Despite second wave worries, the median price of a home in Canada forecast to finish year 7.0% higher than year-end 2019
Delayed spring market extends through Q3 as pent up demand fuels prices and sales
97% of regions surveyed post price appreciation in third quarter despite economic shock of COVID-19
Ontario and Quebec real estate markets dominate list of highest appreciating regions, with Windsor in the top spot at 17.0%
TORONTO, October 14, 2020 –According to the Royal LePage House Price Survey and Market Survey Forecast released today, the aggregate[1] price of a home in Canada increased 8.6 per cent year-over-year to $692,964 in the third quarter, as high demand and low inventory continued to fuel a seller’s market.
The Royal LePage National House Price Composite is compiled from proprietary property data 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 10.0 per cent year-over-year to $819,906, while the median price of a bungalow increased 7.0 per cent to $570,701. The median price of a condominium increased 5.3 per cent year-over-year to $510,365. 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.
“Typical consumption patterns have been disrupted in 2020 as the pandemic has driven the household savings rate to levels not seen in decades,” said Phil Soper, president and CEO of Royal LePage. “Most Canadians have sharply reduced spending on discretionary goods and services involving a great deal of human interaction, and with mortgage rates at record lows, many have refocused on housing investments, be it renovations to accommodate work-from-home needs, a recreational property or a new property better suited for the times.”
Statistics Canada reported that in the first quarter of 2020, the household savings rate climbed to 7.6 per cent of disposable income, the highest rate since 1996. In the second quarter, savings spiked to 28.2 per cent, the highest savings rate since the early 1960’s. From 2015-2020, the average savings rate was approximately 3 per cent.
“In urban centres across Canada, housing inventory has failed to keep up with household formation,” continued Soper. “Chronic under-supply has created a robust pipeline of potential buyers that currently far outsizes the number of homeowners who may need to sell as a result of COVID-19 related job loss,” said Soper. “The price of condominiums, the sector hardest hit by the pandemic, has risen 5.3 per cent nationally compared to last year. When a landlord needs to sell a unit after young tenants move back to their parent’s home, and with fewer new immigrants or opportunities for short-term rental income, there are plenty of first-time buyers ready to seize the opportunity to get into the market.”
Competition amongst buyers in many regions is high. According to a recent Royal LePage Advisor Survey, during the month of September, 95.4 per cent of Royal LePage agents surveyed said detached houses in their region were attracting multiple offers and 54.1 per cent said that condominiums were attracting multiple offers. According to the national survey, 89.4 per cent of agents had to place at least two offers on behalf of their clients to purchase a home during the third quarter. Sixteen per cent had to place more than 5 offers. In Quebec, the proportion of agents that had to place more than 5 offers rose to 19.1 per cent, the highest in the country.[2]
Nationally, real estate markets in Ontario and Quebec posted the highest price appreciation. Windsor reported the highest price gain in the third quarter as the aggregate price of a home rose 17 per cent year-over-year followed by Oshawa (15.0%), Kitchener/Water/Cambridge (13.9%), Hamilton (13.7%), and Mississauga (13.5%). In Quebec, the fastest appreciating regions were in the Greater Montreal Area, where the aggregate price of a home rose 12.5 per cent year-over-year in the third quarter driven by gains made in Montreal Northshore (13.4%), Montreal East (12.3%) and Montreal Centre (12.2%).
Royal LePage expects current regional price levels to be maintained for the remainder of the year. While the national aggregate home price rose 8.6 per cent year-over-year in the third quarter of 2020, Royal LePage is forecasting that the national aggregate home price will increase 7.0 per cent year-over-year to $693,000 in the fourth quarter of 2020. The decrease between Q3 2020 gains (8.6%) and the Q4 2020 forecast (7.0%) reflects a higher national home price in Q4 2019 ($647,310) compared to Q3 2019 ($637,884).
“Home price gains realized this quarter are forecast to be sustained through December,” said Soper. “While the pace of price growth is expected to slow considerably in the final weeks of this most unusual year, it is highly unlikely we will see housing values back up.”
Canada added 378,000 jobs in September, with most of the gains in full-time work. The unemployment rate has now fallen to 9.0 per cent, a 1.2 percentage point improvement from August[3] as the economy claws back pandemic related losses. Another positive development for Canada’s investment housing market is the federal government announcement that international students will be allowed to enter Canada if they are attending a designated learning institution with provincially approved COVID-19 protocols in place.[4]
Soper added that while today’s mortgage rates at extremely low levels have created a window of first-home buying opportunity for many young families, Millennials and Generation Z who do not have the capacity to buy today are shouldering the negative impact of COVID-19 on the Canadian real estate market.
