TORONTO -- Theyre taking a more critical eye to where they live.. Home prices across Canada will drop seven per cent in Lauren Haw, CEO of Zoocasa, a real estate agency that offers market analysis, said a big reason for that surge was pent-up demand from the early months of the pandemic, when many buyers and sellers froze. While each expert expects 2021s market to look a little different, they all anticipate that prices for mid-range detached homes will only go up as more Canadians seek out home offices and backyards to make life with COVID-19 a little more comfortable. Haw doesnt expect the bubble to burst in 2021. Should you buy a house during the coronavirus crisis? Fewer houses are being listed, with inventory down about 12 per cent. Fitch Ratings says demand has Many of those people deferred them because of loss of jobs, he said. The biggest drop in prices has been seen in the downtown condo market and luxury real estate over $1 million, Havre said. Similar to Toronto, Vancouvers downtown condo market has taken a hit, with a three-per-cent decrease year over year in prices. People believed the market was solely fuelled by foreign buyers, that things would collapse because of travel restrictions it hasnt changed anything at all, he said. The Toronto real estate market has shown no signs of slowing down. Despite the global pandemic that took over the world in spring 2020, the Canadian real estate market saw a record breaking high with 551,392 homes trading hands over the course of the year, a 12.6% increase over 2019 sales, according to CREA. So they say, Why pay $500,000 for a 500-square-foot condo when for the same price I can have a pool, a basement office, and I dont have to commute to the city anymore? he said. Canadian home sales record 57% monthly drop in April. The median sales price of new houses sold in January 2021 was $346,400. and there was a 57 per cent drop If youve been sitting on the sidelines of the real estate market with a chunk of savings hoping for house prices to plummet, 2021 probably wont be your year, Canadian real estate market experts say. Since the COVID-19 outbreak started at the beginning of 2020, some Canadians may have found opportunities in the housing market to buy a new home May 16, 2020, Ontario reports 1,508 new coronavirus cases, 14 more deaths, Father of teen fatally stabbed in Leduc school thanks community for support, Coronavirus: Latest developments in the Greater Toronto Area on March 17, Heres where Walmart is closing six stores in Canada, Senior female military officer quits over misconduct allegations: I am sickened, Woman who died after AstraZeneca shot had highly unusual symptoms, officials say, Memorial for teen killed in Leduc school stabbing grows: She was one of a kind, Father of slain Alberta student wants people to remember the beautiful soul she was, Now is the time for people to rise up and start talking about it: Former military officer Alex Auclair, Walmart closing 6 Canadian stores, upgrading half of its remaining locations, Memorial for teen killed in Leduc school stabbing grows, Missing Regina teen found dead in eastern Saskatchewan, Blood clots not a safety concern for AstraZeneca vaccine: officials, Coronavirus: Montreal downtown office vacancy rates remain high, Brant County starts COVID-19 vaccine waitlist for ages 70 to 74, Coronavirus: Lawson Heights School in Saskatoon moves to online learning. Canadian home prices rise in May but cracks appear in the market ; In Toronto, the CMHC predicts average home prices could decline by between three per cent and 10 per cent by 2021, with the softening disproportionately affecting condominiums as opposed to houses and townhouses due to supply discrepancies between the segments. Canadas housing agency says it expects home prices and sales will decline substantially this year and still wont have recovered by the end of 2022. THE CANADIAN PRESS/Graeme Roy. The pandemic will punish Prairie house prices the most in Canada, but even hotspots Toronto and Vancouver will see prices drop on the back of rising rental market vacancies and lower immigration rates, according to a new report. Sales of new single-family houses in January 2021 were at a seasonally adjusted annual rate of 923,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. A limited supply of houses on the market helped fuel that price rally, with more buyers desperate for extra space competing for fewer properties, according to Montreal-based real estate agent Georges Bardagi. In October, as Toronto house prices broke records again, the UBS Global Real Estate Bubble Index ranked Toronto third in the world on a list of cities most at risk of experiencing a property bubble. The exact figures, however, are less important than the explanation behind the expected drop. The Where she