Royal LePage Market Forecast: National Home Prices to
Show Remarkable Resilience in 2020
- Best case scenario forecast shows Canada’s aggregate home price could grow a modest 1% by the end of 2020
- If the pandemic continues to heavily restrict business activity through late summer, a national home price decrease of 3% is expected by the end of 2020
- The aggregate price of a home in Canada climbed 4.4 per cent year-over-year in Q1 2020
- High demand and low inventory in Toronto, Montreal and Ottawa fueled rising home prices
If the strict, stay-at-home
restrictions characterizing the fight against COVID-19 are eased during the
second quarter, prices are expected to end 2020 relatively flat, with the
aggregate value of a Canadian home up a modest 1.0 per cent year-over-year, to
$653,800. If the current tight restrictions on personal movement are sustained
through the summer, the negative economic impact is expected to drive home
prices down by 3.0 per cent ($627,900) year-over-year. In December 2019, Royal
LePage forecast the national aggregate price to increase 3.2 per cent by the
end of 2020. Due to COVID-19, expected price growth has been revised down
almost 70 per cent compared to Royal LePage’s base scenario.
“The impact of COVID-19 on the
Canadian economy has been swift and violent, with layoffs driving high levels
of unemployment across the country. While it is sad that these people skewed
strongly to young and to part-time workers, for the housing industry, the
impact of these presumably temporary job losses will be limited as these groups
are much less likely to buy and sell real estate,” said Phil Soper, president
and CEO, Royal LePage. “From our experience with past recessions and real
estate downturns, we are not expecting significant year-over-year price changes
in 2020. Home price declines occur when the market experiences sustained low
sales volume while inventory builds. Currently, the inventory of homes for sale
in this country is very low, matching low sales volumes as people respect
government mandates to stay at home.
“It is easy to mistakenly equate a
handful of transactions at lower prices to a reset in the value of the nation’s
housing stock. Distressed sales that occur during an economic crisis are a poor
proxy for real estate value,” said Soper.
Broad-based measurements of industry
activity point to a sharp decline in the four or five weeks since all provinces
declared states of emergency. Home search activity on popular real estate
websites are down more than 20 per cent versus norms. Home showings are down by
more than two-thirds, based on Royal LePage sampling. Open house gatherings of
people at a property for sale have been reduced to almost zero nationwide.
“As we ease out of strict
stay-at-home regimens, sales volumes will return; traditional home sales
practices will not,” continued Soper. “The popular ‘open house’ gathering of
buyers on a spring afternoon is gone, and it won’t be coming back any time
soon. The industry is leveraging technologies that allow a home to be shown
remotely and social distancing protocols, where we restrict client interaction
with our Realtors to limited one-on-one or two meetings, will continue for
months and months. This process is inherently safer than a trip to the grocery
store.”
The aggregate price of a home in
Canada increased 4.4 per cent to $655,276 in the first quarter. When broken out
by housing type, the median price of a two-storey home rose 5.1 per cent
year-over-year to $770,005 while the median price of a bungalow and condominium
rose 2.1 per cent and 4.4 per cent to $541,040 and $493,917, respectively.
Price data, which includes both resale and new build, is provided by Royal
LePage’s sister company RPS Real Property Solutions, a leading Canadian
valuation company.
At the start of 2020, Canada’s
housing market was experiencing a surge in home sales with growing upward
pressure on major market home prices. This resulted from pent up demand that
was released in the second half of 2019 when federal mortgage stress test
measures implemented in 2018 had largely been absorbed by the market and
consumer confidence began to build.
“If the fight against the
coronavirus requires today’s tight stay-at-home mandates to remain in place for
several months more, with no semblance of normal business activity allowed,
temporary job losses will become permanent and consumer confidence will be
harder to repair,” said Soper. “This would place downward pressure on both home
sales volumes and prices.
“Equally, if the collective efforts
of Canadians slow the spread of the disease to manageable levels, and if
promising science and therapeutic drugs are announced, people will return to
their jobs, market confidence will bounce back quickly, and we could see
Canada’s real markets roar back to life, with 2020 transactions delayed but not
eliminated.”
REGIONAL SUMMARIES
Greater Toronto Area
Housing demand outstripped supply in
the Greater Toronto Area putting significant upward pressure on home prices.
During the first quarter of 2020, the Greater Toronto Area aggregate home price
rose 7.5 per cent year-over-year to $866,211.
