Royal LePage: Canadian home price forecast revised upward to 16% as roaring spring market eases into summerAggregate price of a home in Canada rose 25.3% year-over-year in the second quarterDemand
Prices Up 13.1% across the Greater Toronto Area in Q1 2021 according to Royal LePage
Dated: April 29 2021
Canadian home prices forecast to end year 13.5% higher than 2020 as waning affordability and modestly improving supply begin to slow the pace of future increases
- Addressing chronically low inventory critical in solving nation’s housing affordability crisis
- Aggregate price of a home in Canada rose 14.1% year-over-year in the first quarter of the year
- 67% of the 64 markets surveyed posted double digit year-over-year aggregate home price gains
According to the Royal LePage House Price Survey released today, the aggregate price of a home in Canada increased 14.1 per cent year-over-year to $749,165 in the first quarter of 2021, as strong demand continues to outpace supply in virtually every market across the country. More than two thirds of the regions surveyed (67%) saw year-over-year double-digit aggregate price gains, driven largely by the single-family property segment. Seventy-seven per cent of regions surveyed reported median price appreciation of standard two-storey homes of ten per cent or more.
The Royal LePage National House Price Composite is compiled from proprietary property data, nationally and in 64 of the nation’s largest real estate markets. When broken out by housing type, the median price of a standard two-storey home rose 15.9 per cent year-over-year to $894,140, while the median price of a bungalow increased 14.1 per cent to $628,341, and the median price of a condominium increased 2.0 per cent year-over-year to $509,364. Price data, which includes both resale and new build, is provided by Royal LePage’s sister company RPS Real Property Solutions, a leading Canadian real estate valuation company.
“2020 was a year like no other in Canadian real estate, with its unprecedented demand for homes, and month after month of record-setting sales and price appreciation,” said Phil Soper, president and CEO of Royal LePage. “The usual winter slowdown was non-existent, and that momentum was carried forward through
Royal LePage is forecasting that the aggregate price of a home in Canada will increase 13.5 per cent to $805,000 in the fourth quarter of 2021, compared to the same quarter last year. The previous forecast, released in December, 2020, has been revised upward to reflect the current state of the market.
A return to pre-pandemic levels of immigration; the vaccine rollout’s impact on economic stability and confidence in the labour market; and, continued low interest rates are supportive of home price growth through 2021. The Canadian government plans to welcome 401,000 new permanent residents in 2021. While home prices in Canada’s largest urban areas continue to appreciate, growth in secondary cities is outpacing that of major centres.
“The winter of ‘20/’21 was one of the most imbalanced real estate markets in our country’s history, with so many people wishing to improve their living conditions, and a pandemic-driven shortage of homes for sale,” said Soper. “We expect this extreme seller’s market to moderate as the year progresses. 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.
“It is important to note that the surge in housing demand over the past year was organic – buyers looking for family homes to live in. With borders closed, foreign investment was near non-existent, and speculative investment was very low. Yet new Canadians are beginning to arrive once more, and investors are regaining confidence and returning to the market. This should sustain the current real estate boom well into 2022,” continued Soper. “This will be especially supportive of the condominium segment in our large urban centres.”
HOUSING SUPPLY CRISIS
There is emerging consensus that Canada has nowhere near the housing supply necessary to provide shelter for our growing population now and over the decade ahead. Widespread housing shortages will 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,” said Soper.
The median price of a condominium rose 14.7 per cent year-over-year in the first quarter of 2021 in the Greater Montreal Area, and 7.8 per cent in the Montreal core. The median price of a condominium in the City of Vancouver increased 5.2 per cent year-over-year compared to 2.3 per cent in the greater region during the same period. Comparatively, the median price of a condominium in the Greater Toronto Area increased slightly by 1.2 per cent year-over-year in the first quarter, while prices in the city centre decreased 0.6 per cent.
“A sweeping transfer of ownership occurred when renters left the major cities. 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,” noted Soper.
GEOGRAPHICAL SHIFT: AFFORDABILITY AND LARGER HOMES
“During the first wave of the pandemic, we saw a massive shift from urban centres to small towns and suburban neighbourhoods. Across the country, the revival of these secondary cities has become a driving force of the market, attracting buyers of all ages,” said Soper.
