Five Years Later: How Pandemic Trends Are Still Affecting Canada’s Housing Market

It might feel just like yesterday that we were lining up to buy toilet paper, banging pots and pans to support our healthcare workers, and spending our waking hours desperately trying to track down a reliable supply of N-95 masks. But it’s actually been half a decade since the COVID-19 pandemic first reared its ugly head.

Along with pretty much every other aspect of our daily lives, COVID-19 had a huge effect on Canada’s real estate markets. Some of those effects vanished almost as quickly as they appeared, but others are still very much with us today.

Five years after the COVID-19 pandemic began, we’re taking a look back at some of the major trends and milestones across Canadian housing markets over the past five years, from the start of the pandemic until now—and offering a look ahead at how the long-term impacts of COVID-19 could continue to shape the future of Canadian housing for years to come.

2020: A year of uncertainty for housing

The first year of the pandemic was characterized by widespread uncertainty and anxiety in nearly every facet of the Canadian economy—including real estate.

As the whole world struggled to come to terms with the pandemic, the resulting economic uncertainty, government restrictions and lockdowns put a virtual freeze on real estate activity for the first part of the year.

Across the country, both home sales and prices posted record declines. Media coverage at the time whiplashed back and forth between doomsday scenarios and an anticipation of the inevitable recovery that would come once things got “back to normal.” New technologies like virtual tours allowed people to still see potential homes and continue along their buying journey.

“Like so many other parts of normal daily life, a lot of buying and selling activity in housing markets across Canada has been put on pause,” said Shaun Cathcart, Senior Economist at the Canadian Real Estate Association (CREA), in May 2020. “That said, preliminary data for May suggest things may have already started to pick up a bit for both sales and new listings.”

At the same time, as the pandemic restrictions forced many Canadians to work from home, both buyers and renters began to reassess their priorities. Almost overnight, housing demand turned from urban cores to rural and suburban communities, as buyers placed a higher priority on larger spaces and homes with more amenities or dedicated home offices.

However, in a true tale of highs and lows, when the lockdowns eased in the second half of the year, the pent-up demand erased the declines of the first few months. To the surprise of many, it ended up pushing sales and prices higher for six straight months in a row.

“In [late] 2020, the pandemic triggered a surge in demand as interest rates dropped to historic lows, making borrowing cheaper and driving up home prices,” explains Jill Warr, a salesperson and REALTOR® with Jill Warr Realty, part of the Sutton Group Old Mill Realty in Toronto, Ontario.

“As remote work became more common, people sought larger spaces and moved toward suburban and rural areas,” she adds. “Virtual showings and digital transactions became the new norm, reshaping how real estate operated.”

Milestones in 2020

• Home sales reached extreme highs and lows. By April 2020, home sales were down 58.4% compared to March 2020, on a seasonally adjusted basis; however, by July 2020 sales had already rebounded and were up 28.6% compared to the month prior. They only continued to grow from there.
• Overall home sales increased by 12.7% in 2020 compared to 2019, reaching a record 561,000 residential sales.
• New listings were down 4.3% in 2020 compared to 2019.
• The average price of homes sold across Canada increased by 13% year-over-year, reaching an historic high of $571,346 in 2020.

2021: A record-setting year with soaring home sales and prices

After the rollercoaster of 2020, many expected 2021 to offer a return to some kind of normalcy in Canada’s housing markets. And by the middle of 2021, Canada’s housing markets had begun to moderate, with sales activity down year-over-year.

Increases in nearly every segment of the market accelerated again over the second half of the year, turning 2021 into yet another record year for Canadian home sales. At the same time, the supply of properties for sale at the end of 2021 hit an all-time low. The housing crisis was front and centre for the 2021 federal election, with each of the major political parties making affordable housing a priority.

“(The year) 2021 continued the trend of rapid price growth,” Warr says. “Buyers experienced ‘FOMO’ (fear of missing out), driven by the rapidly rising prices and low borrowing costs. [Multiple offer scenarios] became common, and investors surged into the market, intensifying competition.

“(The year) 2020 was the year that home became everything, so in hindsight it’s not that surprising that so many people who did not have one in which to ride out the pandemic really wanted one, while so many of those who did have a home to hunker down in were not inclined to give it up,” said Cathcart in April 2021. “It stands to reason then, that as the uncertainty caused and danger posed by COVID wind down, some owners who would not sell during a global pandemic will emerge with properties for sale, while at the same time some of the urgency on the demand side could dissipate.”

In addition, the shift towards smaller communities that had taken root in 2020 blossomed into a full-fledged migration. Fuelled by ongoing concerns about COVID-19 and the widespread adoption of work-from-home, thousands of Canadians fled from densely populated cities to smaller communities, in favour of larger living spaces and easier access to nature.

