Preferences around home buying have continued to shift through the course of the pandemic, particularly among those who aren’t even on the property ladder yet.

A quarter of Ontario renters who are currently active in the real estate market are now more interested in buying a home than they were before the pandemic, according to new consumer data collected by Nanos Research. Conducted on behalf of the Ontario Real Estate Association (OREA) for their monthly Pulse Check on Consumer Attitudes report, the research highlights changing attitudes and preferences of prospective homeowners.

As a result of the COVID-19 pandemic, 25 percent of Ontario renters who are active in real estate have expressed that they are more interested in buying a home now, compared to just 13 percent of renters who said they are now less interested. About 54 percent of renters said that they are just as interested in purchasing now as they were pre-pandemic.

Millennials and those between the ages of 35 to 54 make up the bulk of the interested buyer pool, with 62 percent and 59 percent of those age groups currently looking in the market. More renters are also actively seeking real estate in contrast to current homeowners — 63 percent of renters are searching for a home to purchase compared to 47 percent of homeowners surveyed.

“Despite the uncertainty stemming from the pandemic, housing remains a strong sector of our province’s economy, with the Canadian Dream of home ownership continuing to be a strong value for many Ontarians,” said OREA President Sean Morrison in the consumer report. “As we look ahead and move towards economic recovery in a post-COVID era, we can expect even more interest as renters and first-time home buyers look to enter the market.”

With many Ontarians locked down at home over these recent months with time to reassess their needs, it’s not uncommon for homebuyers to consider moving outside of the city in search of extra space. Three in five of those who are active in the real estate market said that living in rural areas is now more appealing to them than it was pre-pandemic, according to the survey. Similarly, three in five of those surveyed now find suburban living more attractive too.

Last week, in-person open houses were permitted to run once again throughout the majority of Ontario’s public health regions. About eight in ten active Ontarians in the market have expressed that they are comfortable or somewhat comfortable attending an in-person private showing. Sixty-six percent of those active have also reported that they would be comfortable or somewhat comfortable attending an open house with other buyers present.

A surprisingly strong showing from the Canadian housing market in June is leading economists to swiftly revise their forecasts as homebuyers returned to the market in larger than anticipated numbers.

June market data published last week by the Canadian Real Estate Association (CREA) showed country-wide home sales up 63 percent over May and more than 15 percent compared to the same period last year. Home price growth also came roaring back, almost completely erasing the losses suffered through the worst months of the COVID-19 pandemic.

The performance was so strong it led Capital Economics’ Stephen Brown to revise his home price forecast upward to 3 percent in 2021 and 5 percent in 2022. By the end of 2022, he now predicts that prices will have risen by 8 percent from their current levels.

In a research brief published late last week, Brown wrote that the June figures had “made a mockery of the near-unanimous view among economists that [Canadian] house prices would fall this year.”

Indeed, economists projecting varying degrees of home price declines were a staple of media reporting on the pandemic’s housing market impacts since the crisis began. Oxford Economics predicted a nine percent fall by early 2021 just a month ago. Earlier on, RBC forecast a seven percent decline by mid-2021, while National Bank of Canada pegged the drop to be close to 10 percent.

Even Capital Economics itself had, less than two months ago, predicted that average Canadian home prices would bottom out at 10 percent below their pre-pandemic levels while the less volatile Teranet Home Price Index would see a 5 percent drop.

After the CREA June data was released, Brown didn’t mince words when it came to the accuracy of those forecasts.

“Either way, nearly everyone was wrong, as prices have moved in the opposite direction,” he said.

Brown pointed to both substantial rises in average selling prices and a 0.5 percent increase in the MLS Home Price Index, which is a more reliable measure of home price movement over time.

Considering the unanticipated strength of the market so soon after it suffered some of the worst drops in sales activity ever recorded, Capital Economics revised its outlook for Canadian home prices in the coming years.

Brown wrote that the firm now believes prices will be more or less unchanged through the remainder of the year and begin trending upward by 2021, propelled by a recovering economy and low interest rates.

