A housing boom most likely to sustain into 2022—vaccine roll out and low interest rates will help—is also predicted to coincide with a less ‘extreme’ sellers’ market that has hit untouchable levels for many potential homebuyers.
Referring to new statistics from Royal Lepage’s House Price Survey and Market Forecast, Phil Soper, president and CEO of Royal LePage, called this past winter one of the most imbalanced real estate markets in Canada’s history.
“We expect this extreme sellers’ market to moderate as the year progresses,” he said. “Some buyers will step away from the market in the face of sharply higher prices, and the supply of new listings should improve as people feel more confident that the health crisis is under control.”
Yet as potential homebuyers might face less competition as the year goes on, a housing supply crisis looms in the background as prices go up and the population grows. Widespread housing shortages could drive prices higher, pushing home ownership out of reach for many.
“Fewer young Canadians will own their home in the future, and rental rates will climb rapidly, if we drag our heels in adopting public policy aimed at improving the speed of housing development and underlying regulatory costs of bringing on new projects,” added Soper.
By the end of this year, the average home price in Canada is forecasted to rise 13.5 per cent higher than the end of 2020 to $805,000. The highest average is expected to peak in Montreal at a 16 per cent year-over-year, followed by Ottawa and the Greater Vancouver Area.
Compared to last year at this time, the average price of a condo rose 2.0 per cent to $509,364, although this varies across the country. For instance, in the Greater Toronto Area, the price increased slightly by 1.2 per cent and dipped 0.6 per cent ($637,551) in the city centre; whereas the Greater Montreal Area saw the price rise 14.7 per cent and 7.8 per cent in the Montreal core.
In the City of Vancouver, the price increased 5.2 per cent ($782,979) compared to 2.3 per cent in the greater region. Other regions include: Ottawa (5.2 per cent to $385,040); Halifax (13.2 per cent to $335,484); Winnipeg (7.9 per cent to $235,908); and Regina (12.0 per cent to $227,774).
Prices didn’t appreciate in all regions. Besides Toronto, a lower average condo price was recorded in Calgary (1.6 per cent to $243,902) and Edmonton (3.4 per cent to $196,641).
“A sweeping transfer of ownership occurred when renters left the major cities,” noted Soper. “Investors sold their condo units, making way for first-time buyers poised to take advantage of low mortgage rates. The timing of it all resulted in a significant boost in sales without having a huge impact on prices.”