“Young adults are less likely to have been the homeowners who watched real estate equity build over the past few months. Many have lost their jobs during the pandemic,” said Soper. “If policy makers do not make increasing the supply of homes for rent or purchase a priority, there will be negative social consequences for years to come. COVID-19 has stimulated the demand for additional housing in ways that few could have foreseen.”
COVID-19 and changing consumer behavior
As a second wave of COVID-19 takes hold in Canada’s more populous regions, Royal LePage is expecting a change in buyer psychology compared to the period when the country first faced the novel coronavirus. Real estate activity fell to as low as one-third of normal in the spring, as citizens sheltered at home. For the balance of the pandemic, Canadians are expected to prioritize homeownership and seek out as much indoor and outdoor space as they can afford to improve their quality of life while work-from-home and social distancing measures remain part of daily lives.
Many of the tools needed to provide high quality real estate services remotely were available to Royal LePage agents prior to the COVID-19 pandemic, which allowed for minimal disruption in assisting buyers and sellers to adjust to the new norm of transacting.
“Canadians recognize that if they are working with a reputable agent who takes the necessary precautions, going to a scheduled viewing is a relatively low risk undertaking. Almost all of the home buying or selling process can now be completed virtually,” said Soper. “We continue to advise against open houses. Highly motivated buyers are encouraged to schedule a viewing after taking a virtual tour to confirm their level of interest.”
REGIONAL SUMMARIES
Greater Toronto Area
The aggregate price of a home in the Greater Toronto Area (GTA) increased 11.0 per cent year-over-year to $922,421 in the third quarter of 2020.When broken down by housing type, the median price of a standard two-storey home increased 12.2 per cent year-over-year to $1,082,502 in the third quarter, and the price of a bungalow rose 10.6 per cent year-over-year to $887,156. During the same period, condominiums in the region continued to see healthy price appreciation, with the median price rising 6.8 per cent year-over-year to $599,826.
Similar strong home price gains were seen in the City of Toronto where the aggregate price of a home rose 11.1 per cent year-over-year to $975,980. Broken out by housing type, the median price of a standard two-storey home increased 15.5 per cent year-over-year to $1,483,510, and the price of a bungalow rose 11.3 per cent year-over-year to $974,295. During the same period, the median price of a condominium grew 4.9 per cent year-over-year to $644,903.
“Demand from the delayed spring market has continued through the third quarter. The seasonal slowdown is expected in the coming months but given the recent strength of September, we will likely see a more brisk fourth quarter market than the previous year,” said Debra Harris, Vice President, Royal LePage Real Estate Services Limited.
Harris added that while active listings are up, the sales to listings ratio and decrease in days on market indicate that properties are being quickly absorbed by demand.
“The detached home market is outperforming the condo market but condo demand is still considered healthy. Condo sales were up 15% in September compared to September 2019. In Toronto, we are used to strong seller markets and a balanced market can seem quiet by comparison,” said Harris.
Royal LePage is forecasting that the aggregate price of a home in the Greater Toronto Area will increase 8.5 per cent in the fourth quarter of 2020 compared to the same quarter last year.
Greater Montreal Area
In the Greater Montreal Area, the aggregate price of a home posted a 12.5 per cent increase year-over-year reaching $480,673 in the third quarter of 2020.When broken down by housing type, the median price of a standard two-storey home increased 13.9 per cent year-over-year to $610,956 in the third quarter, and the price of a bungalow rose 14.4 per cent year-over-year to $381,607. During the same period, condominiums in the region continued to see strong price appreciation, with the median price rising 8.6 per cent year-over-year to $362,180.
In the core of Montreal, the aggregate price of a home rose 12.2 per cent year-over-year to $610,898. Broken out by housing type, the median price of a standard two-storey home increased 14.6 per cent year-over-year to $825,801, and the price of a bungalow rose 10.6 per cent year-over-year to $557,961. During the same period, the median price of a condominium grew 8.8 per cent year-over-year to $448,496.
“After seven months of COVID-19 restrictions and social distancing measures to stop the spread of the pandemic, we began to see a significant increase in the number of new condominium listings in Montreal Centre in the third quarter,” said Dominic St-Pierre, vice-president and general manager, Royal LePage, for the Quebec region. “If this trend continues into the fourth quarter, we may see a slight decrease in condo prices, which would indicate a more balanced market. This will provide more opportunities for first-time buyers. In the single-family segment, there are currently no signs of a slowdown in sight; the vast majority of homeowners, who are currently selling, are receiving offers at or above the asking price, especially in the most in-demand neighbourhoods.”
Royal LePage is forecasting that the aggregate price of a home in the Greater Montreal Area will increase 9.5 per cent in the fourth quarter of 2020 compared to the same quarter last year.