Despite this clear, rapid improvement in the market’s fortunes, the economist still included a measure of caution in the new forecast. There are still a considerable number of Canadians currently deferring their mortgage payments who may be forced to sell their homes when the deferral programs wind down in September.

He also flagged the precipitous pandemic-induced decline in immigration — the fundamental driver of population growth — as a key challenge on the horizon for the market.

Detached homes around Regent Park and Scarborough’s Birchcliff saw the biggest price gains in Toronto’s pricey real estate market, according to RE/MAX

Regent Park and Scarborough’s Birchcliff are some of the neigbourhoods where Toronto house prices saw the biggest gains in 2020, according to the RE/MAX 2020 Hot Pocket Communities report. The report compares the average price for detached homes over the first six months in 2019 and 2020.

The city’s average home price hit an all-time high in June, despite the COVID-19 pandemic. Low supply has fuelled demand. But some areas are feeling the heat more than others.

The average price for the rare detached homes in the area containing Regent Park, Cabbagetown, Jamestown and the Church-Yonge corridor jumped $2,555,500 from $1,641,813. That 55.7 per cent increase is the highest for any neighbourhood in the GTA. But it coincides with a 75 per cent drop in sales, from eight transactions in 2019 to two in 2020.

Highs and lows
“Strong demand characterized much of the first quarter of 2020, setting the stage for a record-breaking spring market in the Greater Toronto Area,” says Christopher Alexander.

The RE/MAX of Ontario-Atlantic Canada executive vice president says the real estate market has been bouncing back after the severe downtown caused by COVID-19. “With the easing of restrictions and the province moving into the third, and perhaps final phase, we anticipate that the housing market will likely accelerate.”

The Annex, Wychwood and Deer Park area came second place in terms of price growth, climbing 25.7 per cent to $2,918,968. The Birchcliffe-Cliffside area in Scarborough has seen a significant uptick in new developments and businesses. It tied with the High Park and Roncesvalles area for third place with 18.4 per cent gains. Detached homes in the east end area just west of the Scarborough Bluffs rose to $1,095,287. That’s nearly half the $2,050,596 figure for homes the High Park and Roncesvalles area.

Toronto’s priciest real estate had the steepest declines. The Rosedale and Moore Park area plunged 15.2 per cent from $3,687,292 to $3,127,643. The Bridle Path and Windfields area were not far behind. The average home price dropped 9.5 per cent from $3,697,343 to $3,346,422. While sales in Toronto were down between 5 and 75 per cent depending on the neighbourhood, Bridlepath and Windfields is the only area that had an increase in sales at 20 per cent.

Beyond Toronto
The 905 hasn’t seen any declines in average detached home prices. The Township of Brock near Lake Simcoe made the biggest climbs, rising 15.2 per cent to $552,711. Essa township in Simcoe is close behind with 14.6 per cent at $626,003. And then comes Vaughan, rising 13.5 per cent to $1,369,407.

“While the strength of the market is underscored by rebounding economic fundamentals, it’s clear that we are not out of the woods yet, given what’s happening around the world,” adds Alexander. He echoes warnings from realtors and the Canada Mortgage and Housing Corporation.

The CMHC predicts a sharp downturn beginning in the fall as COVID-19 relief programs are expected to dry up. The lack of immigration, low employment, a subsequent increase in supply and other economic impacts from COVID-19 could be factors that bring real estate prices drastically down.

When it comes to competition in the market, Toronto’s renters are finally getting some relief as the city’s vacancy rate within purpose-built apartments increased to 1.8 percent in the second quarter of 2020, the highest level in over five years.

Real estate research firm Urbanation began tracking the vacancy rate at the beginning of 2015. To determine the rate, it looks at purpose-built rentals completed in the Toronto region since 2005. The second quarter reading is the highest level observed since the firm began its quarterly surveys.

