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Canada housing market update - June 2021

In this article, we dissect the latest data from The Canadian Real Estate Associate (CREA). Per CREA, the MLS Home Price Index (HPI) is the most advanced and accurate tool to gauge home price levels and trends. The national benchmark price was $734,500 in June 2021, representing a month-over-month gain of 0.7% and a year-over-year gain of 24.4%.

The national benchmark home price is currently in the third-longest stretch of consecutive month-over-month gains since 2005 (earliest data available). The national benchmark home price hasn't had a negative month since April 2020 but has been decelerating for four straight months since the February 2021 peak, where home prices increased by 4.2% in a single month. The February 2021 peak looks fairly similar to March 2017, which ended up falling negative in the third month after the peak. Will July 2021 break the streak and see a negative month-over-month change?

While the national benchmark home price saw a 24.4% year-over-year increase, we see a wide range of gains when looking at individual cities. Every single city reported by CREA had a higher benchmark home price in June 2021 compared to June 2020. While the more expensive cities like Vancouver and Toronto had what would be considered strong price growth in a typical year, it was the cities in the mid-price range that increased most.

On a year-over-year basis, Bancroft has seen home prices grow the most, at an astonishing 64.1%. Bancroft continued this trend in June with a 7.2% gain, which on an annualized basis would be 114.9%. St. John's, Newfoundland home prices grew the least since June 2020, followed by cities in the prairie provinces. We are starting to see home prices decline in some areas, including larger cities such as Ottawa, Mississauga, and London.

Everyone talks about home prices in Vancouver and Toronto so in the above chart we looked at smaller cities only. Across the board, smaller cities that are sometimes hours away from a major metropolitan area saw the affordability landscape change dramatically since the beginning of the COVID-19 pandemic. Prices were starting to accelerate in the years prior but these cities have never seen a spike like this before.

In summary, while sales have slowed down and some cities are starting to see declining prices, homes are still up significantly year-over-year. At current prices, homes are far from affordable to the average Canadian in most cities across the country. With smaller cities seeing some of the highest price growth, the options for those looking to escape the large metropolitan areas are shrinking. Months-of-inventory has been trending upwards for three months but is still near historical lows, creating a strong sellers' market. Look for inventory to grow before we see a return to a balanced or buyers' market.


After reading this article:

  • Check out our revamped analytics platform, where you can find tools to help you plan for buying a home and visualizations for historical home prices, income, rent, and more.

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