Canadian home prices rising by $7,376 per month
February 10, 2021
Prices have increased by 20 to 30 per cent in a number of markets across Canada in the past year, based on data from the Canadian Real Estate Association (CREA).
According to the CREA, using composite benchmark prices, the typical home increased in value an average of $7,376 every month between January 2020 and January 2021—$88,519 for the year, or nearly $34,000 more than Canada’s average annual household income.
In Metro Vancouver, the housing market is so hot that detached-house prices are rising by nearly $8,000 per month. Some municipalities—including Vancouver, Burnaby and West Vancouver—saw median house prices increase by $200,000 to $590,000 in the past 12 months, according to data from the Real Estate Board of Greater Vancouver.
On the West Side of Vancouver, the largest real estate division in the city, the average price of a detached house sold in January 2021 was $3.71 million—$490,000 higher than the price 12 months earlier, reports Dexter Associates Real Estate of Vancouver.
While home sellers are likely happy, the accelerating price hikes—many smaller Canadian markets are seeing increases that are outperforming even Vancouver—have raised concerns that Canada’s economy has become too reliant on the performance of residential real estate.
In the third quarter of 2020, gross residential investment surged to an unprecedented $160.2 billion, according to Statistics Canada. This represented an increase of almost 9 per cent over the previous record of $147.6 billion at the end of 2017.
Housing accounted for 37 per cent of overall investment in Canada in the third quarter of 2020, while business spending on machinery, equipment and intellectual property dropped to 28.2 per cent, the highest and lowest levels, respectively, since the first quarter of 1993.
“These numbers are symptomatic of an economy on life support,” said Vancouver real estate professional and commentator Steve Saretsky.
“Why start a business when you can get rich by purchasing a home or two? Look around you. Businesses are suffering while house prices continue to surge higher,” he said.
But, as Dexter Associates partner Kevin Skipworth explained, buying a home has traditionally been a route to financial security for the typical Canadian family.