House prices across the country continue to soar. The average price for a home in Canada reached $695,697 in April, up an incredible 41.9% year-over-year. Ontario is driving the majority of those gains, as the province’s average price rose 46% during the same period.
Would-be homebuyers are getting into bidding wars and paying several hundred thousand dollars over the ask price to get their desired home. Insanity.
These bidding wars are wild. My house is worth less than what this house sold for over the list price. pic.twitter.com/u4vjZDRHPt
— Boomer and Echo (@BoomerandEcho) May 21, 2021
A reader bid $250,000 over the list price on the above home, but ultimately was not even close after multiple bids came in at an even higher price. The same reader put in two offers on different properties and lost in a bidding war. Houses are selling in just a few days.
“We find ourselves in a market where buying first seems to be the only path, because if I sold first, then tried to buy, I could be homeless! It is so crazy…makes us wonder if we want to play.”
Related: Buyers fed up with blind bidding, other shenanigans in red hot real estate market
Not every region in Canada is experiencing a real estate boom, mind you. The latest episode of the Globe & Mail’s Stress Test podcast featured a 30-something who moved from Toronto to Saint John and bought a house for $99,000.
Prices in my area (Lethbridge, Alta) are up 14% year-over-year but with an average price of $317,222 it’s still well below the national average. Here’s a look at how the provinces compare in average home price and year-over-year change:
| Area | April 2021 | April 2020 | % Change |
|---|---|---|---|
| Canada | $695,657 | $490,082 | 41.90% |
| BC | $943,845 | $733,330 | 28.70% |
| Alberta | $439,319 | $362,851 | 21.10% |
| Saskatchewan | $283,900 | $256,900 | 10.50% |
| Manitoba | $335,812 | $295,518 | 13.60% |
| Ontario | $869,788 | $595,825 | 46.00% |
| Quebec | $448,601 | $338,384 | 32.60% |
| New Brunswick | $257,649 | $182,368 | 41.30% |
| Nova Scotia | $372,534 | $267,110 | 39.50% |
| PEI | $342631 | $239,070 | 43.30% |
| Newfoundland | $286,900 | $265,200 | 8.20% |
Regulators are concerned and will introduce a new stress test June 1st for uninsured mortgages where the borrower must be able to afford mortgage payments at 5.25% (up from the current 4.79%). The federal government will follow suit with the same minimum qualifying rate on insured mortgages.
I’m curious if other readers have been caught up in any crazy bidding wars, either as a buyer or seller. Let us know in the comments.
This Week’s Recap:
Earlier this week I wrote about accepting market returns and adjusting our expectations of future returns. That’s right, double-digit annual returns from a conservative portfolio is not normal.
On Young & Thrifty I wrote a comprehensive guide to Registered Retirement Savings Plans.
From the archives: Addition by subscription subtraction
Watch for new articles in the coming weeks, including an updated look inside my wallet (same $20 bill from last March), and a deep dive into BMO’s fixed income ETF line-up.
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Weekend Reading:
Our friends at Credit Card Genius share the best cash back credit card offers available right now.
Travel expert Barry Choi explains the best and worst loyalty programs in Canada.
There’s a lot of pent-up demand – is it time to book your post-pandemic travel? For me, yes!
Mike Moffatt explains why Ontario real estate prices keep soaring: population growth and a lack of housing supply.
Gen Y Money wants to reach financial independence early and avoid getting trapped in the sandwich generation.
Morgan Housel looks at the limits of investing sanity:
“Every few years there seems to be a declaration that markets don’t work anymore – that they’re all speculation or detached from fundamentals. But it’s always been that way. People haven’t lost their minds; they’re just searching for the boundaries of what other investors are willing to believe.”
Millionaire Teacher Andrew Hallam explains why Cathie Wood’s ARK investors aren’t making much money.
A Wealth of Common Sense blogger Ben Carlson looks at how to lose money when the stock market is at an all-time high.
My Own Advisor Mark Seed joins Tom Drake on The Maple Money Show to discuss financial independence and early retirement.
On his own blog, Mark Seed looks at whether you can retire early on a low income.
PWL Capital’s Justin Bender compares the All World ex Canada ETFs (VXC vs. XAW) in his latest investing video:
The UK blog Monevator shares a thoughtful post on the origins of our money mindsets:
“Your inner child is still trying to pull the purse strings. If you don’t notice how then you will be doomed to misunderstand money all your life.”
Of Dollars and Data blogger Nick Maggiulli looks at whether you should ever invest in a leveraged index fund?
Michael James looks back at what might have been if he mined bitcoins, never sold his Apple shares, or took a managerial role that came with stock options.
Finally, a smart look at the FIRE movement and how it’s not about retirement, it’s about independence.
Have a great weekend everyone!
