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Canadian Real Estate Prices Rise By Tens of Thousands Just Last Month – Better Dwelling

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Canadian real estate prices are making huge leaps higher, and not just in big cities. Canadian Real Estate Association (CREA) data shows prices hit a record in February. Rapid price growth is nothing new, but where it’s occurring is. Big cities, that typically lead the market, are seeing prices rise quickly. However, it’s nothing compared to the growth in Canada’s small towns.

Canadian Real Estate Prices Rise Over $22k In A Month

A typical home in Canada, known as the benchmark, is rising much faster than incomes. The national benchmark reached $698,500 in February, up 3.35% ($22,641) from the month before. Compared to the same month a year before, prices are now 17.02% ($101,593) higher. Last month, banks warned home prices were beginning to rise faster than household incomes. Now they’ve cleared that barrier by a country mile.

Canadian Real Estate Monthly Price Change

The monthly change in price for a benchmark home in Canadian dollars in February 2021. Source: CREA, Better Dwelling.

Small Towns In Southern Ontario Lead Growth

Most of the biggest monthly gains were in Southern, Ontario, but a maritime city topped the list. Moncton saw the largest percent increase, with a benchmark price of $251,000 in February. This was up 6.1% ($14,431) from the month before. Barrie was in second at $678,100, up 6.05% ($38,685) over the same period. Hamilton’s in third with a benchmark of $831,400, up 5.67% ($44,611) from a month before. The last one also tops the list of growth by sheer dollar amount for the month. 

Only One Canadian Real Estate Market Saw A Loss

Only one real estate market saw a decline, and it also happens to be in the Maritimes. St. John’s, Newfoundland saw the benchmark fall to $265,200 in February, down 1.52% ($4,093) from a month before. The market did manage to squeeze out a gain of 2.73% ($7,048) from the same month a year before. That also makes it the slowest moving growth on an annual basis. To be clear, that’s a healthy amount of growth for home prices. It may be problematic when it’s the slowest growth.

Biggest Annual Price Gains In Southern Ontario

Small towns in Southern Ontario saw the biggest annual percent gains. Tillsonburg’s benchmark reached $476,000 in February, up 39.79% ($135,489) from the same month last year – the biggest gain of any market. Lakelands was in second, with a benchmark of $513,800, up 37.11% ($139,064) over the same period. Woodstock came in third, with a benchmark of $520,400, up 36.49% ($139,127) from a year before. If you’re from BC and have never heard of any of those places, don’t worry. Most people from Toronto probably couldn’t find them on an unmarked map. Yet, at least. 

Canadian Real Estate 12-Month Price Change

The 12-month change in price for a benchmark home in Canadian dollars in February 2021. Source: CREA, Better Dwelling.

Toronto Real Estate Is The 15th Fastest Growing Market

Toronto isn’t on either end of the price spectrum for once. The benchmark price reached $973,100 in February, up 3.41% ($32,088) from a month before. Compared to a year before, prices are 14.72% ($124,861) higher. The city ranks as the 4th fastest growing for prices on a monthly basis, and 15th on an annual. Prices are growing extremely fast, it just seems slow in the context of the rest of Canada’s markets. 

Vancouver Real Estate Ranks 36th For Price Growth

Greater Vancouver real estate was much closer to the bottom of growth, but still not at an extreme. The benchmark price reached $1,089,300 in February, up 1.66% ($17,787) from a month before. Compared to the same month last year, prices are 6.9% ($70,310) higher. The market ranks 33rd for the monthly percentage increase, and 36th for annual. Ranking near the bottom doesn’t quite give justice to how big these increases are. These are rapid price gains, just low compared to the rest of Canada right now.

Canadian real estate prices increased at one of the fastest paces ever, and it didn’t matter where. On average, a typical home made a monthly increase over 3x higher than incomes. Regardless of low interest rates and a lack of inventory, this is difficult to see persisting for long. BMO recently warned if prices increase at last month’s pace, it would be a classic bubble by next year. What if they rise even faster than last month? 

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Canada housing starts fall 19.8% on month in April

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Canadian housing starts fell 19.8% in April compared with the previous month on a sharp decline in multiple urban starts, data from the Canadian Mortgage and Housing Corporation showed on Monday.

The seasonally adjusted annualized rate of housing starts fell to 268,631 units from a revised 334,759 units in March, Canada‘s national housing agency said. Analysts had expected 280,000 unit starts in April.

 

(Reporting by Julie Gordon in Ottawa; Editing by Gareth Jones)

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Towns grapple with big-city-like real estate boom

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Real Estate Sales In September

Small cities and cottage towns across Canada are grappling with the fallout of surging popularity amid the COVID-19 pandemic, as urbanites flock in, driving up home prices with big-city-style bidding wars and putting pressure on municipal services.

The growing demand has led to some small Canadian communities seeing house prices jump more than 75% in one year.

“The small towns are getting hit hard. They’re getting interest like they’ve never had before,” said Stephan Gauthier, an Ottawa real estate agent who is increasingly helping clients buy in villages well outside the city. (Graphic: Annual price gains in select Canadian cities and towns,)

The eye-watering gains in Canada are mirroring similar trends in New Zealand, Australia and Britain, where rural home prices are accelerating faster than in cities as avid buyers rush to snatch up cheaper small-town properties and as white-collar workers bet on being able to work from home even after the pandemic ends.

