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Ontario housing markets to lead Canada heading into 2021

Ontario housing markets to lead Canada heading into 2021

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Ontario housing markets to lead Canada heading into 2021

Housing markets across Canada are expected to remain active for the remainder of 2020 due to pent-up demand and low inventory levels – with price growth in Ontario leading the way, according to a new report from ReMax Canada.

The ReMax Fall Market Outlook Report forecasts the average sale price in Canada could increase by 4.6 per cent during the remainder of the year, compared to the 3.7 per cent increase that was predicted in late 2019.

The pandemic has prompted many Canadians to reassess their living situations. According to a survey conducted by Leger on behalf of ReMax, 32 per cent of Canadians no longer want to live in large urban centres, and instead would opt for rural or suburban communities. This trend is stronger among Canadians under the age of 55.

Pent-up demand

“The classically hot spring market that was pushed to the summer months due to the COVID-19 pandemic created a surprisingly strong market across Canada and across all market segments,” says Christopher Alexander, executive vice-president and regional director, ReMax of Ontario-Atlantic Canada. “Looking ahead, government financial aid programs may be coming to an end in September, which could potentially impact future activity. However, the pent-up demand and low inventory dynamic may keep prices steady and bolster activity for the remainder of 2020. Overall, we are very confident in the long-term durability of the market.”

Not only are Canadians more motivated to leave cities, but changes in work and life dynamics have also shifted their needs and wants for their homes. According to the survey, 44 per cent of Canadians would like a home with more space for personal amenities, such as a pool, balcony or a large yard.

Ontario housing market

With Ontario one of the provinces hit hardest by the pandemic, markets such as Niagara, Mississauga and Kitchener-Waterloo experienced significant drops in activity, but bounced back aggressively in June as economies began to reopen. Toronto continues to be a sellers’ market, with low listing inventory and high demand. An uptick in new listings is anticipated for fall, now that buyers and sellers are more comfortable engaging in the housing market. ReMax estimates a five-per-cent increase in average residential sale price in Toronto for the remainder of the year, with the potential for modest price increases of up to six per cent in regions such as Hamilton, Brampton and London.

Luxury market thriving

Canada’s overall luxury market has remained strong throughout the pandemic, with market conditions unchanged from the beginning of the year in most regions.

The luxury segment in Toronto is considered balanced, with Vancouver pushing into a sellers’ market. Vancouver is beginning to see more interest from move-up buyers instead of the foreign buyers who drove demand in Vancouver’s luxury market prior to COVID-19. This was likely due to travel restrictions brought on by the pandemic. In Toronto, activity was slower than usual this spring as buyers did not have any urgency to transact during the pandemic.

Luxury housing in secondary markets such as Hamilton is seeing a slight uptick in activity, with high-end buyers seeking more square footage and larger properties outside of city centres. Hamilton has experienced an increase in buyer interest from residents from Brampton and Mississauga looking to relocate to the region.


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Ontario markets among Canada's least affordable: ReMax

Ontario markets among Canada’s least affordable – ReMax

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Ontario markets among Canada’s least affordable – ReMax

Despite a commonly held notion that housing in Canada is unaffordable, a majority of Canada’s largest cities (75 per cent) are currently undervalued, according to the 2020 ReMax Housing Affordability Report.

Unfortunately, seven centres in Ontario rank in the top 10 markets that are least affordable.

“Affordability was a cornerstone narrative during last year’s election, perpetuating the overall banner statement across Canada that real estate is increasingly unaffordable and unattainable, particularly for younger, first-time home buyers,” Christopher Alexander, executive vice-president and regional director, ReMax of Ontario-Atlantic Canada, told HOMES Publishing. “This perception is largely influenced (and skewed) by the Toronto and Vancouver markets, which represent some of the most expensive housing markets in North America. However, the housing market is more than these two cities and paint quite a different story. More markets are affordable than not, and most are accessible, with 75 per cent of brokers agreeing that their markets are undervalued.

In markets such as Toronto, demand is far outstripping supply, pushing prices up considerably as a result. “We need to continue to push for an increase in housing supply for buyers and renters, but we have yet to see a comprehensive national housing strategy to help facilitate this shift,” says Alexander.

“Given that approximately 110,000 new Canadians are settling in the GTA each year, the lack of available supply is a huge problem. This is concerning for affordability and needs to be addressed by a national housing strategy. Otherwise, we’ll only see the problem continue to grow and the home prices will continue to climb across the GTA.”

Of the regions surveyed, Winnipeg, Regina and Halifax are currently the most affordable markets, with average sales prices of $281,105, $301,473 and $319,071, respectively. Vancouver, Toronto and Mississauga are currently the least affordable regions in Canada, with average sales prices of $1.19 million, $883,520 and $760,005, respectively.

In Toronto, factors such as the OSFI mortgage stress test, listing shortages, rising prices and saving enough for a down payment are cited as preventing buyers from purchasing property. Buyers in this region are primarily looking to purchase condominiums, but as one of Canada’s least affordable housing markets, they continue to be priced out.

Emerging trends such as co-ownership with friends and family have become common in hot markets such as Vancouver and Toronto, in order to overcome the hurdle of high housing prices. In regions such as Brampton, Edmonton and Ottawa, sharing a single-family home between two families, dividing the floors between them or children seeking financial support from parents for down payments are becoming more common practices.

“All levels of government must work together to find a solution to Canada’s inventory issue, as the market will remain elusive for many otherwise,” says Elton Ash, regional executive vice-president, ReMax of Western Canada.


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