Canadian home prices rise 25% in November to hit record high - The Globe and Mail

The pandemic’s real estate boom has been mostly driven by buyers seeking bigger properties in more affordable cities.Christopher Katsarov/The Globe and Mail

Canadian home prices hit a fresh high in November, with values continuing to accelerate as buyers competed for houses throughout most of Ontario and B.C.

The national home price index, which adjusts for pricing volatility, rose 2.7 per cent to $790,600 from October to November on a seasonally adjusted basis, according to the Canadian Real Estate Association or CREA. That marks the second straight month of gains at that elevated level.

Compared with last November, the home price index (HPI) across the country is 25 per cent higher, a record year-over-year price jump. In Ontario, the HPI is up 30 per cent, with values soaring in the province’s most expensive region of Toronto.

Currently, there are 1.8 months of inventory remaining, or the amount of time it would take to sell all the listed properties if the pace of sales remained the same as November. That ties with March of this year for the lowest level on record. The long-term average has been just over five months.

Even though more homeowners listed their properties for sale in November than in the previous month, the market conditions are similar to March of this year, when prices were spiking and economists were calling on policy makers to break the market psychology and the belief that prices will only rise further.

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Since March, the country’s bank regulator and federal finance department have made it slightly harder for borrowers to qualify for a mortgage from a bank. The Bank of Canada has warned borrowers that interest rates will rise at some point, while the federal mortgage insurer, Canada Mortgage and Housing Corp., has said that the market is overvalued and overheated, and at risk of a downturn.

However, homebuyers have been undeterred by the warnings and have managed to deal with the tougher mortgage stress test, which requires borrowers to prove they can make their home-loan payments at an interest rate of 5.25 per cent and not at their mortgage contract’s actual interest rate. Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, is set to announce on Friday whether it will change the mortgage stress test requirements.

“We called for a response early in the year and here we are with prices up another 30 per cent in some markets. The market clearly needs, as it did back then, higher interest rates,” said Bank of Montreal senior economist Robert Kavcic, who had been one of the loudest voices calling on policymakers to act.

The pandemic’s real estate boom has been mostly driven by buyers seeking bigger properties in more affordable cities. That has propelled prices higher in smaller cities that have traditionally been unaccustomed to strong demand. In the Bancroft area in Ontario’s cottage country, for example, the HPI is nearly 50 per cent higher year over year.

Last month was no exception to the trend. Smaller cities and regions such as Chilliwack and Fraser Valley in B.C., as well as Brantford, Cambridge and North Bay in Ontario, continued to see prices increasing at a faster pace than the rest of the country. In Cambridge, the typical price of a house is now $100,000 higher than August, according to the HPI.

Now, the Toronto region is seeing values jump significantly. In the Oakville-Milton area, just west of the city of Toronto, the typical price of a house reached $1,645,100 in November. That is $200,000 higher than in August, according to the HPI. In the Greater Toronto Area, the typical price of a single-family house was $1,403,800 last month, a $145,000 increase over August.

Across the country, there were 54,222 home resales in November, according to CREA. That is slightly higher than in October on a seasonally adjusted basis and similar to last November.

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https://news.google.com/__i/rss/rd/articles/CBMibWh0dHBzOi8vd3d3LnRoZWdsb2JlYW5kbWFpbC5jb20vYnVzaW5lc3MvYXJ0aWNsZS1jYW5hZGlhbi1ob21lLXByaWNlcy1yaXNlLTI1LWluLW5vdmVtYmVyLXRvLWhpdC1yZWNvcmQtaGlnaC_SAQA?oc=5

2021-12-15 22:57:06Z
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