When broken out by property type,
the median price of a condominium saw the highest appreciation, rising 8.8 per
cent year-over-year to $580,508. The median price of a two-storey home and
bungalow rose 7.7 per cent and 3.7 per cent to $1,010,004 and $826,186,
respectively.
“Toronto real estate appreciated
rapidly in the first quarter as the demand that began in the second half of
2019 kept its momentum while inventory remained low. However, by mid-March both
buyers and sellers had pulled back to adhere to social distancing measures and
gauge the impact of the pandemic on the market,” said Kevin Somers, chief
operating officer, Royal LePage Real Estate Services Limited.
If business activity resumes by the
end of the second quarter, the Greater Toronto Area may see a year-over-year
increase of 1.5 per cent to its aggregate home price by the end of 2020,
increasing to $861,100. If business activity resumes in late summer 2020, the
region could see a decrease of 0.5 per cent year-over-year in aggregate home
price to $844,200.
Greater Montreal Area
During the first quarter of 2020,
the Greater Montreal Area aggregate home price rose 7.2 per cent year-over-year
to $441,979, representing the second consecutive quarterly year-over-year
record increase in almost a decade. However, a decline in sales and new
listings was observed in mid-March due to COVID-19.
When broken out by property type,
the median price of a two-storey home and bungalow rose 8.0 per cent and 6.9
per cent year-over-year, respectively, to $557,594 and $344,043, while the
median price of a condominium rose 5.0 per cent year-over-year to $344,962.
“Historically, the financial and
real estate crises of the past 50 years that have disrupted consumer confidence
and the number of real estate transactions have had little effect on property
prices when analyzed over a 12 to 18 month period,” said Dominic St-Pierre,
vice-president and general manager, Royal LePage, Quebec region. “While sales
will temporarily slow down during the current pandemic, we do not foresee a
significant decline in home prices, at least not for a sustained period, as
housing and shelter is an essential need. Additionally, we expect that the
numerous buyers who have put their purchase on hold will create a surge from
pent-up demand,” he added.
If business activity resumes by the
end of the second quarter, the Greater Montreal Area real estate market should
remain relatively stable, with a year-over-year decrease of 0.5 per cent to its
aggregate home price by the end of 2020, decreasing to $434,500 by the end of
2020. If business activity resumes in late summer 2020, the region’s market
could see a decrease of 3.5 per cent year-over-year in aggregate home price to
$421,400. This forecast factors in that Quebec is the only province in Canada
where real estate brokerage is currently not included in the list of essential
services.
Greater Vancouver
Despite tightening inventory and a
surge in sales, the aggregate price of a home in Greater Vancouver decreased
2.1 per cent year-over-year to $1,083,166 in the first quarter of 2020.
Broken out by housing type, the
median price of a two-storey home decreased 1.1 per cent year-over-year to
$1,402,395, while the median price of a condominium and bungalow decreased 2.5
per cent and 4.2 per cent to $636,012 and $1,182,420, respectively.
“While the region had not quite
returned to the 10-year average in home sales, the Greater Vancouver housing
market was on a path for a vibrant spring market. We were seeing consumer
confidence grow from the healthy demand seen in the entry-level segment that
was extending upwards through the mid-range properties. We expected this upward
trend to continue,” said Randy Ryalls, managing broker, Royal LePage Sterling
Realty. “Amid COVID-19 concerns, Greater Vancouver’s real estate activity
began to slow in mid-March. While we do not know the duration of the pandemic,
demand is still there and waiting for regular market activity to resume.”
The aggregate price of a home in the
City of Vancouver rose 1.0 per cent year-over-year to $1,245,608 in the first
quarter of 2020, driven by a gain of 4.9 per cent in the median price of a
two-storey home. Both the median price of a bungalow and condominium declined
year-over-year during the same period.
If business activity resumes by the
end of the second quarter, Greater Vancouver may see a year-over-year gain of
0.5 per cent to its aggregate home price by the end of 2020, rising to
$1,086,800. If business activity resumes in late summer 2020, the region could
see a decrease of 2.5 per cent year-over-year in aggregate home price
($1,054,400).
“Buyers had come back to the market
after sitting on the sidelines for a couple of years. They could not have
predicted the impact of COVID-19 on their ability to transact this spring and
have found themselves on the sidelines again,” said Ryalls. “If consumer
confidence is intact when we are able to resume normal market activity, I
expect we will see a significant pent up demand and a bump in sales. Buyers are
still able to access a mortgage rate below 3 per cent, which is very attractive
to homebuyers.”