does expect to see prices suffer is in one-bedroom condos, particularly in buildings downtown with a high proportion of renters and Airbnbs. We will see that trend continue to happen, Haw said. Nationally, house prices rose 5.4%. "Everybody locked in their homes discovered the things they wanted to change. If that happens in the second half of 2021 or the first half of 2022, itll be a game changer, he said. "But this pandemic didnt do it. In fact, in cities like Toronto and Vancouver, fierce competition for detached houses meant back-to-back months of record-breaking prices. Vancouver, the only other city on the list, ranked eighth. Whats it going to take? Although numerous reports show homebuyer demand dropped at the start of the coronavirus lockdown, prices were buoyed by a drop Indeed, the average selling price of homes in Windsor increased to $406,861 in 2020 (Jan. 1 Oct. 31), up from $335,697 in 2019 (Jan. 1 Dec. 31). Corelogics forecast predicts home prices nationally will have fallen 6.6 percent year-over-year by May 2021. Wiens said that presents an opportunity for buyers. If you think about the downtown market, what makes it great is the lifestyle, restaurants, bars clubs, that stuff is shut down and its going to come back and its going to come back hard.. The demand for condos downtown has slowed down like everywhere else, but I think the effect is probably smaller in Montreal.. Some people wanted to change their homes, invest in a bigger kitchen. Theres a few models we could be using, some are much more complicated than others. Ontario Ontario is the most populated province in Canada, located on There will be some great opportunities for buyers in the downtown area, he said. As for opportunities to buy, Havre echoed the sentiment that condos in the downtown core will likely see reduced prices for a little while. While prices are almost flat compared to last One factor that could make a major difference is when Canada decides to reopen the borders. Thats bad news for condo owners looking to sell, but possibly good news for anyone keen to buy a small space in hopes that, eventually, the perks of downtown living will return. The agency emphasizes the high degree of uncertainty going forward, including the potential for a more severe and sustained recession if the pandemic is not contained. Canadian Real Estate Prices To See Average Price Drop At Least 11% The agency is expecting a fairly substantial dip in prices across Canada. a record-breaking 10,563 homes in October, according to the chairwoman of the Real Estate Board of Greater Vancouver. Here in Ontario, home prices are forecast to increase by 8.3% in 2020, while Toronto could see an increase of 7.8%, compared to 4.1% in 2019, reads the report. What Im telling all my buyers is to buy downtown immediately, if youve considering it, he said. The pandemic is also pushing people outside city centres, he said. Please read our Commenting Policy first. People who said, I'm gonna buy this $600,000 one-bedroom condo in downtown Toronto, are now saying, I can work from home in Barrie, Ancaster, Guelph or London. And people in London are doing the same and moving to Strathroy and Woodstock.. For 2021, Wiens said he expects to see the prices of houses continue to rise at high levels, with all the time spent at home this winter giving people more time to reconsider their living situations. Montreals condo market is a bit of an outlier, Bardagi said, compared to cites like Toronto and Vancouver. Canadas housing markets broke records in 2020, even as a global pandemic raged, but prices could be poised to fall next year. Use of this Website assumes acceptance of Terms & Conditions and Privacy Policy, Published Sunday, January 3, 2021 7:00AM EST. We experienced a bit of a double whammy because were very reliant on the energy sector here in Calgary, and weve been in a downturn since 2014, 2015 when oil prices collapsed. And so when they collapsed again, we were like, Come on.. This comes as the Canadian Real Estate Association (CREA) reported a 14% drop in sales from February to March, while new listings are also down 12.5% from February. The number of sales passed 3,000 for the first time since 2015, which marked the second-best November in the last 10 years. It has dropped from $948 per thousand board feet in September to now $565 per thousand board feet in early November.. A few key factors have influenced the recent decline in lumber prices. a 32-per-cent leap in residential sales in November 2020, COVID-19 complicates holiday travel for Canadian sun seekers, Alberta chateau once listed for $20 million sells for $5.88 million, Home sales shoot up 32.1 per cent year-over-year in November, These are the Walmart stores closing across Canada, Le Chateau brand for sale by U.S. advisory firm under creditor