First quarter regional highlights:
- 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
- Montreal's aggregate home price forecast to increase 16% year-over-year; the highest in Canada among forecasted regions
TORONTO, April 13, 2021 – According to the Royal LePage House Price Survey released today, the aggregate price of a home in Canada increased 14.1% 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. 77% of regions surveyed reported median price appreciation of standard two-storey homes of 10% 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% year-over-year to $894,140, while the median price of a bungalow increased 14.1% to $628,341, and the median price of a condominium increased 2.0% 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 the first quarter of 2021."
Royal LePage is forecasting that the aggregate price of a home in Canada will increase 13.5% 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% year-over-year in the first quarter of 2021 in the Greater Montreal Area, and 7.8% in the Montreal core. The median price of a condominium in the City of Vancouver increased 5.2% year-over-year compared to 2.3% 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% year-over-year in the first quarter, while prices in the city centre decreased 0.6%.
"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% 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%, 23.3%, 22.6%, 21.5%, 21.4%, and 20.2%, respectively. During the same period in Quebec, Montreal’s Northshore, Sherbrooke and Gatineau reported aggregate price increases of 24.0%, 20.6% and 20.0%, respectively. In Halifax, Nova Scotia, the aggregate price of a home increased 18.1% year-over-year in the first quarter. And, in Surrey, B.C., and Kelowna, the aggregate price of a home rose 15.6% and 14.3%, respectively, for the same period.
The aggregate price of a home in Greater Vancouver increased 9.5% year-over-year to $1,163,276 in the first quarter of 2021. Broken out by housing type, the median price of a two-storey home increased 12.1% to $1,545,705, while the median price of a bungalow increased 12.0% to $1,325,006, and the median price of a condominium increased 2.3% to $652,923 during the same period.
In the city of Vancouver, the aggregate price of a home increased 7.0% year-over-year to $1,271,363 in the first quarter of 2021. During the same period, the median price of a two-storey home increased 9.9% to $2,218,099, while the median price of a bungalow increased 10.7% to $1,563,971, and the median price of a condominium increased 5.2% to $782,979.
"The market is remarkably busy right now. March was a record-breaking month for our brokerage," said Randy Ryalls, general manager, Royal LePage Sterling Realty. "Almost every property is receiving multiple offers, and the sales to listings ratio is more than double what we'd typically see in a balanced market. That being said, we are starting to see an increase in supply come on the market. Hopefully that can continue."
Ryalls noted that the expected influx of spring inventory has been coming on the market but is being quickly absorbed.
"Demand is still outpacing supply in Greater Vancouver, in the suburbs as well as in the downtown core. But if we see a similar lift in inventory in April and May as we had in March, and if sales remain roughly the same, we may see some modest relief sooner than later," added Ryalls.
Royal LePage is forecasting that the aggregate price of a home in Greater Vancouver will increase 13.0% 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.
Aggregate prices are calculated using a weighted average of the median values of all housing types collected. Data is provided by RPS Real Property Solutions and includes both resale and new build.
Government of Canada, https://www.canada.ca/en/immigration-refugees-citizenship/news/notices/supplementary-immigration-levels-2021-2023.html