|Five years ago, the average Canadian house price was $471,000. In May this year, the same house would sell for $688,000. The Canadian housing market has been an unlikely beneficiary of COVID. Even smaller cities like Windsor, Ontario and Halifax, Nova Scotia have seen price increases as people move to more affordable areas to work remotely.
The crazy real estate market has many people wondering if it's a bubble that’s about to burst, or if the market will retain it's value. My thought is that market incentives that have been driving our prices aren’t likely to go away overnight – even after the pandemic subsides.
In fact the market seems to be more like a fluff-filled pillow than a bubble. It may lose some fluff and flatten, but it doesn't seem likely to burst. Already statistics released by the Canadian Real Estate Association (CREA) show national home sales were down slightly (3.5%) between June and July 2021. And yet prices still rose 0.6% month-over-month. The market seems to be leveling off rather than dropping precipitously.
The good news for owners: The value you gained in your home these past few years is likely to remain largely in place, plus or minus. The good news for buyers: You might have a bit of breathing room as more homes come on the market, perhaps slowing the bidding wars.
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