Ottawa
Low inventory and high demand in the
first quarter of 2020 put significant upward pressure on home prices. The
aggregate price of a home in Ottawa increased 8.0 per cent year-over-year in
the first quarter of 2020, crossing the half million dollar milestone for the
first time to $502,808.
Broken out by housing type, the
median price of a bungalow and condominium in Ottawa increased 12.0 per cent
and 8.1 per cent year-over-year to $519,827 and $343,998, respectively, while
the median price of a two-storey home in the region increased 6.9 per cent
year-over-year to $526,584.
“Until mid-March, about 60 per cent
of our listings were seeing multiple offers. The first quarter of 2020 was the
extension of a seller’s market that began 18 months ago,” said John Rogan,
broker of record, Royal LePage Performance Realty. “The impact of the
coronavirus on Ottawa’s real estate market was quick and only those who had to
buy and sell remain active.”
If business activity in the region
resumes by the end of the second quarter, Ottawa may see a year-over-year
gain of 2.5 per cent to its aggregate home price by the end of 2020, rising to
$506,500. If business activity resumes in late summer 2020, the region’s
aggregate home price is expected to remain flat ($494,100).
“There are many unknowns about the
long-term economic impact of COVID-19 on real estate. However, low inventory is
supportive of home price appreciation, or at least home price stability. While
we are not expecting to see 2019 price gains this year, at this stage it’s not
likely that prices will notably decline either,” said Rogan.
Calgary
While sales were more brisk in the
first quarter of 2020 compared to last year, the aggregate price of a home in
Calgary remained relatively flat dipping 0.1 per cent year-over-year to
$469,156.
Broken out by housing type, the
median price of a two-storey home increased 0.9 per cent year-over-year to
$514,713, while the median price of a bungalow was flat at $485,984. The median
price of a condominium decreased 7.2 per cent to $261,778 compared to the first
quarter of 2019.
“Sales are up year-to-date despite
the dip in activity during the last two weeks of March,” said Corinne Lyall,
broker and owner, Royal LePage Benchmark. “With a decline in listing inventory,
we had expected to see modest price gains this spring. Now we are waiting to
see how long the pandemic lasts and how much damage the economy sustains.”
If business activity resumes by the
end of the second quarter, Calgary’s aggregate home price is expected to see a
year-over-year decline of 0.5 per cent by the end of 2020, rising to $463,000.
If business activity resumes in late summer 2020, the region could see a
decrease of 4.0 per cent year-over-year in aggregate home price ($451,300).
Lyall added that while low oil
prices will also have a negative impact on Calgary’s real estate, the risk is
lower than the 2014 oil crisis. This is primarily because the region’s real
estate market has been adjusting to declining oil prices over the years and the
current low level of housing inventory.
“Oil companies have learned how to
operate very efficiently since 2014 and with the pipeline going ahead, there is
optimism that Calgary’s real estate market will find the momentum that was
building before the pandemic took hold. We are hoping in Alberta that everyone
will take the correct measures so we will plank the curve sooner rather than
later,” said Lyall.
Edmonton
The aggregate price of a home in
Edmonton decreased 1.4 per cent year-over-year to $371,118 in the first quarter
of 2020.
Broken out by housing type, the
median price of a standard two-storey home increased 1.5 per cent
year-over-year to $430,732. The median price of a bungalow and condominium
decreased 6.3 per cent and 5.3 per cent year-over-year to $351,481 and
$215,223.
“Edmonton’s softened real estate
prices and continued low interest rates were attracting buyers to the market as
they saw good value in larger homes,” said Tom Shearer, broker and owner, Royal
LePage Noralta Real Estate. “Now that the market has been paused by the
pandemic, consumer confidence and employment levels will determine the new norm
when market activity resumes.”
Shearer added that prior to
mid-March, when the pandemic began impacting real estate activity, his
brokerage had noticed a surge in investors looking for single-family homes with
legal suites.
“Investors watch the market closely
because their decisions are purely financial. They saw prices come down to a
level where the likelihood of profitability was good,” said Shearer.
If business activity resumes by the
end of the second quarter, Edmonton’s aggregate home price is expected to see a
1.0 per cent year-over-year decrease to $370,800, by the end of 2020. If
business activity resumes in late summer, the region could see a decrease of
3.0 per cent year-over-year in aggregate home price ($363,300).
Halifax
After two years of strong home price
appreciation, the aggregate price of a home in Halifax decreased 1.8 per cent
year-over-year to $317,064 in the first quarter of 2020.
