Should You Buy a Home this Holiday Season?
Usually in a typical holiday season, the weather is messy and there is warm food around the table. Most Canadians prefer to cozy up at home and hunker-down until the spring to start their real estate adventures. But in this case, it can be good to go against the grain. The decreased amount activity is precisely why the holidays can often be a great time to buy a house. The market typically slows down with all the snow and slush on the streets, meaning less competition, and more buyer friendly prices.
However, the 2021 real estate market has been far from typical because of the pandemic and other factors. Can we apply the same principles as previous years? Probably not. All buyers must approach the market intelligently. Buyer competition is higher than ever this holiday season and inventory is still at record lows.
But there may be hope in the holidays.
Even with tight conditions, here’s why it might be a great time to buy a home.
What’s different this year compared to 2020?
Since late spring of 2020, historically low interest rates have been propelling larger numbers of buyers in search of properties better suited to spending more time at home; as a result, many of Canada’s major markets have been hit by record-breaking sales even through late fall, when the markets typically slow down.
Even new stress tests implemented in June 2021 only temporarily paused the exponential rises of home sales. In October 2021, national home sales rose by 9% month-over-month. 1 October 2021 did not beat the 2020 record for sales, but this was still the second-best sales month ever for the country.
Combine more buyer activity with the fact that new listings took a major hit in 2021, and although there is some turn around, they are far behind sales. All these factors present competitive and tight conditions in many parts of the country that have continued since 2020.
But don’t store your hope away for spring cleaning! There may be some saving grace in the snow.
Two years of record sales...almost
In real estate, market conditions are usually analyzed by comparing one month’s stats to the same month the previous year (year-over-year comparisons). Mostly because buyer activity tends to ebb and flow with the seasons. By that measure, sales are continuing to hit astronomical heights over the last two years.
For October 2020, the Canadian Real Estate Association (CREA) reported that national year-over-year sales were up 32% over the same month last year 2 and the Toronto Regional Real Estate Board’s Chief Market Analyst, Jason Mercer, stated that the Greater Toronto Area (GTA) should “[e]xpect record or near-record home sales for the remainder of 2020.” 3
Fast forward to October 2021, as previously stated, home sales in the Canadian real estate market rose nationally by 9% month over month.4 5 October was still the second-highest month recorded by a sizeable margin.
“After a summer where it looked like housing markets might be calming down a bit, October’s numbers suggest we might be moving back towards what we saw this spring, with regards to current market demand and supply conditions….” said Cliff Stevenson, Chair of Canadian Real Estate Association (CREA). 6
Competition is high, but it may get even higher
While record-breaking year-over-year sales point to the fact that there are more buyers out there than usual for this time of year, month-over-month data – where the current month is measured against the previous month in the same calendar year – started showing a slight easing on the throttle both in 2020 and 2021, which is hopeful news for anyone planning to buy a home in the holiday season.
In 2020, CREA reported that national home sales rose 0.7% from September to October. 7 Ontario’s busiest markets like the GTA, Ottawa and Hamilton saw month-over-month sales fall by as much as 8%. 8 Without any new impacts to the market like the pandemic or changes to mortgage affordability, this indicated that we should be moving to more predictable buyer activity even if the levels will be higher than usual.
Flash forward to 2021, most regions featured in our State of the Market Report saw modest month-over-month increases or stayed at par with the previous month. Peel was the only region that saw prices fall 2% month over month. Again, as previously stated, year over year prices were still a run-away train, every region but Calgary and Edmonton saw substantial price gains. Niagara and Hamilton real estate prices skyrocketed 34% and 27% respectively, with all regions increasing by an average of 21%. 9
Every region featured in this report was in a seller’s market, with most sales-to-new-listings (STNL) ratios tightening up several percentage points months over month.
Long story short, competition is tight because listings are low. But not necessarily because more buyers are taking to the market than any other season. Compared to rest of the year, the holiday season has less active interest.
This year, competition is high now, but it is almost guaranteed to get higher.
To buy, or not to buy?
What will happen to Canadian markets between now and the spring? There is no sure-fire way to know. Real estate markets are affected by factors at the local, national, and global levels. The pandemic and the economy stood center stage for the last two years. As restrictions ease as we move into this spring, we have a new stress test and promised political reform, which do represent some impediments to Canadian purchasing ability.
With the cold weather slowing the market, the holiday season may provide a small window of opportunity to invest wisely before the spring season arrives.
If you’re ready to start your search, navigating competitive markets is best done with the professional guidance of a local REALTOR®. FairSquare Group Realty Agents are dedicated to helping you buy the right home for your family while keeping your safety a top priority. And when your deal closes, we’ll give you $2,000 cash back* as a thank you! Sellers can also benefit from working with experienced, local REALTORS® for a low fixed fee, which can save you thousands in commission. It’s how we’re making Canadian real estate better. Call 1-855-999-9740 to learn more.
1 FairSquare - October State of the Market Report
2 CREA October 2020 National Statistics, retrieved November 27, 2020.
3 TRREB October 2020 Market Report
4 CREA – 2021 already a record year for Canadian home sales
5 CREA – Canadian Home Prices continue to Re-accelerate in September
6 FairSquare - October State of the Market Report
7 CREA – Canadian Home Prices continue to Re-accelerate in September
8 CREA October 2020 National Statistics, retrieved November 27, 2020.
9 FairSquare - October State of the Market Report