When Will Prices Soften Within the Canadian Real Estate Market?
Monday May 17th, 2021
While prior to the pandemic, many people migrated to bigger cities for job opportunities and proximity to work, within the last 12 months the opposite has occurred.
Canadians have moved from big cities into smaller, more rural areas that promise green space and larger living quarters at a fraction of the cost, compared to urban centres such as Toronto and Vancouver.
One factor is that with work-from-home even more generalized, many people don’t have to live within commuting distance from their jobs. That means that folks who own condos and smaller homes can take out built-up equity and move to a property that better meets their needs – as over the past year, home is not only where you eat a few meals and sleep, but also the office, your kids’ school, playground, gym, etc.
These changing Canadian homebuyer appetites have exerted pressure upon smaller real estate markets across the country that have welcomed the surge in demand but are struggling to keep up with supply. This has contributed to the upward surge in Canadian real estate prices over the past year – great news for homeowners, but a hurdle for first-time buyers who are eager to take advantage of current record-low interest rates.
The Bank of Canada’s low interest rate has led to many potential homebuyers engaging in the real estate market. All signals from the Bank of Canada currently point to interest rates remaining low for the rest of 2021 and potentially through 2022. In addition, it is forecasted that 701,000 properties are expected to be exchanged using the Canadian MLS systems in 2021.
For the rest of 2021, it is anticipated that activity will continue to climb and set monthly records. The national average home price could rise by 16.5% to just over $665,000 this year – a figure that may not be sustainable in the long run.