2021 will remain a seller's market: experts
This time last year, real estate pundits suggested buyers “might” return to the housing market after sitting on the sidelines following the introduction of the mortgage stress test two years earlier and one agency predicted a “healthy” 3.7 per cent increase in the price of an average house.
Of course, those forecasts were made weeks before the COVID-19 pandemic delivered a big plot twist. Housing numbers took a deep dive due to the lockdown before they came roaring back. While the dust on 2020 numbers hasn’t settled quite yet, the actual national average sale price posted a whopping 13.8 per cent year-over-year gain in November, the Canadian Real Estate Association reports.
So, what does 2021 have in store? With move-up and move-over buyers continuing to drive activity in many regions across Canada and an ongoing housing supply shortage likely to continue – presenting challenges for homebuyers and putting upward pressure on prices – Re/Max Canada expects average residential prices to rise four to six per cent this year.
“We’ve seen a lot of anecdotal evidence since the summer that households are considering significant lifestyle changes by relocating to less-dense cities and neighbourhoods,” says Christopher Alexander, executive vice president and regional director of Ontario-Atlantic Canada. “This has sparked unprecedented sales this year in suburban and rural parts of Canada and we expect this trend to continue in 2021.”
Despite the disruption of the virus, consumers are feeling optimistic, according to a Leger survey conducted on behalf of Re/Max, with 52 per cent of Canadians eyeing real estate as one of the best investment options in 2021 and expressing confidence that the Canadian housing market will remain steady next year.
PropertyGuys.com co-founder and lead market analyst Walter Melanson has compiled a list of trends he predicts will define the 2021 real estate market:
1. Virtual will become a reality. Virtual tours, robust online dashboards, direct messaging and even virtual renovations will be commonplace. Open houses and in-person meetings may even be a thing of the past altogether, with scheduled private showings reserved for serious buyers only. “A few years ago, we began promoting remote signings,” he says. “That’s gone from a ‘nice to have’ to a ‘need to have’ and might be here to stay.”
2. Moving out of the city. With remote work expected to continue even after the pandemic, people will continue to broaden their search for real estate, which has already taken many out of the city to undervalued markets. “People may end up moving to places they would have never dreamed of one year ago,” says Melanson. In some cases, people are downsizing to one property only, such as living at their cottage instead of owning a detached property and a vacation home.
3. More first-time buyers. Pandemic puppies, babies and opportunities to work from home – along with low interest rates – provide compelling reasons for first-time buyers to make a move.
4. Co-living will be increasingly common. Following months of one-household bubbles, living under one roof will remain more practical and comforting for many families and friends. It’s not unlike students cohabitating while attending university but won’t be limited to young people and will evolve gradually – one development and friend at a time. Expect to see increased demand for in in-law suites, once used as rental income, and larger common spaces, such as kitchens.
5. Rise of private sales. Melanson believes more buyers and sellers will adopt online tools to help them sell easily and efficiently on their own.
6. Birth of fractional ownership. If you’d like to add real estate to your investment portfolio but don’t want to be a landlord, this emerging trend might interest you. The peer-to-peer investing and lending model allows several and sometimes even hundreds of unrelated buyers to share in the ownership of real estate that’s managed by a third party.
7. I-buyers in Canada. Already in vogue south of the border, the i-buyer – also known as the ‘instant buyer’ – movement will continue to evolve across Canada this year. Buyers use automated valuation models to calculate the value of a home and then generate an instant offer – bringing the power of cash, speed and certainty to the selling process. It might not make sense for every seller and in every market, but Melanson thinks the trend has potential.
Demand for luxury homes ‘spikes’
According to the Re/Max broker network in Ontario:
Regions like London, Kitchener-Waterloo, Hamilton-Burlington, Niagara, Kingston, Cornwall and Thunder Bay could see average sale price increases of seven to 12 per cent in 2021.
Move-up and ‘move-over’ buyers will continue to impact luxury segments, with cities like Ottawa and Hamilton-Burlington seeing a massive spike in demand for luxury homes since the onset of the pandemic. Toronto’s luxury market hasn’t been impacted by COVID-19.
The urban-to-suburban buyer interest has impacted Toronto’s downtown core, specifically for condos, which is currently a buyer’s market. Supply levels throughout Toronto continue to drop and aren’t expected to improve in 2021, which will impact average home prices.
Source: 2021 Re/Max Canada Housing Market Outlook Report
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