The COVID-19 pandemic shook the Canadian (and global) economy, causing business closures and job losses across many industries. But the public health crisis has failed to drive a stake through the Canadian real estate market – so far. Despite a slowdown at the height of the pandemic earlier this year, the nation’s housing sector has enjoyed a record-setting recovery from coast to coast, thanks in part to a combination of tech-savvy real estate agents low interest rates and high demand. Although homebuyer trends are evolving, major urban centres and small towns are experiencing booming sales activity and rising prices.

With winter on the horizon, can the housing market maintain its upward trajectory? Some believe that pent-up demand has likely been exhausted, but that real estate prices will continue to edge higher across the country. What does the data say? Let’s explore some of the latest analysis and numbers to see what has been occurring in the broader Canadian real estate market, and what trends may emerge as we approach 2021.

Will Canadian Real Estate Prices Cool This Winter?

The Federal Reserve Bank of Dallas recently published a report analyzing the real estate markets in the Group of Seven countries during the second quarter. Researchers revealed that Canadian residential real estate prices reported the biggest jump in the G7, rising 2.42 per cent from the previous quarter. The next closest in G7 is France, rising 1.71 per cent. This occurred despite soaring vacancy rates and very little immigration during the April-to-June period.

It is remarkable to see how much home valuations have increased and how sales have popped during an unprecedented public health crisis. Here are just some of the August 2020 average sales prices and the year-over-year growth based on Canadian housing market data:

• Greater Toronto Area: $890,400 (+11.1%)

• Greater Vancouver Area: $1,038,700 (+5.3%)

• Ottawa: $517,800 (+19.9%)

• Greater Montreal Area: $408,200 (+16.4%)

• Halifax: $372,982 (+18.1%)

The unforeseen developments of 2020 may have stumped market watchers, but the upward trends make sense since a key factor helping in the recovery of the national real estate market has been an inventory shortage that surfaced long before COVID-19 reared its head in Canada. According to the Canadian Real Estate Association (CREA), inventory levels fell to an all-time low of 2.6 months in August. This is the length of time it would take to liquidate the current stock of listings at the current sales rate.

Can Canada sustain this momentum heading into winter and 2021? RBC Economics recently published a report that suggested pent-up demand has been exhausted, which could mean the Canadian real estate market will lose some of this fierce momentum in the months to come. Despite the possibility of a slow down, the report suggests that prices will continue to climb.

“With pent-up demand now largely exhausted, we see activity cooling later this fall,” economist Robert Hogue wrote. “The pent-up demand created this spring proved a powerful driver of activity. Question is: how much longer can it be such a dominant factor? We think there’s probably little pent-up demand left to satisfy in most markets.”

The expectation for higher prices is in line with the RE/MAX Fall Market Outlook Report, which forecasted a continuation of growth in valuations and activity in most housing markets. But why? The Canadian real estate market has plenty of growth factors working in its favour:

• Interest rates are at an all-time low.
• Real estate agents are still utilizing virtual tools to facilitate transactions.
• Some levels of pent-up demand continue to linger in the background.
• The federal government has made it clear that it would not allow any substantial downturn in the industry.

Where to Buy in Canada

Whether homebuyers’ sights are set upon Atlantic Canada, the Greater Toronto Area, the Prairies of the West Coast, the Canadian real estate market is ripe with a wide range of opportunities for both new homebuyers and homeowners looking to upgrade. Now that more people are working remotely, many professionals are no longer confined to living within close proximity to their workplace, which is opening up a wave of growth everywhere – namely within small suburban or rural municipalities.

The Bank of Canada (BoC), which is anticipated to maintain an accommodative monetary policy for a few more years, projects that the road to recovery will be a long one. Despite the remaining roadblocks within the economy, including business closures and widespread job loss, the real estate sector is booming, suggesting that any significant price cooling activity is unlikely to correlate with Canada’s cooling temperatures. When it comes to the national real estate market, all signs point to a hot winter market ahead.  

A home is the biggest transaction most of us will ever make. That’s why it’s important to work with an experienced and knowledgeable real estate agent. RE/MAX Four Seasons Realty Brokerage prides itself on being a true leader in the real estate industry throughout Collingwood, Thornbury and Stayner. Since opening our doors in 1984, our focus has always been on providing innovative technology and unparalleled customer service in order to create a totally remarkable real estate experience.

Be sure to connect with us on Facebook, Twitter, Instagram and LinkedIN.

Article courtesy of blog.remax.ca.