Home prices are continuing to soar as the Canadian real estate market continues to experience a shortage of supply.
According to an updated House Price Survey and Market Forecast released Friday by Royal LePage, the national aggregate home price has increased 21.4 per cent year-over-year to $749,800 in the third quarter of 2021.
Market activity slowed as a result of a chronic lack of inventory, a persisting challenge for housing markets from coast-to-coast, coupled with the seasonal summer slowdown.
“During the third quarter, the torrid pace of home price appreciation moderated as both demand and inventory waned, a typical summer market trend in a very atypical year. With easing pandemic restrictions, there was finally something to talk about other than real estate, and people began travelling and socializing again,” stated Phil Soper, president and CEO of Royal LePage.
“In addition, a year of relentless competition for too few properties drove some would-be purchasers to the sidelines as buyer fatigue set in. Yet their fundamental need or desire for a new home remains and we are seeing pent-up demand grow. We expect another unusually busy winter season building to a brisk 2022 spring market," Soper said.
Barrie saw a quarter-over-quarter change of two per cent — with the average price of a single-detached home increasing from $807,500 to $823,900. The city saw an increase of 27.1 per cent year over year. Standard condominiums, however, have seen a decrease of 1.3 per cent since last quarter — from $465,750 to $459,500 — but experienced an increase of 25.9 per cent increase year-over-year.
“While detached houses in suburban and smaller city communities continue to be the primary driver of Canada’s aggregate house price growth, we are seeing prices levelling in many of these regions and expect future growth to track closer to historical norms,” said Soper.
While the price gap between houses and condos widened during the pandemic, experts believe that will change in the coming months as buyers see condo units as good value for money.
“In addition, the revitalization of our cities, as employees return to offices and the businesses that serve them reopen, is driving renewed interest from investors eager to provide much-needed rental accommodation," Soper said.
Royal LePage is forecasting that the aggregate price of a home in Canada will increase 16 per cent to $771,500 in the fourth quarter of 2021, compared to the same quarter last year. This forecast is consistent with the company’s previous update in July, 2021.
“Looking back to the late spring of 2020, the Royal LePage benchmark value of a home was $580,000. The subsequent ‘COVID-catalyst,' which drove legions of Canadians to upgrade their living situations, has created a period of exceptional home price growth with real estate values on track to grow 33 per cent by year end.”
More than 18 months into the pandemic, experts are continuing to see strong price appreciation in the suburbs, as well as secondary cities outside of the GTA, which Karen Yolevski, chief operating officer for Royal LePage Real Estate Services, explained has been fuelled by a desire for larger homes, more outdoor space and the flexibility of location thanks to the increase of individuals being able to work remotely.
“This trend began prior to the pandemic and has been accelerated since March 2020. The question that remains is what percentage of those who moved away from the city centre will ultimately make their way back. Future newcomers to Canada will also be a significant factor in future demand," she said.
Yolevski added that while activity cooled slightly in the third quarter, and fewer listings received multiple offers, a chronic shortage of inventory will continue to create a competitive environment for buyers.
“In some cases, would-be sellers are not putting their homes on the market for fear they will not find another property to buy. I expect, even as the rate of appreciation slows, prices will continue to climb through the remainder of the year and into 2022, when unmet demand from this year returns to the market.”
