The national average price is expected to increase by 9.1% in 2021, reaching US$620,400. The average price trend in Canada in 2021 is expected to be similar to that in 2020. Supply shortages, especially in Ontario and Quebec, will lead to strong price growth, while Alberta and Saskatchewan’s average prices are expected to rise in a few years. Depreciation!
On December 15, 2020, Ottawa – The Canadian Real Estate Association (CREA) updated its forecast of housing sales activity through the Canadian Real Estate Council and the Association’s Multiple Listing Service® (MLS®) system.
Current trends and the outlook for the fundamentals of the real estate market indicate that in 2021, economic activity will remain relatively healthy, and housing prices in all regions will continue to rise or remain stable.
In the past few years, record levels of international immigration, low-interest rates, and the increasing proportion of millennials entering the year of home purchase have made the real estate market an important force in the Canadian economy. Recent government support programs for people and businesses have also helped the entire economy through the worst influenza pandemic to date.
Mortgage interest rates fell to their lowest points in history in 2020, including the five-year benchmark interest rate of Canadian banks used by Canada’s largest banks to qualify applicants under the B-20 mortgage stress test.
In the second half of 2020, the recent improvement in national sales trends exceeded expectations. Compared to supply, the relative intensity of housing demand means that sales activity has been destroying active stock, which was already scarce in many markets before the pandemic.
The increase in demand has affected every part of the country, including the Prairie, Newfoundland, and Labrador. Although the pressure on prices in these regions is not as high as in other regions, compared with previous years, demand is increasing, and prices have indeed started to rise.
Although the pandemic caused a historic setback in the spring market, CREA expects that national sales in 2020 will record 544,413 vehicles, increasing 11.1% over 2019. The Canadian housing market is broadly based, except for Alberta, and sales in every province have increased year-on-year. The provinces of British Columbia and Quebec contributed greatly to the overall revenue.
In 2020, the national average price was expected to increase at a rate of 13.1% per year, slightly above $568,000. This mirrors the current balance of supply and demand, which is very beneficial to sellers in many local markets.
It is expected that in 2021, monthly sales will fall back to a more typical level. However, assuming that the market in the spring of 2021 is relatively normal, it is expected that the annual housing sales will increase over 2020. Next year, national housing sales are expected to increase by 7.2% to 584,000 units. Sales activities in all provinces except Ontario are expected to increase in 2021, as low-interest rates and improving economic fundamentals allow people to enter the market for saleable homes.
Over the past few years, Ontario’s demand has been strong, especially outside of Toronto, which has weakened the province’s active supply. Strong demand, especially for larger single-family homes, will drive up average prices as potential buyers compete to purchase the most desirable real estate.