Toronto’s rental availability rate, which adds units that are set to be vacated by tenants, also hit the highest level recorded since Urbanation began tracking it in 2015. The firm reported the availability rate as 3.2 percent this past quarter, compared to 2.3 percent in the first quarter of the year and 2 percent in the second quarter of 2019.

On the rental pricing side, units that were listed for rent during the second quarter averaged $2,420, a 3.7 percent year-over-year decline. While this sounds like a sharp drop, Urbanation noted that on a per square foot basis, rents declined by a more modest 0.6 percent to $3.22 per square foot over the same period in 2019. This suggests the larger monthly rent price drop was likely weighted by the composition of units listed during that period.

As the vacancy rate rises and demand cools amid the ongoing disruptive effects of the pandemic, Urbanation found that over 40 percent of buildings it surveyed had offered incentives such as a month of free rent to attract potential new tenants.

The rising vacancy rate came as purpose-built rentals under construction in the Toronto region continued to hover around a 40-year high, meaning more supply for the market is on its way. At the end of the second quarter, there were 13,358 purpose-built rental units under construction across the Greater Toronto Area, up 17 percent from the second quarter in 2019.

Preferences around home buying have continued to shift through the course of the pandemic, particularly among those who aren’t even on the property ladder yet.

A quarter of Ontario renters who are currently active in the real estate market are now more interested in buying a home than they were before the pandemic, according to new consumer data collected by Nanos Research. Conducted on behalf of the Ontario Real Estate Association (OREA) for their monthly Pulse Check on Consumer Attitudes report, the research highlights changing attitudes and preferences of prospective homeowners.

As a result of the COVID-19 pandemic, 25 percent of Ontario renters who are active in real estate have expressed that they are more interested in buying a home now, compared to just 13 percent of renters who said they are now less interested. About 54 percent of renters said that they are just as interested in purchasing now as they were pre-pandemic.

Millennials and those between the ages of 35 to 54 make up the bulk of the interested buyer pool, with 62 percent and 59 percent of those age groups currently looking in the market. More renters are also actively seeking real estate in contrast to current homeowners — 63 percent of renters are searching for a home to purchase compared to 47 percent of homeowners surveyed.

“Despite the uncertainty stemming from the pandemic, housing remains a strong sector of our province’s economy, with the Canadian Dream of home ownership continuing to be a strong value for many Ontarians,” said OREA President Sean Morrison in the consumer report. “As we look ahead and move towards economic recovery in a post-COVID era, we can expect even more interest as renters and first-time home buyers look to enter the market.”

With many Ontarians locked down at home over these recent months with time to reassess their needs, it’s not uncommon for homebuyers to consider moving outside of the city in search of extra space. Three in five of those who are active in the real estate market said that living in rural areas is now more appealing to them than it was pre-pandemic, according to the survey. Similarly, three in five of those surveyed now find suburban living more attractive too.

Last week, in-person open houses were permitted to run once again throughout the majority of Ontario’s public health regions. About eight in ten active Ontarians in the market have expressed that they are comfortable or somewhat comfortable attending an in-person private showing. Sixty-six percent of those active have also reported that they would be comfortable or somewhat comfortable attending an open house with other buyers present.

A surprisingly strong showing from the Canadian housing market in June is leading economists to swiftly revise their forecasts as homebuyers returned to the market in larger than anticipated numbers.

June market data published last week by the Canadian Real Estate Association (CREA) showed country-wide home sales up 63 percent over May and more than 15 percent compared to the same period last year. Home price growth also came roaring back, almost completely erasing the losses suffered through the worst months of the COVID-19 pandemic.

The performance was so strong it led Capital Economics’ Stephen Brown to revise his home price forecast upward to 3 percent in 2021 and 5 percent in 2022. By the end of 2022, he now predicts that prices will have risen by 8 percent from their current levels.

In a research brief published late last week, Brown wrote that the June figures had “made a mockery of the near-unanimous view among economists that [Canadian] house prices would fall this year.”