protection process, Canadian home prices gains accelerate in February, Annual pace of inflation edges up in February, Stocks fall on Wall Street ahead of Fed view on U.S. economy, EU sets out COVID-19 pass plan to allow free travel by summer. ': Prince Charles takes swipe at anti-vaxxers, Mitch McConnell vows 'scorched earth' if U.S. Senate ends filibuster, Feds extending COVID-19 wage and rent subsidy until June, CRA says 'rare' error in some tax slips lists repaid CERB as taxable income, Feds extending Canada Recovery Benefit eligibility by 12 weeks, Everything you need to know about COVID-19 and your taxes, explained. So it's not a demand issue, which is what a recession solves, the supply issue is the problem. In the event house prices do collapse, remember that also doesnt automatically make the market easier to enter. Its really not.. Home building will also be affected, with housing starts expected to see declines of between 50 and 75 per cent this year compared with pre-COVID-19 levels before starting to rebound next year. Do they feel comfortable living in such high-density environments when we are still in a pandemic?. While bidding wars for houses are poised to heat up in many parts of the country, condos are a different story. Carney: Canada has to reduce emergency spending 'very soon', Baby shot in the head during police robbery chase in Houston, Benefits outweigh risks of AstraZeneca COVID-19 shot as review continues: WHO, Health authority fires Quebec nurses accused of mocking Indigenous patient, 'She was my baby girl': Father of girl stabbed in Edmonton-area classroom remembers 'talented artist', Prince Harry has had 'unproductive' conversations with William and Charles since Oprah interview, Gayle King says, Moderna plans to test its COVID-19 vaccine on Canadian children, Here's what we know about the Atlanta spa shootings that left 8 dead, Indigenous surgeon combats racism in health-care system, Boy finds 1995 message in bottle and tracks down the writer, Why 'deepfake' videos mean seeing is no longer believing, Man in 30s dies from COVID-19 in Peterborough, CTV National News for Tuesday, March 16, 2021, Extended: Massive explosion in California. Some other people decided, I want a big change, Im going to move out of the city, she said. The COVID-19 pandemic didnt devastate Canadas hottest housing markets the way some forecasters predicted. But the pandemic has really made people think long and hard about what it's like to live in apartment buildings. The Toronto market also appears to be strugglingprices remained steady in February, but resales dropped 12.6 per cent, a trend Agopsowicz predicts will spread across the rest of Ontario. Ultra-low interest rates, introduced in the early days of the pandemic, are making those purchases particularly attractive for first-time buyers who havent seen their livelihoods jeopardized by COVID-19. READ MORE: Coronavirus and the housing market Is this a good time to buy? Its very interesting that were seeing the activity that were seeing, and were pleasantly surprised, he said. The pandemic arrived at a time when the city was still grappling with the repercussions of the struggling oil sector. : Is a stricter lockdown coming? Bardagi said he anticipates a surge of foreign buyers whove been waiting in the wings will flood the market. I dont know what it will be that will drive the Toronto market into price decline.. The urban-to-suburban buyer interest in Ontario has impacted Torontos downtown core, specifically for condos, which is currently a buyers market. Canadian homes prices could drop up to 25% in some regions: CMHC. According to Vukasovic, for the first time since May 2018, home prices have declined in both the freehold and condominium segments as a result of COVID-19. DBRS predicts a drop in 10% to 15% for home prices due to Corona Virus. CMHC says home sales could decline by 19 to 29 per cent from pre-COVID levels before starting to recover late this year. Without income, you can not qualify for a mortgage. With more properties on the market, housing prices should stabilize, he says. There is clearly a risk that the small number of houses that change hands do so at even lower prices, however, added Brown. Coronavirus and the housing market Is this a good time to buy? A new RE/MAX report tracks which neighbourhoods climbed the highest for Toronto house prices in a pricey real estate market in 2020. COVID has made people appreciate the space that they live in or on the flip side, not appreciate it, Vancouver-based agent Mark Wiens told CTVNews.ca earlier in December. Growing demand, low supply and rising prices are expected to impact activity and prices in 2021." There is momentum going on and its not going break up any time soon, he said. Vancouvers housing market has long been supported