RBC Economics says 2021 housing market will end the “way it started: scorching hot”

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      The housing market traditionally slows down around this time of the year.

      This is quite typical as people get busy preparing for the holiday season.

      Plus, they also don’t want to go out house hunting in the cold.

      But things aren’t normal and haven’t been since the start of the COVID-19 pandemic.

      Hence, the current wintry weather isn’t cooling down Canada’s hot housing market.

      And as RBC Economics observes, Canada’s housing market “keeps on rolling”.

      In a recent report, bank economist Robert Hogue projected that the year will go out in a blaze.

      “Despite signs of cooling this past spring and summer, our housing market is ending 2021 the way it started it: scorching hot,” Hogue wrote.

      RBC Economics made Hogue’s paper available online on the same day the Canadian Real Estate Association released latest market numbers.

      The CREA reported on December 15 that national home sales “edged up slightly in November, holding onto all of the gains made in October”.

      In particular, home sales across the country rose 0.6 percent month-over-month in November 2021.

      The association noted that the “small increase followed on the heels” of a nine percent rise in activity in October.

      Speaking about October, the CREA in an earlier report on November 15 noted that on a year-to-date basis, 581,275 residential properties changed hands from January to October 2021.

      The number surpassed the annual record of 552,423 sales for all of 2020.

      This means that 2021 has already set a new national record, even though November and December sales have yet to be accounted for.

      It’s basically the same story in B.C.

      On December 15, the B.C. Real Estate Association reported that home sales from January to November 2021 have surpassed the previous highest annual total record set in 2016.

      The BCREA indicated that 117,973 residential properties were sold from January to November 2021.

      The previous annual record was 112,425 units in 2016.

      Going back to Hogue’s December 15, 2021 report, the RBC economist noted that home sales in November could have been higher than the monthly growth of 0.6 percent had it “not been for a dearth of homes for sale”.

      Hogue noted that while new listings increased 3.3 percent month-over-month, this was not enough to meet strong demand.

      “Local markets across the country remain critically short of supply as 2021 draws to a close,” Hogue wrote.

      This situation “keeps a raging fire under property values”.

      Benchmark prices rose for a third straight month. It was a 2.7 percent month-over-month increase in November.

      A December 17, 2021 report by Dexter Realty noted that 1,519 properties were sold in markets served by the Real Estate Board of Greater Vancouver from December 1 to December 15.

      The Vancouver-based realty company noted that this number is comparable to the 1,582 sales at the mid-point of November, and “slightly up” from 1,482 at mid-month in December 2020.

      “With sales levels like this we are going to see an extremely low active listing count to start 2022,” Dexter Realty’s Kevin Skipworth wrote in his report.

      Earlier this year, RBC’s Hogue observed in a report that buyers came out in force in January 2021, “driving home resales to yet another record-high level in Canada”.

      “If the pandemic’s second wave caused potential home sellers to pause, no one told buyers,” Hogue wrote in a February 16, 2021 report.

      Although market conditions eased somewhat last spring and summer, things have taken off.

      “It’s increasingly hard to dismiss this fall’s renewed vigour (and heat) in the market as just a passing phase,” Hogue wrote in his December 15, 2021 report.

      The economist noted much of the “current impetus has to do with looming interest rate hikes”.

      The Bank of Canada is expected to raise interest rates starting in the middle of 2022.

      “We believe many buyers are rushing in before higher rates take purchasing budget room away from them,” Hogue wrote.

      The economist continued, “The latest market statistics now suggest this phenomenon might have longer to run, possibly into the first few months of 2022.”