

The national average house price is expected to increase by 9.1 per cent — to $620,400 — in 2021, the Canadian Real Estate Association (CREA) said today.

Shortages of supply, particularly in Ontario and Quebec, are expected to result in strong price growth, while Alberta and Saskatchewan are anticipated to see average prices pick up following several years of depreciation, the group said.

"Current trends and the outlook for housing market fundamentals suggest activity will remain relatively healthy through 2021, with prices either continuing to climb or remaining steady in all regions," CREA said in a news release.

CREA, which represents more than 130,000 real estate agents across the country, also reported that national home sales continued running at historically strong levels in November, with sales up 32.1 per cent from November 2019.

So far this year, some 511,449 homes have traded hands over the Canadian MLS Systems, up 10.5 per cent from the first 11 months of last year.

"Many Canadian housing markets continue to see historically strong levels of activity, so much so that a new annual sales record this year is looking more likely every day," CREA chair Costa Poulopoulos said in the statement.

Robert Kavcic, a senior economist with BMO, said the housing market should remain healthy in 2021, even if sales and housing starts back off from current heated levels 

"Markets outside the core of the major cities remain extremely tight, and price growth should carry into 2021," he said in a commentary. "It remains to be seen how the ravenous acquiring of rural/vacation properties plays out later in 2021 and into 2022, assuming the [COVID-19] vaccine is effective. It would be reasonable to expect those markets to plateau or even give back some (but not nearly all) of the recent price gains."

Housing starts show increase

In a separate news release, Canada Mortgage and Housing Corp. (CMHC) reported a 14.4 per cent jump in housing starts in November over the previous month. 

CMHC said the seasonally adjusted annualized rate of housing starts for all areas in Canada was 246,033 units in November, up from 215,134 units in October. 

"While other parts of the economy are being gripped by the second COVID wave, housing starts shrugged off any challenges and re-accelerated in November," said Royce Mendes of CIBC Economics.

He said the November figure was not only the second highest this year, it was the second highest monthly reading since 2017. It also beat forecasters' consensus projection of roughly 213,000.

Starts of multi-family units drove November's increase. CMHC said multi-family starts in urban centres increased by 22.5 per cent to 177,661 units, while single-detached urban starts decreased by 3.8 per cent to 55,445 units.

National rural housing start were estimated at a seasonally adjusted annual rate of 12,927 units last month.