Home ownership is the Canadian dream. We value the security and pride that comes with it, not to mention the solid financial returns enjoyed by those who are in it for the long haul. But increasingly, even short-term owners and investors have seen some impressive gains.
Very impressive, according to the latest data from the Canadian Real Estate Association. According to their January market report, the average Canadian home price rose almost 23 per cent compared to last year. That’s an increase of about $143,000 on the average home in Canada, which currently is around $622,000. This surpasses the average household income, and returns on most of types of investments. Needless to say, real estate is where it’s at.
Now, here are some more numbers homebuyers will want to pay attention to. Flash back to Economics 101, which taught us that rising commodity prices are the product of high demand and low supply. National home sales increased two per cent from December to January. On a year-over-year basis, sales were up 35 per cent. Meanwhile, new listings were down 13 per cent from the month prior. Currently, there are just 1.9 months of housing inventory – the lowest national level on record.
While existing homeowners are revelling in this strong seller’s market that’s dominating Canada, homebuyers will need a strategy – and thick skin! – to get through 2021. That means three things:
First of all, have a solid down payment. Prices are rising with no real end in sight. Homes in some of the countries hottest housing markets are selling well over asking price. Yes, interest rates are low right now, and are unlikely to increase until 2023. This will mitigate those high price tags, but the more you can pay up-front, the less interest you’ll pay and the better off you’ll be.
Second, have a good knowledge of the market. Pay attention to market reports from your local real estate board. Check the listings often, know what’s available and at what cost. An experienced real estate agent will go a long way to getting new listings in front of you as soon as they hit the market. Stay in touch and be accessible to your agent. In our office we are proactive and quick to connect with our customers at all hours of the day.
Last but not least, have the ability to “act fast.” If you’re hoping to buy a home (as so many other Canadians are) you won’t necessarily have time to see a few more listings, or to “sleep on it.” Under current market conditions, time is of the essence. Get organized and informed. Understand first and know what you want and ultimately need in a home, the various locations you’re considering, and have your paperwork in order, including your mortgage pre-approval. With all this in hand, you’ll be ready to act quickly when the right opportunity presents itself.
Most of Canada is a seller’s market. This was the case last year, despite the pandemic, and this is expected to continue in 2021 and beyond. Demand for homes will intensify as borders and businesses reopen ahead, and the federal immigration plan brings an additional 1.2 million people to Canada in the next three years. My best advice – buy your home, while you still can.