The boom in Canada has builders flooding into smaller communities. More homes mean more demand for drinking water and wastewater treatment, forcing some towns to fast-track expensive infrastructure projects.

For locals, the influx of city people is a double-edged sword. New residents are breathing life and diversity into places where – before the pandemic – schools were closing and many businesses struggled through the winter.

But the soaring housing prices are locking locals out of the real estate market, and competition for rentals means many people can no longer afford to live locally, leaving small-business owners scrambling for staff.

Even existing homeowners, whose home values have risen sharply, are unable to move up the property ladder as the gap to the next rung widens past their means.

“You want people to come here and help build the community. But at what cost to the people who have been here for literally generations?” said Nancy Cherwinka, who lives in Prince Edward County, a peninsula in Lake Ontario known for its wineries and beaches.

MOVE TO THE COUNTRY

Roughly 75,000 people left Toronto and Montreal – Canada‘s two biggest cities and main COVID-19 hot spots – for other parts of their respective provinces of Ontario and Quebec in the year up to July 2020, the largest such migration since at least 2001, according to the latest Statistics Canada data.

For Prince Edward County, about 200 km (125 miles) east of Toronto, that migration has helped drive house prices up 78.5% on the year, putting ownership out of reach for many local residents. The average selling price of a home there in April was C$740,112 ($610,000).

“Now the rental market has gone nuts,” said Chuck Dowdall, executive director of the Prince Edward County Affordable Housing Corporation, with potential home buyers giving up on buying, and renting instead.

The rental crunch is making it difficult for small businesses to hire and retain staff, even if they pay above minimum wage.

It is a struggle that Samantha Parsons and her husband, owners of Parsons Brewing Company, know well. They built a small bunkhouse next to their brewery to house workers temporarily and have even had staff stay with them. This year, they arranged a lease for a three-bedroom home for employees.

“You have to be creative,” said Parsons, adding they still lose out on talent because of the housing challenge.

IF YOU BUILD IT

To tackle the housing crisis, Prince Edward County is planning for more than 3,000 housing starts through 2026, including dozens of below-market rental units.

That boom is putting pressure on municipal services, notably aging water infrastructure. The region is hastening plans to spend C$68 million ($56.2 million) on its water and wastewater system, with developers on the hook for much of the bill.

New-home construction is also surging in other smaller centers across Canada, with rural starts in the first quarter of 2021 at their highest point since 2008. (Graphic: Canada rural housing starts, )

In Collingwood, Ontario, a four-season resort town about 145 km (90 miles) northwest of Toronto, the population boom has forced the community to pause all new-home construction while it sorts out how to address its critical water shortage.

In Nelson, a former mining town in British Columbia’s Kootenay mountains, a pandemic-driven explosion of infill and coach housing is forcing the small city to expand its wastewater and water infrastructure sooner than planned.

“We were heading down that road anyway … but now it’s been accelerated. So that’s going to put us a little bit on our back foot,” said Mayor John Dooley, adding that the sewage treatment plant alone will cost about C$25 million.

Dooley said Nelson hoped to split the costs with the province and federal government.

Back in Prince Edward County, about half the children at a rural daycare are new to the community since the pandemic. At the sister daycare in town, a quarter of students are newcomers. Enrollment at local schools is also up, reversing a trend that had led to closures in previous years.

More young families living in the community will ultimately be beneficial, said Cherwinka, as long as they stick around once life goes back to normal.

“Hopefully they stay, hopefully it’s not just a pandemic solution,” she said. “Hopefully it’s long term.”

($1 = 1.2092 Canadian dollars)

 

(Reporting by Julie Gordon in Ottawa; Additional reporting by Andy Bruce in London; Editing by Peter Cooney)

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Canadian home prices, sales to moderate but remain high

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By Julie Gordon

OTTAWA (Reuters) -Canada’s home sales and price growth will moderate over the coming years from the unsustainable levels of 2020, but remain elevated, with housing starts expected to stabilize by the end of 2023, the national housing agency said on Thursday.

While the pace of price growth is expected to ease as mortgage rates increase and buyers face already high prices, home prices could climb 14.4% on average in 2021, the Canada Mortgage and Housing Corporation (CMHC) forecast in its spring market outlook.

Its report does not forecast any annual price declines in the 2021-2023 period.

“Economic conditions are expected to return to pre-pandemic levels by the end of 2023 … This includes the pace of home sales and prices, which we expect to see moderate from 2020 highs over the same period,” Bob Dugan, chief economist at the CMHC, said in a statement.

Dugan warned that significant risks that could impact the forecast include the path of the COVID-19 pandemic, a faster-than-expected increase in mortgage rates, and a reversal of the urban exodus that has driven up prices outside large cities.

The CMHC said last May that it expected housing starts, sales and prices to plunge amid the pandemic, with prices not expected to recover to pre-pandemic levels until 2022.

But home sales and prices soared to record levels, with the average selling price up 31.6% in March 2021 from a year ago. Housing starts also hit a record high in March.

Rental demand is also expected to recover through 2023 as immigration and inter-provincial migration resume, and as students return to campus, the agency said.

(Reporting by Julie Gordon in OttawaEditing by Paul Simao)

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