The Greater Toronto Area’s chronic housing supply shortage will cause prices to grow 5.75% by the end of next year, according to a new report.
Average home prices in the region are slated to hit $990,300, according to Royal LePage’s 2021 forecast, while low-rise houses are anticipated to reach $1,185,800, a 7.5% year-over-year increase. The average price of condos in the region, however, will only rise by 0.5% to $600,800—the result of a modest boost in the 905 area offsetting a slight decline in the City of Toronto.
The GTA’s condo market has been in the doldrums this year because, catalysed by the COVID-19 pandemic, supply has outstripped demand. But the report noted that, despite condo listings surging this year, prices will not be adversely affected thanks to the federal government’s record immigration targets for each of the next three years, and university students returning to their classrooms by autumn, which should cause a spike in resale condo demand in H2-2020.
“Many young people returned home to save money during the pandemic and we expect them to want to get back into city life when the vaccine becomes available,” Debra Harris, vice president of Royal LePage Real Estate Services Ltd., said in the report “The question is whether consumer confidence in the condo market will be healthy given the surge in listings. The reality is that current inventory is much healthier than where we were last year. For the many young professionals who were discouraged by strong competition in the condo market in previous years, this window may be their opportunity to find a home they can get excited about living in.”
Royal LePage expects the aggregate home price nationwide to increase by 5.5% year-over-year in 2021.
The nation’s capital will be red-hot
Bolstered by torrid demand from Torontonians searching for less density and more outdoor space, no housing market will see more growth in 2021 than Ottawa, where Royal LePage expects the average price of a home to grow by 11.5% year-over-year to $624,000. The price of ground-related homes in the city is slated to spike by 12% to $656,300, while its condominium market should increase by 7.5% to $417,900.
“Living in Ottawa gives you access to great schools and healthcare, a good job market and you can maintain a city lifestyle while affording a much larger home than what is offered in the GTA,” Jason Ralph, managing partner of Royal LePage TEAM Realty, is quoted in the report. “Many local buyers struggled to find what they were looking for in 2020 due to low inventory. With their return to the market in the spring coupled with continued demand from the GTA, prices are forecast to rise significantly.”
Ralph added that competition in Ottawa’s single-family home market will be fierce and, with no supply relief on the horizon, that multiple offers will drive prices up next year.
“Ottawa has very low inventory across all housing types, and the single-family home market is especially competitive,” said Ralph. “We do not see inventory relief coming in the spring, which is expected to result in multiple offers and further price increases. However, despite price gains, Ottawa remains very affordable compared to capital cities internationally, as well as large urban centres in Canada.”
Potential rise in mortgage defaults won’t cool Montreal market
The average price of a home in Greater Montreal, the country’s second-largest metropolitan area, is anticipated to increase by 6% year-over-year in 2021, with the real estate market picking up from where it left off in 2020—despite strict lockdown measures, it hasn’t been hampered.
Montreal’s aggregate home price will increase to $514,900 in 2021, according to Royal LePage, with the average single-family home will rising 7% to $656,200, and the median price of a condo inching up 3.75% to $382,600.
“Generally speaking, the number of condos for sale should continue to increase, especially in the downtown core, where prices could stabilize or even dip slightly in some cases, attracting first-time homebuyers who can take advantage of record-low interest rates,” Dominic St-Pierre, Royal LePage Quebec’s vice-president and general manager, predicted in the report. “Elsewhere in the region, condo prices could increase. One of the driving factors in condo demand will be the return of foreign students to the city centre, providing improved revenue for landlords who have seen rental prices shrink.”
Canada’s most expensive city will become even pricier
Royal LePage expects the aggregate price of a home in the Greater Vancouver Area, Canada’s most expensive metropolitan region, to surge by 9% to $1,262,600 next year. The region’s low-rise houses will average $1,671,700, increasing by 10% year-over-year, with the median condo price slated to rise by 3.5% to $684,300. Mirroring Canada’s other major urban centres, price appreciation in Greater Vancouver will be driven by low inventory in 2021.
“In March, we couldn’t have imagined this is where we’d be today, but despite public health concerns, consumer confidence remains high. With very attractive mortgage rates and the promise of a vaccine on the horizon, demand is likely to remain strong,” said Randy Ryalls, managing broker at Royal LePage Sterling Realty.
“We are seeing multiple offers on almost every reasonably-priced detached listing. There simply isn’t enough inventory to meet the demand. A balanced Vancouver market has about 15,000 active listings available. Right now, we’re sitting at roughly 10,000. If we reach the end of January without an injection of inventory, we will continue to see upward pressure on prices in the spring. I expect a strong seller’s market in 2021.”
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