December rounded off 2021 with a record-breaking lack of homes for sale on the market, pushing red-hot conditions into the new year.
The latest data from the Canadian Real Estate Association (CREA) reports that with only 1.6 months of inventory available on the market last month, December 2021 tops the list for the month with the least amount of inventory in Canadian history. This means that if no new homes came onto the market, we’d completely sell out at our current pace before March Break.
Previously, the record low was 1.8 months, as seen in March and November of 2021. Before last year, there hadn’t been a month dip below 2 months of inventory, and in 2021 almost half of the year was spent below this benchmark.
It’s clear that record-low inventory levels are continuing to drive the separation between extremely low supply and strong consumer demand.
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A total of 35,971 transactions took place in the month of December across the country, which is -9.9% below the record set in 2020. As was the case with most of the later months in 2021, although the sales were below last year’s peak, they were still the second-highest on record. High demand for housing coupled with record-low supply continues to drive prices higher, as the national MLS Home Price Index Benchmark reached $811,700, an increase of 26.6% or $150,000 from a benchmark of $661,700 this time last year.
New listings did not keep up with the seasonally-heightened level of transactions seen last month, as the national sales-to-new-listing ratio (SNLR) climbed to 79.7%. Almost two-thirds of CREA’s reported local markets were recorded as being a seller’s market (SNLR above 70%) with the remaining one-third of markets being recorded as a balanced market (SNLR between 40-60%).
Ultra-Low Listings In Early 2022 Set the Stage for a Hot Spring Market
Looking at 2021 in its entirety, a total of 666,995 residential properties traded hands over the year. This was a new record by a considerable margin, up 20% from the previous record set in 2022 and 30% from the ten-year average – demonstrating just how high sales demand has been this year, and how inventory is struggling to keep up.
And while sales volumes have decreased in the latter half of 2021 compared to the year prior, it’s clear that the extremely-low supply levels on the market are constraining the total number of transactions, as buyers quickly snatch up any new properties that hit the market.
According to industry experts, we can expect this trend to continue into 2022. “With the housing supply issues facing the country having only gotten worse to start 2022, take any decline in sales early in the year with a grain of salt because the demand hasn’t gone away, there just won’t be much to buy until a little later in this spring” said Cliff Stevenson, Chair of CREA.
“But when those listings eventually start to show up, the spring market this year will almost certainly be another headline grabber. If you’re thinking about jumping into the market as either a buyer, seller or both, your local REALTOR® has the information and guidance you’ll need to navigate the market in these unprecedented times,” continued Stevenson
What Happened in Ontario Real Estate Markets in December?
As the year comes to an end, the ongoing trend of price growth occurring in the nation’s east and west ends continues. Price growth has crept back above 25% in British Columbia, though it remains lower in Vancouver, 20% in Montreal, and between 10 – 30% in the Maritimes, with mid-high single-digit growth in the prairies. Ontario’s price growth remained above 30%, with the Greater Toronto Area surging ahead of other parts of the province.
December closed out a strong year in real estate with an unseasonably competitive month in real estate in the GTA. In total, there were 6,031 total sales in the GTA this December, which is down more than 1000 transactions from the record peak last year (-15.7%). However, compared to last year, homes sold faster and higher above their asking price in December of 2021. This created stiff competition for buyers, as the average property days on market decreased 47% while the average property sold for 109% of its asking price.
These ultra-competitive buying conditions in the GTA have continued to contribute to price growth in the region. The average price hit $1,157,849 last month, an increase of 24.2% year-over-year.
Related Read: Average Prices Soar Nearly 25% in The Toronto Region: TRREB
Ultra-low inventory has taken the Kitchener-Waterloo market by storm. With only 0.2 months of inventory available on the market, 104 active listings in total, buyers are facing a steep seller’s market in the city. The scarcity of listings has contributed to a 34.1% year-over-year increase in the benchmark price, to $842,014. The Kitchener-Waterloo market sold 344 residential homes in December, a decrease of 1.7% compared to the same month last year.
The capital city ended the year in an immensely competitive sellers’ market, as new listings drastically dropped 58% from November with a mere 600 houses added to the stock. Ottawa witnessed 862 property sales in December, representing a 14% drop compared to last year. The benchmark price saw an 18% increase from last year to $709,980. Although 2021 was a record-breaking year, the year’s final month saw a decrease in sales from November. This was led by Ottawa’s housing inventory challenges which are continuing to place upward pressure on prices.
Hamilton-Burlington home prices soared in December, reaching a new record for residential properties at $931,787, up 27% from this time last year. Sales decreased 11% year-over-year, however, it appears that the number of transactions was constrained by record-low inventory, not buyer demand. With only approximately 300 residential properties left on the market heading into the new year, a little more than 0.4 months of inventory, the region is gearing up for a fiercely competitive start to 2022.
2021 was an extremely strong year for real estate in the London Region, reaching nearly 11,000 transactions in 2021. As with most Ontario markets, London-St. Thomas is facing a critical shortage of inventory, with only 0.3 months of inventory, or 175 active listings, left on the market in December as work-from-home policies continue to draw new residents to the region. The MLS HPI Benchmark for the area reached $657,600, up 37.5% from this time last year. Although demand for detached housing was the highest of all property types in the region, condo apartments and townhomes are the product types with the highest price appreciation, up 51.5% and 48.9% respectively.