"Canadians can expect a vibrant spring real estate market, with home prices rising modestly"
According to the Royal LePage House Price Survey, the price of a home in Canada has increased 2.2% year-over-year to $648,544 in the fourth quarter of 2019. Similar to the third quarter where potential buyers were continued to come back to the real estate market. The first half of 2019, buyers remained hesitant on the sidelines waiting to gauge the impact of the federal mortgage stress test.
President and CEO of Royal LePage, Phil Soper says, "We have successfully navigated the first significant national housing market correction since the Great Recession a decade ago. While the drop in the number of properties bought and sold during the 2018-2019 downturn was large, the value of homes in Canada held up remarkably well, with only minor, single-digit declines in the areas of Ontario and B.C. that experienced the most aggressive price inflation in recent years, and of course those regions still suffering from a downturn in the oil and gas sector."
The federal government signaled some changes could come to the mortgage stress test mechanism in 2020. The stress test has pushed people away and out of the real estate markets across Canada temporarily. For the most part, buyers have readjusted and continue to purse their dream of owning a home.
The impact of regulations-driven drop in demand has been felt differently in different parts of the country.
The Royal LePage National House Price Composite is compiled from proprietary property data from 64 of the nation's largest real estate markets. When broken down by housing type, the median price of a 2-storey home rose by 2.3% year-over0year to $761,817, while the median price of a bungalow increased modestly by 0.7% to $537,622. Data analyzed included both resale and new build transactions.
Condominiums remain the fastest appreciating property type of the real estate market across Canada, with median prices rising 3.3% year-over-yeat to $487,525. Condo prices rose 7.8% in the Greater Toronto Area to $565,919. After significant price gains in recent years in the condominium segment, the price of a detached home is more attractive as the gap between the two segments tightens, especially for millenials looking for more space for growing families.
According to the Royal LePage Market Survey Forecast, the aggregate price of a home in Canada is expected to increase 3.2% year-over-year in 2020 rising to $669,800 and 6.62% in the Greater Toronto Area. This forecast is dependent on consistent economic conditions, assuming no housing policies change,
Greater Toronto Area
With low inventory, heightened increase in demand and accounting for population growth, prices haved continued to fuel for homes in GTA. In the 4th quarter, the price of a home increased 4.8% year-over-year to $843,609. In the same period of time, the median price of a standard two-storey home and bungalow increased 4.4 and 4.2 per cent to $982,944 and $806,977 respectively.
"The GTA is at a pivot point where we are seeing signs that prices could begin to rapidly increase," said Kevin Somers, CEO, Royal LePAge Real Estate Services Limited. We are seeing a low supply of listings while we are seeing more potential buyers trying to enter the market.
Home price growth has varied significantly across the region. Some areas have showed stabilizing prices and healthy price growth, many regions, including the city centre, showed potential for rapidly accelerating appreciation rates drive by high demand and low inventory.
Significant price gains were see in Pickering and Mississauga, where prices increased 9.7 and 7.9 percent year-over-year. The price of a home increased in Toronto 6.6 per cent year-over-year respectively. On the other hand, cities like Ajax and Oshawa showed a year-over-year decline of 1.8 and 1.2 per cent year-over-year to $661,049 and $524,423 respectively.
Kitchener - Waterloo
Residential real estate provided a solid return on investment in 2019 in Kitchener and Waterloo, with average prices climbing 9.3 per cent.
Sales volume increased slightly to 5,925 transactions, an 1.6% incline year-over-year and a 3% increase over a 10-year average. "We hit nearly 6,000 transactions, which is very, very strong for Kitchener-Waterloo," new president of the K-W Association of Realtors, Colleen Koehler said.
The average price for all residential properties sold last year climbed to $527,718. Detached homes were up 7.1% to an average of $614,743. The median price of all properties rose 10.1% per cent to $490,000, while the median price of a detached home increased to $570,000, a jump of 8.6 per cent.
Lack of supply continued to fuel a sellers market that pushed priced higher. New arrivals - often leaving behind the higher-priced GTA for the relative affordability of Waterloo Region - might sell property elsewhere but compete here for a limited supply.
With the local population expected to continue climbing, interest rates remaining low, we expect a similar market, with prices and sales volume on the rise.
With that being said, the 2019 real estate market has slowly climbed and expanded and will continue to rise in 2020 and be a sellers market. We will be writing a blog on that shortly, stay tuned! Thank you for reading!