Revised Forecast Now Expects Housing Prices to Rise 19.3% in 2021
Friday Jun 18th, 2021
While it might feel natural to blame COVID for the drastic changes felt in Canada’s housing market, the pandemic is not entirely at fault. As the Canadian Real Estate Association (CREA) recently pointed out, “COVID-19 supercharged trends that were already present.”
But as the pandemic took hold, household savings increased, and interest rates fell, boosting first-time home buying activity while existing owners began to relocate to areas offering more space to ride out the pandemic. As we all collectively know, these factors drove house prices higher, while supply fell to an all-time low.
Current trends and the outlook for housing market fundamentals suggest activity will remain strong through 2021, resulting in a record number of sales this year despite the slowdown that began in April.
CREA now predicts the national average home price for the year will increase by 19.3% to just over $677,775 in 2021 — up from its previous outlook for an increase of 17% over last year. At the same time, CREA says some 682,900 properties are forecast to trade hands, which the association says would be a record-setting result and an increase of 23.8% over 2020 — this is down from CREA’S previous forecast of 27%.
Strong competition between buyers is keeping intense upward pressure on property values at this stage.