The Curious Case of Record-Breaking Canadian Home Sales in a Pandemic Year
Register Now01.05.21
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Buying
In 2016, home sales in Canada hit a record that was difficult for any of the subsequent years to beat. In the landmark year, 536,118 homes exchanged hands in Canada. And then came 2020, offering the worst the world has seen in recent years. There were complete lockdowns, economic activity slowed down, and anxiety rolled in.
Surprisingly, the same 2020 is giving 2016 a run for its money. With 511,449 already sold between January and November in 2020. The pandemic year is all set to take over the top slot for Canada’s highest home sales. It is only 0.3% behind the 2016 numbers. The home sale figures for 2020 are also a considerable 10.5% above the 2019 figures in the same period.
It is not just the number of transactions that are making a record in 2020. The price per unit has also seen positive growth. According to the CREA report, the average price of the resale homes was $603,000, which is easily 14% above the 2019 levels.
The average price is certainly affected by the expensive real estate in the markets of Toronto and Vancouver. However, these markets have always been attractive and a common denominator across different years. The 2020 rise in the average price of homes has another driver.
The primary driver of the increase is the low supply of units during 2020. Supply in real estate is measured in months of inventory in the market. It essentially reflects the number of months it would take to sell all the current listings in the market at the current rate of sale if no new listings are added.
Up to 4 months of inventory means that all the current listings will be cleared from the market in 4 months and depicts a seller’s market. This a market with a low supply of units, and whatever is available in the market is selling like hotcakes. Sellers have the edge in such a market.
According to CREA, the national real estate market is operating at 2.4 months of inventory. So, it is easy to tell that there is an acute shortage of housing units on the market, and with the demand not slowing down, the average home prices will stay up. The supply is even tighter in popular real estate markets. In fact, 21 markets have registered less than 1 month of inventory for November.
2020 started on an average note. As the year progressed, it was on its way to being one of the worst years for Canadian homeowners. However, once the lockdowns were lifted, 2020 has turned out to be a breakout year for Canada’s real estate market. It has become one of the significant indicators of the rebound path that the country’s economy is on.
Irrespective of the final figures of home sales, 2020 has set a positive tone for 2021. It would be interesting to see how the year and the homeowners will capitalize on the optimistic outlook to register even more incredible highs.
