The Pandemic Effect: A Two-Year Retrospective on Canadian Real Estate Prices

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For the past two years our news channels have been dominated by the pandemic and health emergencies throughout the country. This unprecedented event caused a ripple effect across many socio economic areas including real estate. Canadians from coast to coast have been, and continue to be, astounded with the rapid rise in real estate pricing and demand for housing both in busy urban centres and out towards both suburban and rural communities. During the immediate outbreak and initial lockdowns the housing market saw a decline in sales, listings and pricing as people stayed at home. No one, at that point, could have foreseen the frenzy to come.

In March of 2020, the housing market plummeted. Transactions stalled as all waited – glued to the breaking news. It was only a few months later that the bubbling demand added, what can only be described as rocket fuel, to the Canadian housing market. To get a snapshot of how market activity has changed in the 2 years since the start of the pandemic, Zoocasa used data from CREA to compare average home prices and sales between January of 2020 and February of 2022 in 20 real estate markets across the country. This analysis serves to provide a high-level overview of market dynamics and a broad perspective on market activity.

Across Canada, it is great to be a property seller

Canada has firmly sat in a sellers market for well over a year now, and 2022 has continued this trend. In January of this year, we started with a sales-to-new-listings-ratio (SNLR) of 90.2%. While February provided some relief for buyers, the SNLR still remained high at 72.9%. For reference, a sellers market constitutes any market with an SNLR of over 60%. Below 40% is considered a buyers market, and anything in between is a balanced market. In January 2020, Canada’s SNLR was 54.5%. This is generally more consistent with the long term average of this metric, which sits around 55%.

There are many factors as to why the SNLR has gone up over the past two years. . The importance of the home and how many purposes our homes have served made some sellers reluctant to put it on the market initially. Record low supply has led to an increase in bidding wars across the country. These were already prevalent in Vancouver and Toronto but towards the end of 2021 they became more commonplace in smaller areas as well. This resulted in homes being sold for a lot more than they were initially listed for. In Ottawa, for example, homes would sell for 27.88% more than they were listed for when we analyzed how much homes in Ontario were selling for over asking. Industry leaders are hopeful that more housing supply will come into play in the following months. As we move towards the Spring market there are indicators that suggest slight improvements towards a more balanced market. However, the strain on housing supply has been remarkably low for quite a while, which has contributed to rising costs in all markets.

How long can interest rates stay so low?

Canada has seen historically low interest rates for the last two years, which has also been a contributing factor in the inflating prices. As a result of the pandemic, interest rates were set at a 0.25% rate at the end of March 2020, a number only previously seen in the Spring of 2009 in response to the global financial crisis. These low rates gave buyers more incentive when it came to purchasing a home. Particularly in the last few months of 2021 and early 2022, knowing that the era of historically low interest rates would soon be coming to a close, buyer activity accelerated. The Bank of Canada raised rates last month by an additional 0.25%, with that only likely to increase in the coming months This means a downward pressure on price growth could be on the horizon..

So where have prices grown the most?

Every major market across Canada has seen a huge increase in both the number of sales, as well as the price of the average home. Ontario has seen some of the largest price increases in the country. In the GTA, the average price of a home has risen by over $495,000, and now has peaked at over $1,334,568, 59% more than it was in January 2020.

In Hamilton-Burlington, the price has risen by over $484,000, up 78% to a price of $1,101,952. British Columbia has also seen some remarkable increases in prices. The average price of a home in Fraser Valley is now $1,285,489, which is $534,263 or 71% higher than it was at the beginning of 2020. In terms of sales, there has also been a drastic increase. In Calgary alone, sales have gone up 276%, with 4,238 completed in February 2022 in comparison to 1,127 in January 2020.

Here’s a snapshot of how average home prices and volume of sales changed in 20 regional markets across Canada between January 2020 and February 2022. Further below, you’ll find roundups of a selection of markets across the country, reflecting some of the most drastic and smallest changes in the last 2 years.