Greater Vancouver
The aggregate price of a home in Greater Vancouver increased 4.4 per cent year-over-year to $1,133,528 in the third quarter of 2020. Broken out by housing type, the median price of a standard two-storey home in Greater Vancouver increased 5.5 per cent year-over-year to $1,474,670 in the third quarter. During the same period, the median price of a condominium increased 3.1 per cent year-over-year to $659,122 while the median price of a bungalow increased 2.8 per cent to $1,232,858.
Price gains were more muted in the city’s centre where the aggregate price of a home rose 2.2 per cent year-over-year to $1,266,868. Broken out by housing type, the median price of a standard two-storey home increased 1.0 per cent year-over-year to $1,997,098, and the price of a bungalow rose 5.4 per cent year-over-year to $1,451,737. During the same period, the median price of a condominium grew 2.7 per cent year-over-year to $772,378.
“The pent up buyer demand from our delayed spring market continues to drive record sales and lift home prices. There are more buyers than properties and the market is tightening,” said Randy Ryalls, general manager, Royal LePage Sterling Realty. “September’s sales were exceptionally strong and multiple offers are common on well-priced homes.”
Ryalls added that low interest rates and healthy consumer confidence are driving the market.
“Demand is high across the Lower Mainland and strongest for detached properties in the Lower Mainland,” said Ryalls. “Due to their affordability, demand is healthy for condominiums despite current buyer preferences for more space and less shared amenities.”
Royal LePage is forecasting that the aggregate price of a home in Greater Vancouver will increase by 4.5 per cent in the fourth quarter of 2020 compared to the same quarter last year.
Ottawa
Ottawa’s aggregate home price grew significantly during the third quarter, rising 12.0 per cent year-over-year to 536,610.
“Despite the pandemic, year-to-date unit sales are similar to 2019 and more than half of all listings continue to see multiple offers,” said John Rogan, broker, Royal LePage Performance Realty. “High demand and low inventory is an ongoing buyer concern whether they are looking for a property in Ottawa’s city centre or communities within an hour drive.”
The median price of a standard two-storey home increased 11.1 per cent year-over-year to $559,360 while the median price of a bungalow saw a strong 13.9 per cent year-over-year increase to $553,815. During the same period, the median price of a condominium saw an increase of 15.3 per cent year-over-year to $383,176.
Rogan added that as a national capital city, on an international level, as well as in comparison to other major Canadian cities, Ottawa real estate remains relatively affordable.
Royal LePage is forecasting that the aggregate price of a home in Ottawa will increase 8.5 per cent in the fourth quarter of 2020 compared to the same quarter last year.
Calgary
The aggregate price of a home in Calgary remained relatively flat year-over-year, increasing 0.5 per cent to $468,815 in the third quarter of 2020.
Broken out by housing type, the median price of a standard two-storey home increased 0.4 per cent year-over-year to $509,976, while the median price of a bungalow increased 2.1 per cent year-over-year to $499,549. Due to high inventory in the condominium segment, the median price of a condominium decreased 3.4 per cent year-over-year to $260,048.
“Strong demand for Calgary real estate has kept home prices stable. Sales during the summer were higher than those seen during the same period in 2019, and September was the strongest September for sales in the past 6 years,” said Corinne Lyall, broker and owner, Royal LePage Benchmark. “Demand has been highest in low density areas and in lower price ranges. We have also seen increased demand for properties outside of the city in our bedroom communities, especially recreational properties.”
Lyall added that while fewer sellers typically list in the late fall or early winter, buyers seem still active and eager to take advantage of exceptionally low interest rates. If demand remains higher than the seasonal norm, inventory is expected to tighten.
Royal LePage is forecasting that the aggregate price of a home in Calgary will remain relatively flat, decreasing 0.5 per cent in the fourth quarter of 2020 compared to the same quarter last year.
“While COVID-19 could bring further economic challenges, Calgary’s real estate market has already come down in price after years of a declining oil market. Home prices are not likely to have much room to decline further given other market fundamentals,” said Lyall.
Edmonton
The aggregate price of a home in Edmonton remained relatively flat, increasing 1.0 per cent year-over-year to $373,156 in the third quarter of 2020.
“Sellers who were holding out for a full market recovery over the past few years are bringing high quality two-storey listings to the market often at a lower price than purchased. Sellers in the mid- and entry-level of the market have seen robust activity,” said Tom Shearer, broker and owner, Royal LePage Noralta Real Estate.
Broken out by housing type, the median price of a standard two-storey home increased 3.0 per cent year-over-year to $429,787 and the median price of a bungalow decreased 2.4 per cent to $356,710. In the same period, the median price of a condominium decreased 0.9 per cent to $220,949.