Windsor, Ontario, posted the highest year-over-year aggregate price growth in the country at 30.2 per cent in the first quarter of 2021. Elsewhere in the province, Oshawa, Pickering, Barrie, the Kitchener and Niagara regions, and London posted aggregate price increases of 25.2 per cent, 23.3 per cent, 22.6 per cent, 21.5 per cent, 21.4 per cent, and 20.2 per cent, respectively. During the same period in Quebec, Montreal’s Northshore, Sherbrooke and Gatineau reported aggregate price increases of 24.0 per cent, 20.6 per cent and 20.0 per cent, respectively. In Halifax, Nova Scotia, the aggregate price of a home increased 18.1 per cent year-over-year in the first quarter. And, in Surrey, B.C., and Kelowna, the aggregate price of a home rose 15.6 per cent and 14.3 per cent, respectively, for the same period.
GREATER TORONTO AREA SUMMARY
The aggregate price of a home in the Greater Toronto Area (GTA) increased 13.1 per cent year-over-year to $989,961 in the first quarter of 2021. Broken out by housing type, the median price of a two-storey home increased 13.6 per cent to $1,164,894, while the median price of a bungalow increased 15.3 per cent to $982,120, and the median price of a condominium increased 1.2 per cent to $598,819 during the same period.
In the city of Toronto, the aggregate price of a home increased 7.4 per cent year-over-year to $984,709 in the first quarter of 2021. During the same period, the median price of a two-storey home increased 11.8 per cent to $1,550,577, while the median price of a bungalow increased 14.7 per cent to $1,061,534, and the median price of a condominium dipped slightly by 0.6 per cent to $637,551.
“There is a persistent momentum in the market that continues to put upward pressure on prices,” said Debra Harris, senior vice president, Royal LePage Real Estate Services Ltd. “Without an extended surge of inventory, that momentum is unlikely to relent. Homeowners who want to move are reluctant to list their homes before they buy because they are concerned there won’t be anything available, and the cycle continues.”
Harris added that sellers would feel more confident about securing their next home if the number of days on market were longer.
“Typically, we measure absorption – how long it would take to run out of inventory – in months. At the moment, we have an absorption rate in the GTA of about three and a half weeks. The number of new listings added each month is lower than the pace of sales, and that gap continues to widen,” said Harris.
The anticipated return of immigrants and a more typical volume of students, both local and international, in the fall is expected to boost condo sales in Toronto and the surrounding areas, added Harris. She expects we will begin to see an indication of that demand by the middle of the second quarter.
Royal LePage is forecasting that the aggregate price of a home in the Greater Toronto Area will increase 11.0 per cent in the fourth quarter of 2021, compared to the same quarter last year. The previous forecast, released in December, 2020, has been revised upward to reflect the current state of the market.
About the Royal LePage House Price Survey
The Royal LePage House Price Survey provides information on the three most common types of housing in Canada, in 64 of the nation’s largest real estate markets. Housing values in the Royal LePage House Price Survey are based on the Royal LePage Canadian Real Estate Market Composite, produced quarterly through the use of company data in addition to data and analytics from its sister company, RPS Real Property Solutions, the trusted source for residential real estate intelligence and analytics in Canada. Commentary on housing and forecast values are provided by Royal LePage residential real estate experts, based on their opinions and market knowledge.
About Royal LePage
Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of over 18,000 real estate professionals in over 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting women’s and children’s shelters and educational programs aimed at ending domestic violence. Royal LePage is a Bridgemarq Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE. For more information, please visit www.royallepage.ca
About Royal LePage Vision
Founded in 2003, Royal LePage Vision, in Toronto, is a multiple award-winning brokerage with a strong contingent of high-performing agents. Our strength over the past 16 years is rooted in technology and how innovation translates to exceptional service.
From top to bottom our brokerage is built on making it easier for our Realtors to succeed in real estate while staying consistently connected to the office. With a strong emphasis on training, for both our support staff & Realtors, each one of our Realtors has the support and tools to be effective in their market.
If you would like to learn more about the difference VISION makes, please give us a call at 416-321-2228 or visit https://visionrealty-toronto.royallepage.ca/resources/join-us
Latest Blog Posts
Canadian home prices forecast to end year 13.5% higher than 2020 as waning affordability and modestly improving supply begin to slow the pace of future increasesAddressing chronically low inventory
Despite an unprecedented year due to COVID-19, including necessary public health restrictions and uncertainty surrounding the economy, Greater Toronto Area REALTORS® reported over 95,000 home
The record pace of home sales in the fall continued with 8,766 sales reported in November by Greater Toronto Area REALTORS® through the Toronto Regional Real Estate Board’s (TRREB) MLS;