Indeed, economists projecting varying degrees of home price declines were a staple of media reporting on the pandemic’s housing market impacts since the crisis began. Oxford Economics predicted a nine percent fall by early 2021 just a month ago. Earlier on, RBC forecast a seven percent decline by mid-2021, while National Bank of Canada pegged the drop to be close to 10 percent.

Even Capital Economics itself had, less than two months ago, predicted that average Canadian home prices would bottom out at 10 percent below their pre-pandemic levels while the less volatile Teranet Home Price Index would see a 5 percent drop.

After the CREA June data was released, Brown didn’t mince words when it came to the accuracy of those forecasts.

“Either way, nearly everyone was wrong, as prices have moved in the opposite direction,” he said.

Brown pointed to both substantial rises in average selling prices and a 0.5 percent increase in the MLS Home Price Index, which is a more reliable measure of home price movement over time.

Considering the unanticipated strength of the market so soon after it suffered some of the worst drops in sales activity ever recorded, Capital Economics revised its outlook for Canadian home prices in the coming years.

Brown wrote that the firm now believes prices will be more or less unchanged through the remainder of the year and begin trending upward by 2021, propelled by a recovering economy and low interest rates.

Despite this clear, rapid improvement in the market’s fortunes, the economist still included a measure of caution in the new forecast. There are still a considerable number of Canadians currently deferring their mortgage payments who may be forced to sell their homes when the deferral programs wind down in September.

He also flagged the precipitous pandemic-induced decline in immigration — the fundamental driver of population growth — as a key challenge on the horizon for the market.

The latest monthly statistics released by the Canadian Real Estate Association (CREA) for June highlighted that home sales and new listings rebounded to normal levels across Canada last month, following a period of historic lows this April and May due to the pandemic. Almost 1 million jobs were added back to the Canadian economy in June, and the housing market showed signs of growing “cautious optimism” among buyers and sellers, as CREA noted.

Further, as July 1 approached, recently announced changes to the Canada Mortgage and Housing Corporation (CMHC) mortgage insurance borrowing criteria loomed, which may have incentivized certain buyer segments to accelerate their search. As such, national home sales improved 63% since May, and there was a 49.5% monthly spike in new listings. Average home prices rose 6.5% nationally year-over-year (y-o-y) to almost $539,000 in June.

A closer look at real estate markets across Ontario for June revealed that regional market trends closely mirrored national housing activity. After all, Ontario accounted for 378,000 of the total jobs recovered in June, and much of the province graduated into Stage 2 of reopening by the end of the month. To get a gauge on how the pandemic impacted price and sales activity in Ontario, reviewed average home prices and sales data for June from local real estate boards and CREA for 28 Ontario markets, comparing changes on an annual basis to highlight how and where the market shifted since last year.

Our analysis and findings provide a bird’s eye view of market dynamics to give buyers and sellers an indication of what to expect in their local real estate market. The average home price included in this analysis applies to the local market as a whole and takes into account a number of different property types, neighbourhoods, and square footage values among other factors. As such, prospective buyers and sellers will benefit from a detailed review of sales, new listings and price trends for specific home types of interest at the city, town, or neighbourhood level.

GTA Cities Dominate List of Ontario Markets With Highest Average Home Price Increases

In 9 of the 28 markets included in our analysis, the average home price grew over $100,000 annually. Oakville topped the list, with the annual average home price increasing a whopping $177,550 or 17% since last year to $1,249,685. Markham followed close behind – the annual average home price grew $171,726 y-o-y, an impressive 19% increase to $1,086,502.

In total, 5 York Region markets posted not just six-figure annual average price growth, but double digit rates of annual average price growth as well. In addition to Markham, the average home price increased by $149,010 or 16% in Aurora to $1,068,255; by $136,466 or 13% in Vaughan to $1,154,352; by $130,514 or 12% in Richmond Hill to $1,213,191, and by $117,193 or 15% in Newmarket to $889,534. Although the average home price increased substantially in these York region markets, sales in June have yet to catch-up to last year’s levels; Richmond Hill had the largest sales gap, with transactions still down 17% from last year.