“Year-to-date, sales are down approximately 3 per cent compared to 2019. Considering the impact of COVID-19 on the economy, this is an indication of a fairly healthy real estate market,” said Shearer.
Royal LePage is forecasting that the aggregate price of a home in Edmonton will decrease 0.5 per cent in the fourth quarter of 2020 compared to the same quarter last year.
Shearer added that while Edmonton is in a balanced real estate market, demand for recreational real estate has risen significantly.
“Recreational properties within a two hour drive of the city are seeing demand and prices soar,” said Shearer. “Travel plans are on hold and buyers are figuring out how they want to enjoy family holidays. Shelter-in-place and social distancing guidelines have buyers looking to the great outdoors to relax and escape the city.”
Halifax
The aggregate price of a home in Halifax increased 11.3 per cent year-over-year to $358,078 in the third quarter.
“Low inventory is fueling home prices. In some neighbourhoods we have very few listings and in other areas, there are none,” said Matt Honsberger, broker and owner, Royal LePage Atlantic. “Recently, we have seen a modest improvement in inventory that should provide some relief but many potential sellers are not listing because they don’t want to become buyers in Halifax’s hot market.”
The median price of a standard two-storey home increased 12.8 per cent year-over-year to $383,438. The median price of a bungalow increased 8.1 per cent year-over-year to $297,140, while the median price of a condominium saw an increase of 4.6 per cent year-over-year to $318,049.
Honsberger added that while most buyers are local, the region continues to see strong demand from buyers relocating from Ontario and Alberta.
“Most of the demand from outside the province is from Ontario buyers with a connection to the region. The prevalence of COVID-19 has been lower than other Canadian cities and Halifax is a great city in which to live and work,” said Honsberger. “Some buyers are retirees, but most buyers have secured jobs in the region or they will work remotely.”
Royal LePage is forecasting that the aggregate price of a home in Halifax to increase 12.0 per cent in the fourth quarter of 2020 compared to the same quarter last year.
Winnipeg
The aggregate price of a home in Winnipeg increased 3.4 per cent year-over-year to $323,966 in the third quarter of 2020.
During the same period, the median price of a two-storey home increased 8.9 per cent year-over-year to $375,721, while the median price of a bungalow increased 2.2 per cent to $304,078.
“As a result of social distancing measures and more people working from home, the true value of the home has risen. Winnipeggers are living, working and playing more at home. Whether it’s building a deck or moving to a new neighbourhood for more space, we are looking for ways to improve our lifestyle through our property,” said Michael Froese, managing partner, Royal LePage Prime Real Estate.
Froese added that 33 per cent of homes in September sold for higher than list price, which is a direct result of a steep decline in inventory.
“Consumer confidence in the Winnipeg housing market is high and buyers are looking to take advantage of very low interest rates. However, inventory was down 38% in the third quarter compared to last year so it is a very competitive market,” said Froese. “Larger homes outside of the city centres are attracting a lot of interest.”
Royal LePage is forecasting that the aggregate price of a home in Winnipeg will increase 2.5 per cent in the fourth quarter of 2020 compared to the same quarter last year.
Regina
The aggregate home price in Regina increased 2.7 per cent year-over-year to $325,228 during the third quarter of 2020.
The median price of a standard two-storey home increased 7.8 per cent year-over-year, rising to $408,423 while the median price of a bungalow decreased 1.0 per cent to $288,798. During the same period, the median price of a condominium decreased 3.2 per cent to $214,112.
“Low interest rates and pent up demand from the spring market pause continue to fuel Regina’s real estate market,” said Mike Duggleby, managing partner, Royal LePage Regina Realty. “While not as frequent as previous months, we are still seeing multiple offers and fourth quarter sales are expected to be higher than last year.”
Duggleby added that robust sales have resulted in low inventory for entry-level and mid-range homes.
Royal LePage is forecasting that the aggregate price of a home in Regina will increase 2.5 per cent in the fourth quarter of 2020 compared to the same quarter last year.
Royal LePage Home Price Data and Forecasts:
Royal LePage House Price Survey Chart (Canada’s largest 64 housing markets): https://rlp.ca/house-prices-Q3-2020
Royal LePage Market Survey Forecast Chart: https://rlp.ca/2020-forecast-october-2020
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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.
For further information, please contact:
Stella Karami skarami@getproof.com (647) 884-9651
[1]Royal LePage’s aggregate home price is based on a weighted model using median prices and includes all housing types.
[2]Royal LePage Advisor Survey. National survey of 936 agents conducted between October 1, 2020 and October 7, 2020.
[3] Statistics Canada, Labour force characteristics by province, monthly, seasonally adjusted
[4] Government of Canada, Government introduces new border measures to protect Canadian public health, provides update on travel restriction, October 2, 2020
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