As a result, the demand for single-family homes soared, while housing prices rose dramatically in the suburbs and rural areas. At the same time, thousands of families moved to the East Coast, drawn by less urban congestion.

“One of the biggest milestones at the start of the pandemic was the migration to Nova Scotia as a place to live that was much more laid back, friendly, and cheaper than Toronto and Vancouver,” explains Brenda Kielbratowski, a REALTOR® CEO of the Halifax Home Selling Group in Halifax, Nova Scotia.

“People were getting extremely high prices in Toronto and had the money to make extremely high offer prices,” she notes. “In addition, many buyers who had been driven out of the larger cities by increased home values opted for a location further from metro areas, or a semi-detached home or condo as opposed to a single-family home.”

Fuelled by this migration, average home prices in Halifax rose from $329,482 in December 2019 to $489,933 in December 2021—an increase of almost 50% in just two years.

Milestones in 2021

• Market conditions were among the tightest on record, with just 68,000 active listings heading into 2022.
• Sales activity also hit a record high of 677,500 homes sold in 2021, up more than 115,000 compared to the previous record set in 2020.
• New listings were down 15% year-over-year in December 2021.
• The average price of homes sold across Canada increased by 21.3% to an historic high of $693,106 in 2021.
• Almost two-thirds of local markets were officially listed as sellers’ markets.

2022: High inflation and rising interest rates

After the flurry of activity of 2021, home sales fell in Canada for much of 2022. In September 2022, for example, Canadian home sales were 11% below the 10-year pre-pandemic national average. But because of the limited inventory, housing prices actually rose across much of the country.

Perhaps the biggest real estate issues of the year were the rise of inflation, and the Bank of Canada’s interest rate hikes in response to ongoing economic and political uncertainty from the Russian invasion of Ukraine, not to mention the discovery of new strains of COVID. Rising interest rates coupled with the inflation crisis also raised new questions about Canada’s old problem of housing supply and affordability, especially for first-time home buyers in higher-priced markets like Toronto and Vancouver.

“By 2022, affordability concerns deepened as home prices, especially for single-family homes, skyrocketed,” Warr notes. “Buyers started to shift their focus to more affordable options, leading to an uptick in condo sales. The market showed resilience, though it was much slower.”

Politically and in the media, 2022 also saw broad public debate about the possible long-term implications of the affordability crisis, particularly for renters and first-time home buyers. In response, federal and provincial governments introduced policies aimed at curbing speculation, cooling foreign demand for Canadian housing, and improving affordability.

“There are currently fewer properties listed for sale in Canada than at any point on record,” said Cathcart in January 2022. “So unfortunately, the housing affordability problem facing the country is likely to get worse before it gets better. Policymakers are starting to say the right things, but now they have to act to change this course we’re on. An aggressive national push to build more homes is what will address the issue, but it will probably have to be a greater amount of building than anything we’ve ever undertaken. A touch over the status quo won’t cut it.”

Milestones in 2022

• Canadian home sales reached 506,924—a 25% drop from the year prior, a clear indicator rising interest rates were affecting real estate markets.
• At the same time, prices reached new records. The average price for a home was $709,706 in 2022.
• The Bank of Canada’s policy rate rose rapidly from 0.25% at the start of the year, to 4.25% by December, making it even more difficult for Canadians to afford a home.

2023: A period of cooling and adjustment

By 2023, while much of the initial shock of the pandemic had subsided, in the housing arena, many of the effects of COVID-19 were still being felt.

“In 2023, interest rate hikes slowed down the market, and [multiple offer scenarios] became less frequent,” Warr recalls. “Sellers, eager to capitalize on earlier high prices, contributed to a larger inventory and a more balanced market. At the same time, hybrid work models maintained demand in both cities and suburbs, with prices showing only slight fluctuations.”

As most of the COVID-19 restrictions were lifted, many provinces saw an “urban renaissance” as some of those who had moved out of Canada’s larger cities started trickling back home.

As the economy picked up, there was also a resurgence in both housing demand and activity across the country. In spite of more interest rate hikes, many communities approached pre-pandemic levels of activity.

“It was always clear that if buyers were going to jump back into a market that was still undersupplied that prices would act accordingly and that’s exactly what happened in April,” Cathcart said during CREA’s May 2023 Housing Market Report. “It’s not pandemic level growth, but there also isn’t much else in history that’s all that much stronger either.”

Early in the year, home sales surged and prices were once again on the rise. By the end of the year, however, housing markets showed signs of cooling, as both sales and prices fell quarter over quarter.