by foreign buyers. Based on economic indicators, such as Alberta having the second-highest unemployment rate in the country, Havre said hes surprised the market is doing as well as it is. The same month, the average price for detached homes jumped to $1,204,844, a 14.8-per-cent increase from October 2019. NAR just released its list of hottest Zip Codes in In the upper bound, the average price bottoms at $481,832 in Q1 2021, down 11.09% from the price at the end of last March. Third wave in Ont. If the economy continues to recover from COVID-19 shutdowns and interest rates remain low, that will likely translate into upward pressure on housing prices, Haw said. The reason Calgary is facing challenges has a lot to do with the oil industry, Havre said. Condo sales fell 8.5 per cent in the city of Toronto in October, with far less interest in smaller units in the densely populated core. It could be this recession is not yet believed by most Ontarians. Bardagi said it can sometimes be easy to forget how attractive life in Canada can be to outsiders, and that a new wave of international buyers could throw gasoline on an already burning real estate market. On March 15, the average price for freehold homes in Toronto hit $1.36 million; however, theyve since The writing is on the wall with 21 per cent of mortgages being deferred. Its a less rosy picture in Calgary. Its still very much a growing market, he said. After slowing in the past two years, Canadas housing market has bounced back strongly last year, despite the COVID-19 pandemic. In one case, a house that Moody's Analytics national housing market outlook predicts a nine per cent decline in Toronto. Median prices also jumped, with single-family homes up 17 per cent and condos up 14 per cent. As for a price collapse, Wiens agrees that 2021 isnt the year, pointing to the high demand. There will be planes full of people who want to move here and buy here.. Canadian Real Estate Prices To Drop 28%. While the market for houses will likely remain competitive in early 2021, the first few months of the year could be the time to find a deal for downtown condos, Wiens said. Toronto should avoid any further house price declines, thanks to heavy demand for housing, but price growth will be limited to an average of 3.3 It says the drop in home prices will come along with a historic recession this year as the economic shock of COVID-19, including a plunge in oil prices, hits the market. Will Ontario House Prices Drop in 2021? Sign up for our weekly email newsletter delving into climate science and life on a changing planet. A forecast by Haus shows home prices dropping between 0.5 and 2.5 percent from October 2020 to July 2021. The price for a house in Ontario in 2020 is forecasted to be 648,100 Canadian dollars. The average home sale price stayed about the same, moving up one-tenth of one per cent to just over $821,000. For example: Central 1, the economists for the credit unions, predicts Ottawa prices will rise 10% in 2021. Canada Mortgage and Housing Corp. says in a special housing market outlook that it expects home prices to decline between nine and 18 per cent, and as much as 25 per cent in oil-producing regions, before starting to recover by mid-2021. Canadas housing agency says it expects home prices and sales will decline substantially this year and still wont have recovered by the end of 2022. Calgary-based agent Justin Havre pointed out that the average price for detached homes is flat in Calgary, at 0.74 per cent higher than in 2019. It's just not going to happen. Except for April and May, weve seen huge year-over-year increases in the number of sales each month, Wiens said. CTVNews.ca Writer, A real estate sold sign is shown in a Toronto west end neighbourhood May 17, 2020. Canada's Most Trusted News. READ MORE:Canadian home sales record 57% monthly drop in April. In November, the benchmark price of a Vancouver home hit $1,044,000, up 5.8 per cent from November 2019. Brendan LaCerda, a Senior Economist with Moodys Analytics, estimates that each 1% rise in unemployment results in a 4% drop in home prices. Since the last time we touched on the subject in early September of 2020, the cost of lumber has already started to decrease substantially. Until now, the impact of unemployment has been delayed by the CERB and mortgage payment deferral program. Vancouver remains a sellers market, according to the chairwoman of the Real Estate Board of Greater Vancouver. Agents sold a record-breaking 10,563 homes in October, a 25-per-cent increase from the year prior. Thats translated into a small-town revival, Haw said, with cities and towns throughout southern Ontario seeing fierce competition for houses. Low inventory has been a common trend across many Ontario housing markets, putting prices on an upward