Are you wondering what the future holds for Canada’s real estate market? In this blog post, we take a look at the latest trends and forecasts for the Canadian housing market and average sale price expectations for veterans and first-time buyers. Also from Atlantic Canada to Western Canada, for difference property type.
Real estate is a huge industry in Canada. It accounts for 10% of GDP and supports hundreds of thousands of jobs. However, there are some challenges facing the sector right now.
The Canadian economy has been growing steadily since 2009, and the country continues to experience strong job growth.
Understand the Canadian Real Estate Market & Housing Prices
Canada has been experiencing an unprecedented boom in its housing market. In fact, the country is currently considered to be the second largest economy in the world. This growth has led to a surge in demand for homes, which has made the Canadian real estate market very lucrative. However, the market is also highly volatile, so it’s important to know where things are headed before making any major decisions.
It’s important to understand the current state of the housing market before making predictions about future trends. In order to do so, you need to know how much inventory is available for sale, what types of homes are selling, and which areas are seeing the most growth.
Housing prices across Canada have increased by an average of 10% per year since 2010. In Vancouver, home prices grew by 20%. This increase was due to low interest rates and high demand from foreign buyers.
In terms of condo prices, condos saw an overall decrease of 1.9% average price year-over-year (YoY) between 2019 and 2020, but then increased by 1% YoY between 2020 and 2021.
In general, the national average home price is heavily influenced by sales in greater Vancouver and the GTA, which are among Canada’s most active and expensive real estate markets.
What Drives Demand For Canadian Housing Market
There are several factors driving demand for housing in Canada.
First, the population continues to grow rapidly & so does price growth.
What is the amount of annual supply that will be needed for housing for the new Canadians? Are the strong demand focusing on the major markets or our secondary markets on an annual basis? These are answers the chief economist must answer.
Second, Canadian immigration levels continue to rise.
The federal government’s immigration objectives are expected to result in more than 1 million new immigrants within 3 years time, which will put an additional strain on the housing demand.
The federal government and the Bank of Canada will be able to provide this year and for the next two years will have a sum in the range of 1.22 million more Canadians entering the economy. This is going create pressure on the demand side, said the Canadian real estate association.
The number of immigrants is likely to increase as the economy grows and the rate of vaccination increases which will increase optimism for those who are new buyers. So long as prices for single-family homes continue increase, condos will be able be very successful. The expert declares. Southern Ontario is running out of space for single-family houses.
Third, the federal government & the Bank of Canada are not working on supply side
The problem it is the case for federal authorities I’m guessing that the tools they use tend to focus on demand-side management tools. Most are supply levers are with the provinces as well as the municipalities.
Therefore, the federal government shouldn’t be encouraging the demand considering how strong it is in a restricted world.
Interest Mortgage Rate remains a key factor for house prices
Finally, interest mortgage rates remain low in major markets, which allows buyers to borrow large amounts of money.
In both Ontario and British Columbia, the average down payment was just under 20%, even though the average home prices were almost one million dollars each.
Houses for sale in Vancouver typically require a lot more down payment adding to the troubled market, but even though homes have risen a significant amount somewhere near $400,000 since 2019!
In addition to driving up prices for homes across Canada, rising interest rates may be pushing some buyers into bidding wars.
This could possibly increase the average home price in Canada to over $700,000 a 16% YoY increase.
Despite affordability being a concern, when asked this year nationally in Vancouver and Toronto, a majority of analysts expected an increase across the board for housing market activity. “We expect demand to remain robust, but moderation towards more normal levels of activity is expected.”
Areas Where Demand Will Increase
Demand for housing will increase in areas where the population is growing quickly. As mentioned earlier, Canada’s population is expected to double within the next 30 years. Therefore, areas with high population density will see the most significant increases in demand.
Real estate markets across Canada are showing signs of recovery after years of decline. This year, we expect to see an increase in sales activity across all major cities. We also anticipate a rise in prices due to increased demand from buyers looking to buy a home before interest rates start rising again.
If you compare activity year-over year (YoY) average price across single-detached houses townhomes, condos and condominiums, BC’s Nanaimo, Victoria and Vancouver saw significant price increases of 23 percent, 19.1 per cent and 16.4 percent, respectively.
It is also bound to be influenced by is happening at the U.S. central bank does as it is in-line to U.S. rates affects the loonie, and consequently exports.
The rate of overnight, set by the BoC determines the cost of borrowing for the banks and consumers. However, even if the overnight rate isn’t predicted to increase for a while doesn’t mean that banks shouldn’t be able to increase the cost of borrowing.
Rate Hikes & Mortgage Rates
The latest threats to increasing interest rates and high inflation could alter the prospects for real estate CBC News Loaded Business Central banks have promised rate increases when inflation increases.
Markets to Keep an Eye on Vancouver as well as Toronto real property markets continue to be the leading Canadian cities when it comes to development and investment opportunities each region has its own unique opportunities and problems.
Over the last several years, record numbers of immigration from abroad (not not including the 2020 census) as well as lower interest rates and an increasing middle-aged Millennial generation have combined to boost household growth and demand for housing in Canada.
Although Canadian homes sales, prices, and even starts decreased in April in comparison to record high numbers in March as the excitement of earlier months began to ease however, the poll from May 11-20 of 15 property experts indicated that activity will remain high.