Royal LePage Market Forecast and Insights

Royal LePage Canadian Market 2020 Q2 Insights and Forecast for Remained of 2020

Royal LePage: National home prices rise sharply in second quarter as housing supply struggles to keep up with surge in demand

Balance expected to return to market in second half of the year

  • Two-storey house prices outpace condos as home-bound Canadians place premium on space
  • Ontario posts Canada’s highest home price increases, with Mississauga in top spot at 13.5% year-over-year
  • Royal LePage revises Canadian home price forecast upwards to 2.3% by year end 2020, as low rates and pent-up demand face limited housing supply

TORONTO, July 9, 2020 –According to the Royal LePage House Price Survey and Market Survey Forecast released today, the aggregate price of a home in Canada increased 6.8 per cent year-over-year to $673,072, in the second quarter. Once provinces allowed regular real estate activity to resume, demand surged in many markets. Inventory levels, already constrained pre-pandemic, have failed to keep pace.

“Home prices shot up in the second quarter as a crush of buyers entered the market, attracted by extremely low interest rates and the perception of bargains to-be-had,” said Phil Soper, president and CEO of Royal LePage. “Across Ontario and Quebec in particular, the demand for housing outpaced the growth in supply, especially in the early weeks post-lockdown. The surge in the number of first-time buyers was felt acutely, as these housing consumers soaked up supply without contributing to it.”

Soper continued, “We are now seeing sellers return to the market in key supply-constrained regions in numbers sufficient to meet demand. Home buyers should enjoy more reasonable conditions with stable prices and improved selection in the second half of the year.”

The Royal LePage National House Price Composite is compiled from proprietary property data in 64 of the nation’s largest real estate markets. When broken out by housing type, the median price of a standard two-storey home rose 8.0 per cent year-over-year to $794,392, while the median price of a bungalow increased 3.9 per cent to $550,289. The median price of a condominium increased 5.3 per cent year-over-year to $503,983.

“COVID-19 shaped the real estate market during the second quarter in every possible way,” said Soper. “As consumers and Realtors® complied with April’s shelter-at-home directives and only urgent housing needs were serviced, sales volumes plummeted to one-third of normal in our largest cities. As the reality of extended and potentially permanent work-from-home employment sunk in, people pondered both the location and size of their homes. Simply put, larger homes in smaller communities have become more fashionable. As competition for these properties heats up, bidding wars are more common in what were our quieter cities and towns.”

Across Canada, the 11 regions to post the highest year-over-year gains in median home price were in Ontario. In order, Mississauga (13.5%), Windsor (12.2%), Markham (11.9%), Ottawa (11.7%), Niagara/St.Catharines (11.3%), London (10.5%), Brampton (10.4%), Toronto (10.2%)/Greater Toronto Area (10.0%), Guelph (9.9%), Kitchener/Waterloo/Cambridge (9.8%), and Milton (9.7%).

Immigration

Immigration has been disrupted by pandemic travel restrictions, with the impact to real estate markets varying across regions and housing segments. Royal LePage’s 2019 Newcomer study showed that upon arriving in Canada, only 15 per cent of newcomers purchase their first home. The average time period after which newcomers will purchase a property is three years after arriving in Canada.

“Our research shows that many of the newcomers to our nation who intended to buy a home this year have already been living in Canada for three or more years,” said Soper. “A short-term drop in the number of new immigrants and international students will not directly impact home sales in the current year, as most newcomers will rent their first home. We may feel the impact of fewer new Canadians in our residential investment market with less demand for rental units. Mitigating the impact of this trend is a surge in first-time buyer interest. Some landlords may choose to sell to eager millennial families if rental demand softens.”

Lengthy Economic Recovery and Revised Royal LePage Forecast

As home sellers return to the market, inventory levels are expected to rise, relieving the acute upward pressure on home prices that characterized the supply-constrained second quarter of 2020. Uncertainty clouds Canada’s real estate outlook as a lengthy recovery for the Canadian and world economies is expected. The negative impact on home prices should be muted by the balanced nature of Canadian housing, as chronic housing supply shortages offset dampened medium-term demand.

Royal LePage has revised its forecast slightly upward, with the national aggregate price expected to end 2020 up 2.3 per cent to $663,000 in the fourth quarter compared the same period in 2019.

Royal LePage 2020 Q2 Winnipeg Market Insights and Forecast

Royal LePage: Winnipeg home prices soften as buyer demand shifts to surrounding communities Strong June sales outpacing new inventory point to a ‘U’ shape recovery for Winnipeg’s regional real estate market WINNIPEG, July 9, 2020 –

According to the Royal LePage House Price Survey released 1 today, the aggregate price of a home in Winnipeg decreased 1.4 per cent year-over-year to $302,399 in the second quarter of 2020. During the same period, the median price of a bungalow decreased 0.8 per cent year-over-year to $287,715 and the median price of a condominium decreased 4.1 per cent year-over-year to $231,036. The median price of a standard two-storey home decreased 1.5 per cent year-over-year to $330,995. “Winnipeg’s real estate market has proven to be extremely resilient and we are seeing signs of a ‘U’ shape recovery. While COVID-19 certainly pulled the market downward for the first half of the second quarter, June sales are higher than last year. The market is energized and consumer confidence is back,” said Michael Froese, managing partner, Royal LePage Prime Real Estate. Froese added that year-over-year sales activity in Winnipeg’s surrounding area is outperforming the city-centre. “Communities outside of the city are growing in popularity, leading to price appreciation gains in those areas,” said Froese. “For many, remote work started as a necessity this spring but it is growing in popularity and employer acceptance. Buyers are now looking for larger properties with home offices. With less commuting, moving away from the city-centre to more affordable properties is appealing.” Royal LePage is forecasting that the aggregate price of a home in Winnipeg will remain flat in the fourth quarter of 2020 compared to the same quarter last year. Nationally, the aggregate price of a home in Canada increased 6.8 per cent year-over-year to $673,072, in the second quarter. Once provinces allowed regular real estate activity to resume, 1 Aggregate prices are calculated using a weighted average of the median values of all housing types collected. Data is provided by RPS Real Property Solutions. demand surged in many markets. Inventory levels, already constrained pre-pandemic, have failed to keep pace. “Home prices shot up in the second quarter as a crush of buyers entered the market, attracted by extremely low interest rates and the perception of bargains to-be-had,” said Phil Soper, President and CEO of Royal LePage. “Across Ontario, Quebec and British Columbia in particular, the demand for housing outpaced the growth in supply, particularly in the early weeks post-lockdown. The surge in the number of first-time buyers was felt acutely, as these housing consumers soaked up supply without contributing to it.” The Royal LePage National House Price Composite is compiled from proprietary property data in 64 of the nation’s largest real estate markets. When broken out by housing type, the median price of a two-storey home rose 8.0 per cent year-over-year to $794,392, while the median price of a bungalow increased 3.9 per cent to $550,289. The median price of a condominium increased 5.3 per cent year-over-year to $503,983. As home sellers return to the market, inventory levels are expected to rise, relieving the acute upward pressure on home prices that characterized the supply-constrained second quarter of 2020. Uncertainty clouds Canada’s real estate outlook as a lengthy recovery for the Canadian and world economies is expected. The negative impact on home prices should be muted by the balanced nature of Canadian housing, as chronic housing supply shortages offset dampened medium-term demand. Royal LePage has revised its forecast slightly upward, with national aggregate prices expected to end 2020 up 2.3 per cent in the fourth quarter compared to the same period in 2019.