According to the Royal LePage House Price Survey and Forecast, powered by its sister company RPS Real Property Solutions’ Data and Analytics, the aggregate price of a home in Canada is expected to remain remarkably stable through the COVID-19 pandemic.
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. The aggregate price of a home in Canada climbing 4.4% year-over-year in Q1 2020 to $655,276.
However, the forecasts for the rest of the year is as follows:
- Best case: If strict, stay-at-home restrictions are eased in Q2 2020, prices are expected to end 2020 relatively flat, with the aggregate value of a Canadian home up a modest 1.0% year-over-year, to $653,800.
- Base case: 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 year-over-year ($627,900).
“From our experience with past recessions and real estate downturns, we are not expecting significant year-over-year price changes in 2020,” said Phil Soper, president and CEO, Royal LePage.
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 Mr. Soper.
Recent Market Activity
Broad-based measurements of industry activity point to a sharp decline in the 4-5 weeks since all provinces declared states of emergency:
- Home search activity on popular real estate websites are down more than 20% 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
Greater Toronto Area (GTA):
- Housing demand outstripped supply in the GTA in Q1 2020, with the aggregate home prices rising 7.5% year-over-year to $866,211
- Condos saw the highest appreciation, rising 8.8% year-over-year to $580,508, while median price of a two-storey home rose by 7.7% to $1,010,004
- If business activity resumes by the end of Q2, the GTA may see a year-over-year increase of 1.5% to its aggregate home price by the end of 2020 and if business activity resumes in late summer 2020, the region could see a decrease of 0.5% year-over-year in aggregate home price to $844,200
Greater Montreal Area (GMA)
- During Q1 2020, the GMA’s aggregate home price rose 7.2% year-over-year to $441,979, representing the second consecutive quarterly year-over-year record increase in almost a decade
- When broken out by property type, the median price of a two-storey home rose by 8% to $557,594, while the median price of a condo rose 5.0% year-over-year to $344,962
- 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.”
- If business activity resumes by the end of Q2, the GMA should remain relatively stable, with a year-over-year decrease of 0.5% to its aggregate home price by the end of 2020 and if business activity resumes in late summer 2020, the region’s market could see a decrease of 3.5% year-over-year in aggregate home price to $421,400
Greater Vancouver Area (GVA)
- Despite tightening inventory and a surge in sales, the aggregate price of a home in GVA fell by 2.1% year-over-year to $1,083,166 in Q1 of 2020
- The median price of a two-storey home decreased 1.1% year-over-year to $1,402,395, while the median price of a condo decreased by 2.5% to $636,012
- Said Randy Ryalls, managing broker, Royal LePage Sterling Realty. “While we do not know the duration of the pandemic, demand is still there and waiting for regular market activity to resume.”
- If business activity resumes by the end of Q2, the GVA may see a year-over-year gain of 0.5% to its aggregate home price by the end of 2020, rising to $1,086,800. However, if business activity resumes in late summer 2020, it could see a decrease of 2.5% year-over-year ($1,054,400)
- While sales were more brisk in Q1 of 2020 compared to last year, the aggregate price of a home in Calgary remained relatively flat dipping 0.1% year-over-year to $469,156
- The median price of a two-storey home increased 0.9% year-over-year to $514,713, while the median price of a condo decreased 7.2% to $261,778 compared to the first quarter of 2019.
- Said Corinne Lyall, broker and owner, Royal LePage Benchmark, “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.”
- Also, Ms 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 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
- If business activity resumes by the end of Q2, Calgary’s aggregate home price is expected to see a year-over-year decline of 0.5% and if business activity resumes in late summer 2020, it could see a decrease of 4.0%
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 House Price Survey are based on the Royal LePage National House Price 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.
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