COVID-19 impacted Canada's housing market in some surprising ways
At the beginning of 2020, many real estate industry professionals speculated on what would take place in the year ahead. Some called for increases in major markets across the country, and others predicted that things would level off after an up and down year in 2019. RE/MAX expected a 3.7% increase in the national average price of residential real estate, while other major brokerages drew similar conclusions.
No one anticipated a pandemic, rock bottom interest rates, and a surge to the suburbs that would drive markets significantly higher across Canada in 2020. The projected 3.7% proved to be a very low estimate, especially for the following cities. Here are 5 real estate markets that out-performed in 2020.
1. Muskoka, Ontario
Low supply was a common trend in many markets in 2020, and that was certainly the story in Muskoka, Ontario. The average residential sale price in Muskoka rose a whopping 20.3% in 2020, making it a clear out-performer on our list of hot markets.
A two-hour drive from Toronto, the Muskoka region is home to over 1,600 lakes and is a popular getaway destination from the city in the summertime. With more people looking to get out of the city, the lack of inventory has driven prices up significantly, and the trend is expected to continue. Labour shortages are slowing new developments in the area, meaning inventory should remain limited. Homes listed for sale are already selling in less than one month, and days on the market could go down even more if demand continues to grow this year.
As for market drivers, individuals leaving major markets and looking for space during the pandemic were undoubtedly the primary movers. 2020 saw this trend occur in many suburban populations across Canada, and we’ll see if it continues into 2021.
2. Niagara, Ontario
Just a shade under Muskoka in terms of price growth, Niagara saw a massive increase in residential sales prices in 2020. Residential real estate increased 19% year over year, and it’s showing no signs of slowing down at the moment.
The demand for single-family homes has really pushed prices upward in the area, with first time home buyers, move-up buyers, and renters leaving major city centers to look for the same thing: Space. It’s coming at a premium in Niagara, which resulted in the price increases we saw last year.
Unlike Muskoka, Niagara is expected to have somewhat of an increase in supply this year, so the market may not continue to rise at the same clip in 2021. However, we’d still expect to see a double-digit percentage price increase when the year comes to a close - especially for detached homes.
3. Ottawa, Ontario
As we recently reported on, Royal LePage has projected that Ottawa real estate prices as a percentage would increase by more than any other city in Canada in 2021. This would be more of the same for our nation’s capital, as average residential real estate sales prices rose by 19.2% in 2020, outperforming most of the country by a large margin. Nearly all year there was an increase in sales and a decrease in average days on the market for listings.
Unlike some major markets, the condo market in the Ottawa area remained steady, as retirees looked for lower-maintenance living options. The cities housing prices also benefited from having an influx of first time home buyers and one of the most stable job markets in all of Canada.
4. Vancouver, British Columbia
Vancouver’s real estate market has outperformed the national average for many years, so it was no surprise to see that the average residential sale price increased again in 2020. While the price increases weren’t as sharp as in some of the Ontario regions mentioned above, prices in Vancouver increased 11.4% last year, with detached homes leading the way. The market is expected to continue to favour sellers in 2021, as condo owners and first time home buyers look to move into single-family homes that provide more space.
While the demand for condos is still significant for first-time buyers in Greater Vancouver, there was somewhat of a shift from the downtown core towards the suburbs in 2020. That trend should continue into 2021 with move-up buyers from the suburbs looking to sell their condos fast - homes in Greater Vancouver are often going subject free, forcing buyers to sell quickly. Multiple offers, even numbers in the double digits, is the norm right now on detached homes throughout the region.
5. Victoria, British Columbia
Last on our list is the capital of British Columbia, Victoria. Vancouver Island’s largest city saw residential real estate prices increase by 11% in 2020, matching Vancouver's growth despite a much quieter luxury market.
Home offices, second home offices, spacious backyards, gardens, patios, and home gyms were hot ticket items in 2020, driving buyers to detached homes in Victoria which saw prices increase steadily. Victoria and Saanich have long been attractive spots in the region, though areas like Langford have become more popular since the pandemic began last year. The condo and detached home markets are both busy in Victoria, as calls for new developments have been growing louder as availability drys up. Townhomes are less common in Victoria than they are in areas like Vancouver, which has been another factor pushing move up condo owners further towards detached homes.
2020 turned out to be a very busy year for Canadian real estate markets, with many seeing double-digit percentage growth in residential prices year over year. The five markets on this list outperformed by a wide margin, and there’s little sign of things slowing down any time soon. With depressed interest rates looking predictably stable, new layout and floorplan priorities taking shape, pent up demand, and a shortage of inventory driving buyers, it’s easy to see why the CREA’s resale forecast asserts that the current conditions “heavily favours sellers in many local markets.” While no one knows for certain, it’s safe to assume that these market trends should be watched closely in 2021.