trajectory. That being said, its been 30 years since a major correction in the Toronto real estate market, she said. If renters come back, we wont see investors need to sell off one-bedroom condos.. Graham Slaughter We expect Q1 and Q2 to be more of the same until a vaccine comes in and we come back to a somewhat more regular situation, which will probably be in the summer or next fall, he said. With the health crisis palpably impacting the Canadian housing market, many would-be homeowners are wondering if prices in some of the country's most notoriously expensive cities will be dropping to more affordable levels anytime soon.. I dont think were currently at the bottom of condo prices, so I do think urban condo prices will continue to suffer in Q1, Haw said, adding that a vaccine could change that. Supply levels throughout Toronto are continuing to drop and are not expected to improve in 2021, which will impact average home prices. The government of Ontario has prohibited any open houses and many people are choosing to sell their homes after the effects of COVID-19 blow over. In one word, 2020 has been incredible, according to Vancouver agent Mark Wiens. Id hope that means service centres start to recover, the economy starts to rebound, businesses rebound, everyone runs to their local restaurants, which will be good for the economy, so we see renters come back to the city. The average sales price was $408,800. Montreal saw a major jump among all property types in 2020, with the city seeing a 32-per-cent leap in residential sales in November 2020 compared to November 2019. CTVNews.ca chatted with real estate agents and experts in Vancouver, Calgary, Toronto and Montreal to get their predictions for where the market is headed. Prices in Montreal havent seen the same drop in price because Montreal simply doesnt have the same number of condos. Toronto and Vancouver wont be exempted and should the Canadian dollar rise as expected, it will weigh on the Ontario economy, pushing unemployment higher and for an extended period. Looking ahead, he expects 2021 will be another tough for Calgary, with more struggling homeowners facing foreclosure in the first half of the year. Want to discuss? Home price growth is projected to hit a national average of 6.1% in 2020, compared to a 2.3% increase last year. The biggest drop in prices has been seen in the downtown condo market and luxury real estate over $1 million, Havre said. As a result of their varying assumptions, some forecasters expect prices to continue rising, while others expect are more likely prices to drop. A new report predicts home prices across Canada will drop in 2021, as high unemployment and lower incomes due to the COVID-19 pandemic keep buyers from returning to the market. In one case, a house that sold for $11 million a few years ago sold in 2020 for $6 million -- a staggering drop that Havre said suggests luxury buyers are simply not interested in making a move. A bubble burst is not imminent. The minute housing prices go down in Toronto, people are going to jump on the market and try to snap them up. Besides winter and road construction, its a great place to live.. However, sales will be met by tempering forces: declining affordability due to still-rising home prices and a lack of supply of houses, especially existing homes. Hottest Zip Codes: Home Price Rises and Views. Today well stick to your basic trendline using exponential linear regression. Simply put, that didnt happen, Wiens said. I dont see a price correction coming in 2021. Download the CTV News app now. Using this model, and using the OECD index numbers, we should see prices drop Quarterly house price to income ratio in Canada 2015-2020 Affordability of single-family detached homes Canada 2020, by market Affordability of condominiums Canada 2020, by market All the experts agreed that small one-bedroom condos in downtown cores have already seen a price hit in 2020, and these prices arent expected to quickly rebound in early 2021. When COVID-19 arrived and the border shut down, there were concerns that the housing market could be rattled. If they havent been able to find employment, and then they havent been able to sell their property, foreclosure may be the unfortunate circumstance for some people.. nearly six per cent in October, despite a jump in sales that month. Year-to-date sales were down nearly six per cent in October, despite a jump in sales that month. While the emergence of the pandemic was expected to knock down housing prices, Bardagi suggested that, now, the opposite is true: as vaccines are introduced and the economy returns to normal, he suspects more people will feel comfortable listing their houses. 'Who would have thought? So youll still be looking at a discount if you buy downtown in March 2021, I believe, Wiens said.