Broken out by housing type, the
median price of a two-storey home and bungalow in the region decreased 0.8 per
cent and 1.7 per cent year-over-year to $338,057 and $266,593, respectively,
while the median price of a condominium decreased 13.4 per cent year-over-year
to $284,039.
“2018 and 2019 were exceptional
years for Halifax’s real estate market and going into 2020, we were sustaining
momentum without significant changes in price or unit sales. It was a typical
first quarter of the year for Halifax,” said Matt Honsberger, broker and owner,
Royal LePage Atlantic. “We were expecting the market to pick up again in the
spring but like other cities across Canada, the only buyers and sellers who
have been transacting since mid-March are those who must buy or sell. The
shoppers have taken a necessary step back.”
If business activity resumes by the
end of the second quarter, Halifax’s aggregate home price during 2020 is
expected to remain unchanged compared to the end of 2019 at $316,600. If
business activity resumes in late summer, the region could see a decrease of
1.0 per cent year-over-year in aggregate home price ($313,400).
Winnipeg
The aggregate price of a home in
Winnipeg increased 1.8 per cent year-over-year to $303,523 in the first quarter
of 2020 with all three reporting property-types seeing year-over-year increases
in median price.
Broken out by housing type, both the
median price of a bungalow and condominium in the region increased 2.3 per cent
year-over-year to $292,532 and $241,048, respectively, while the median price
of a two-storey home in the region increased 1.3 per cent year-over-year to
$326,627.
“Winnipeg had an excellent first
quarter. Sales were up 12 per cent in the first quarter compared to 2019.
Demand was high and consumer confidence was soaring,” said Michael Froese,
broker and manager, Royal LePage Prime Real Estate. “Understandably, activity
has slowed at the tail end of March as Manitobans’ priorities have shifted to
help flatten the curve. There are still many people needing help to buy and
sell real estate. With strong safety protocols in place, we are helping our
customers get through this challenging time.”
If business activity resumes by the
end of the second quarter, Winnipeg’s aggregate home price is expected to
remain unchanged by the end of 2020, compared to home prices at the end of
2019, at $310,900. If the activity resumes in late summer, the region could see
a decrease of 2.0 per cent year-over-year in aggregate home price ($304,700).
“While no major urban city will be
able to avoid the negative economic impact of COVID-19, Winnipeg is
well-positioned to remain relatively stable through the pandemic due to our
strong underlying market fundamentals. We are resilient,” added Froese.
Regina
The aggregate price of a home in
Regina decreased 2.1 per cent year-over-year to $317,400 in the first quarter
of 2020.
Broken out by housing type, the
median price of a two-storey home increased 4.8 per cent year-over-year to
$399,564, while the median price of a bungalow and condominium decreased 6.5
per cent and 12.9 per cent to $284,033 and $194,470, respectively.
“We were beginning to see signals of
a market recovery, which was disrupted by the pandemic,” said Mike Duggleby,
broker and owner, Royal LePage Regina Realty. “However, Regina’s real estate
market has seen its share of challenges over the past few years and prices are not
likely to significantly decline.”
If business activity resumes by the
end of the second quarter, Regina’s aggregate home price during 2020 is
expected to decrease 2.0 per cent year-over-year to $311,000 by the end of
2020. If business activity resumes in late summer, the region could see a
decrease of 4.0 per cent year-over-year in aggregate home price ($304,700).
Royal LePage Home Price Data and
Forecasts:
- Royal LePage House Price Survey Chart (Canada’s largest 64 housing markets): rlp.ca/house-prices
- Royal LePage Market Survey Forecast Chart: rlp.ca/2020-forecast
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About the Royal LePage House Price
Survey
The Royal LePage House Price Survey
provides information on the three most common types of housing in Canada, in 64
of the nation’s largest real estate markets. Housing values in the Royal LePage
House Price Survey are based on the Royal LePage Canadian Real Estate Market
Composite, produced quarterly through the use of company data in addition to
data and analytics from its sister company, RPS Real Property Solutions, the
trusted source for residential real estate intelligence and analytics in
Canada. Commentary on housing and forecast values are provided by Royal LePage
residential real estate experts, based on their opinions and market knowledge.
About Royal LePage
Serving Canadians since 1913, Royal
LePage is the country’s leading provider of services to real estate brokerages,
with a network of over 18,000 real estate professionals in over 600 locations
nationwide. Royal LePage is the only Canadian real estate company to have its
own charitable foundation, the Royal LePage Shelter Foundation, dedicated to
supporting women’s and children’s shelters and educational programs aimed at
ending domestic violence. Royal LePage is a Bridgemarq Real Estate Services Inc.
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