Mississauga, Halton Hills, and the City of Toronto completed the list of regions where average home prices grew in the six figures annually. Average home prices rose by $140,265 in Mississauga, $111,183 in Halton Hills, and by $106,657 in the City of Toronto.

6 Markets Experienced Annual Sales Growth Over 20%, Including Barrie at 41%

15 of the 28 markets studied experienced y-o-y sales growth this June, with 6 markets even clocking in annual sales increases of over 20%. Barrie led the pack with a staggering 41% increase in sales and 321 homes changing hands last month. New listings in Barrie were slower to catch up in the region and created strong seller’s market conditions this June with a sales-to-new-listings-ratio (SNLR) of 74%.

A seller’s market exists when the SNLR – the ratio of the number of sales to the number of properties listed in a given period – is over 60%. It implies that a greater number of properties sold relative to newly listed homes, favouring sellers over buyers. In Barrie, buyers faced even greater competition this year compared to last June when the SNLR was 56% and housing demand and supply were balanced. Balanced market conditions exist when the SNLR is between 40% and 60%.

Sudbury Region and Pickering rounded up the top three regions with the highest rate of sales growth, with sales increases of 27% and 24% each. Among all the regions included in our analysis, Sudbury exhibited the most prominent seller’s market conditions with an SNLR of 87%. It was even more competitive for Sudbury buyers this year compared to June 2019 when the SNLR was 64%. Pent up buyer demand from April and May, when economic uncertainty was the highest, may have been a contributor to these higher levels of sales in June.

Among the regions with the slowest positive sales growth were Oakville, London, and Milton. Each of these 3 regions experienced a sales increase of 5% y-o-y.

Richmond Hill (-17%), Aurora (-14%), and Mississauga (-14%) experienced the greatest sales declines y-o-y. This was followed by Vaughan (-13%) and the City of Toronto, where 2,830 homes sold in June – a 12% decline y-o-y. Despite a double-digit decline in sales in June, Toronto remained in a balanced market with an SNLR of 46%.

Below find our infographic highlighting average price and sales growth in 28 housing markets across Ontario this June followed by lists of the regions that experienced the highest annual price and sales growth.

 

Top 5 Markets for Annual Average Price Growth (Dollar)

Oakville

• Average home price, June 2020: $1,249,685 (+$177,550 or +17%)
• Home sales, June 2020: 322 (+5%)

Markham

• Average home price, June 2020: $1,086,502 (+$171,726 or +19%)
• Home sales, June 2020: 333 (-3%)

Aurora

• Average home price, June 2020: $1,068,255 (+$149,010 or +16%)
• Home sales, June 2020: 87 (-14%)

Mississauga

• Average home price, June 2020: $891,012 ( +$140,265 or +19%)
• Home sales, June 2020: 742 (-14%)

Vaughan

• Average home price, June 2020: $1,154,352 (+$136,466 or +13%)
• Home sales, June 2020: 293 (-13%)

Top 5 Markets for Annual Average Price Growth (Percentage)

Niagara Region

• Average home price, June 2020: $538,946 (+$98,191 or +22%)
• Home sales, June 2020: 628 (+8%)

Markham

• Average home price, June 2020: $1,086,502 (+$171,726 or +19%)
• Home sales, June 2020: 333 (-3%)

Mississauga

• Average home price, June 2020: $891,012 (+$140,265 or +19%)
• Home sales, June 2020: 742 (-14%)

London

• Average home price, June 2020: $486,372 (+$78,098 or +19%)
• Home sales, June 2020: 748 (+5%)

Windsor-Essex Region

• Average home price, June 2020: $401,465 (+$65,422 or +19%)
• Home sales, June 2020: 742 (+9%)

Top 5 Markets for Annual Sales Growth (Percentage)

Barrie

• Average home price, June 2020: $556,932 (+$67,591 or +14%)
• Home sales, June 2020: 321 (+41%)

