After a lull at the onset of the pandemic, the housing market has been heating up across the country, and especially so in areas such as Waterloo Region, where the price for an average single-family home topped $910,000 last month.
Despite the economic downturn and ongoing uncertainties due to the COVID-19 pandemic, home prices are becoming even less affordable (not to be confused with newfound efforts in the region to marginally increase the housing stock for the most disadvantaged).
A new report from the Royal Bank of Canada makes clear the situation, one in which we’ve seen in the last six months the steepest increase in national benchmark housing prices on record. The country’s most expensive markets, Vancouver and Toronto, recorded above-average gains of $143,000 and $139,000, respectively, which is perhaps not surprising. But much of the increase has been driven by markets on the periphery of those cities, a phenomenon in part attributed to the pandemic-related jump in remote work that has seen people move in search of larger, cheaper homes. Ironically, driving up prices in their wake.
The report notes that single-family home prices soared $147,000 in Barrie and $145,000 in the Fraser Valley since August. Hamilton-Burlington (up $137,000), Kitchener-Waterloo (up $114,000) and London-St. Thomas (up $104,000) weren’t far behind. Single-detached homes also got a lot more expensive in other BC markets, virtually all of southern Ontario, and parts of Quebec and the Atlantic provinces.
Our search for space saw demand drop for small condos in the larger cities, where prices were up just $12,000 on average nationally, though they actually fell in Toronto.
Already, many people – especially younger ones, but increasingly cutting across all demographics – despair of owning a home as the economy sinks, works become more precarious and, sometimes inexplicably, housing costs rise.
With prices, government policy is largely to blame, mostly through immigration and, down through the ranks, poor land-use planning and growing taxes and fees.
The big issue, of course, is whether we’ve got a housing bubble … and when it will it pop.
Not just yet, apparently, as the market continues to heat up. Even in this region, sales each month reach new heights, as do costs.
Average home prices are now far out of reach of many residents, which doesn’t seem sustainable. Some economists and market watchers are waiting on a correction. Still, there are plenty of us who see housing as a safe investment, unlike, for instance, the stock market, which remains volatile. Both markets are a gamble, however, and both were and continue to be heavily manipulated by the financial sector, the very industry responsible for the systemic corruption at the root of our economic woes.
Speculation, of course, is another word for gambling.
There’s a simple reality, however: housing prices do not always go up.
Price decreases could help those looking to get into the market down the road, but that upside could be offset by the fact credit is harder to come by. Lenders are hanging on to their money, and tightening requirements when they do part with it.
If there is a take-away lesson to be learned when it comes to real estate, it’s don’t take any undue risks. And gambling, which is how we’ve been viewing the housing market, is risky to the core. If we keep betting on ever-increasing prices – with equity loans to match – and allowing too many people to over-leverage themselves, there’s going to be a great deal of pain if the market sees a correction or if interest rates start rising to historical levels. Don’t wager the farm on the boom times lasting forever.