As many offices shifted from remote work to hybrid models, Canadians struggled to strike a balance between work and life. REALTORS®, meanwhile, worked hard to reconcile their clients’ preferences for both urban appeal and suburban living.

“Was the December bounce in home sales the start of the expected recovery in Canadian housing markets? Probably not just yet,” said Cathcart in January 2024 when referencing numbers seen in December 2023. “It was more likely just some of the sellers and buyers that were holding onto unrealistic pricing expectations last fall finally coming together to get deals done before the end of the year. We’re still forecasting a recovery in housing demand in 2024, but we’ll have to wait a few more months to get a sense of what that ultimately looks like.”

Milestones in 2023

• A total of 449,984 housing units were sold in 2023, representing a drop of 11.2% from 2022.
• The average price of a home sold in Canada in 2023 was $682,748—a 3.8% drop from 2022.
• There were 117,309 active listings heading into 2024, representing a 72% jump from two years prior.

2024: A return to balance and a renewed focus on affordability

Home sales and prices stayed relatively flat for the first part of 2024. But six consecutive cuts by the Bank of Canada over the last half of the year spurred a rise in both home sales and prices as the year came to a close.

As Warr notes: “2024 saw a resurgence in sales, driven by lower interest rates and renewed market confidence. Sales [in Toronto] increased by 2.6%, and home prices only slightly dropped by 0.8%. This indicated a period of stabilization and economic recovery.”

As a result, the housing industry returned its attention to the issues that were shaping Canada’s housing markets long before any of us had ever heard the word “COVID.” This was reflected in the launch of the federal government’s Canada Housing Plan to tackle the national crises in housing affordability and supply. CREA applauded this plan, calling it “extremely ambitious” and something REALTORS® have been encouraging for years.

“Canada’s housing challenges have been building over many years and no one group can tackle it on their own,” said Janice Myers, CREA’s CEO. “REALTORS® across Canada have been advocating for a collaborative, multi-faceted approach for years. We’re ready to play our part. We know many younger Canadians feel a lack of hope about their housing outcomes. The dream of homeownership is alive, it’s just out of reach.”

Although more Canadians returned to traditional on-site work, remote work was also still much more popular than before 2020. Across Canada, buyers were still putting a premium on homes with extra space, home offices, and other amenities that reflected this “new reality.”

Milestones in 2024

• The last quarter of 2024 was active, as home sales were up more than 25% year-over-year to close out the year.
• Total home sales for 2024 reached 482,796.
• The average price of a home sold in 2024 was $689,822.
• There were 124,663 properties listed for sale at the end of 2024, up 6.3% from a year earlier, but still down from the long-term average of 150,000 listings.

2025: Looking ahead—the future of real estate

Clearly, the COVID-19 pandemic reshaped our economy, and changed how we think about housing and the places we call home. But which pandemic trends will continue to influence Canada’s housing market for the next five years, or even decades to come?

While each of the past five years has been unique, some of the more enduring pandemic trends that continue to influence our real estate markets today include:

• a shift to remote work driving demand for larger homes and dedicated home offices;
• migration to rural areas and the suburbs, driven by the flexibility of remote work;
• a move away from traditional seasonal housing markets to a year-round approach; and
• the rise in virtual open houses, showings and other real estate transactions, which have become a mainstay for buyers and sellers alike.

Looking ahead, the trade war with the United States has cast a shadow over some of the optimism regarding Canada’s housing market. Both sales and prices have been relatively stagnant so far this year. With interest rates at the lowest levels they’ve been in years, the number of new listings jumped 14.8% in January… only for them to fall off a cliff in February, a result of fear and uncertainty. The number of newly listed properties fell back 12.7% month-over-month, which Cathcart called “significant but hardly surprising” due to the imposed tariffs. 

“Today, the market is much more balanced compared to the fluctuations experienced during the past five years,” Warr notes. “Overall, the market’s evolution from rapid growth to cooling and now, stabilization, reflects both economic policy shifts and evolving buyer needs.

“Lower interest rates, improved inventory, and lessons learned from the pandemic have helped stabilize things,” she adds. “While affordability remains a challenge, the outlook is more optimistic, and the market is shaping up to be healthier and more sustainable in the future.”

CREA forecasts for 2025

• A federal election is underway, and housing remains a priority for all political parties.
• Activity will likely vary by region, with Ontario and British Columbia seeing the biggest rebounds in sales, while high demand in Alberta and Saskatchewan drives the highest increases in prices.
• Overall, growing demand from buyers due to lower interest rates is predicted to lead to a 4.7% increase in the national average home price to $722,221, and an 8.6% increase in national home sales to 532,704 residential properties. Please note: this forecast was prepared before a trade war began.