Sudbury Region

• Average home price, June 2020: $317,592 ( +$33,978 or +12%)
• Home sales, June 2020: 356 (+27%)

Pickering

• Average home price, June 2020: $772,237 (+$74,320 or +11%)
• Home sales, June 2020: 161 (+24%)

Thunder Bay Region

• Average home price, June 2020: $267,537 (+$12,945 or +5%)
• Home sales, June 2020: 269 (+23%)

Clarington

• Average home price, June 2020: $632,112 (+$67,654 or +12%)
• Home sales, June 2020: 240 (+22%)

Methodology

Sources for average home prices, sales and new listings:

Ajax, Aurora, Brampton, City of Toronto, Clarington, Halton Hills, Markham, Milton, Mississauga, Newmarket, Oakville, Oshawa, Pickering, Richmond Hill, Vaughan, Whitby: Toronto Regional Real Estate Board
Hamilton and Burlington: REALTORS® Association of Hamilton-BurlingtonLondon: London & St. Thomas Association of REALTORS®
Barrie: Barrie & District Association of REALTORS®
Kitchener and Waterloo: Kitchener-Waterloo Association of REALTORS®
Guelph: Guelph & District Association of REALTORS®
Niagara region, Ottawa region, Sudbury region, Thunder Bay region, Windsor-Essex region: Canadian Real Estate Association
The sales-to-new-listings ratio (SNLR) is calculated as June sales divided by new listings in June.

 

 

Aggregate price of a home increased 9.1 per cent to $592,059 in the second quarter of 2020, survey finds

Hamilton home prices are up nearly 10 per cent despite the COVID-19 pandemic, a new survey by Royal LePage has found.

According to the Royal LePage House Price Survey released Thursday, the aggregate price of a home in Hamilton increased 9.1 per cent to $592,059 in the second quarter of 2020.

Broken out by housing type, the median price of a standard two-storey home increased 9.7 per cent year-over-year to $616,992, and the median price of a bungalow increased 7.3 per cent year-over-year to $557,340. During the same period, the median price of a condominium rose 10.3 per cent to $414,110.

“I believe that interest rates are extremely low right now, which is obviously motivating people that were in the market to to seek the house they want,” said Joe Ferrante, Royal LePage State Realty broker of record.

“Are they looking possibly for a deal? A lot of people are at home right now and realizing that there are opportunities out there. But I would say the biggest thing driving it is the rates, and what’s driving the prices up is the lack of product … it’s a simple supply and demand issue.”

A buyers’ market
Ferrante said due to COVID-19, it’s a lot easier to be a buyer right now than it typically is to be a seller.

“[If] you want to buy something, you put on your mask, your gloves and off you go and you go into other people’s houses, but for sellers there’s still some reluctance there.”

“I’d say for every five people that would have potentially put their house up for sale, maybe three of them are, so that’s obviously driving up the prices.”

Home sales plunged earlier this year as the COVID-19 pandemic forced buyers to the sidelines, but they have picked up as businesses have started to reopen.
Even with the earlier plunge in prices, Ferrante said a year-on-year comparison in Hamilton shows the numbers are still relatively close.

“I think they were down by one or two percentage points for the number of sales overall, and that would be the entire Hamilton area, including Burlington,” he said.

“So it’s very, very close. Down but not substantially.”

Torontonians heading to Hamilton
Ferrante added that while there has always been healthy and steady real estate demand from Toronto, the level of interest his brokerage is seeing has significantly increased.

“The more Toronto-based buyers can work from home, the more demand there is for real estate in Hamilton,” he said.

“We are seeing young Toronto-based families who have been largely house-bound during the pandemic tell us that they need more space. Home offices and large yards quickly moved up the list of important features.”
Agents excited, but will it last?
Ferrante said it’s uncertain if the increased prices will last, and it’s clear what is the real reason for the uptick.

“I’ve got some agents that are excited but it’s too soon to tell where this is going to lead us.”

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, demand surged in many markets. Inventory levels, already constrained pre-pandemic, have failed to keep pace.