When COVID 19 struck in 2020, many experts predicted that the Canadian housing market would crash. For example, the Canada Mortgage and Housing Corporation predicted in May that home prices would drop by up to 18% by the end of 2020. However, the housing market defied all odds and experienced record-breaking home prices in the midst of the pandemic.
The Real Estate Board of Greater Vancouver reported that the benchmark price of a home rose to $1,044,000 in November, a 5.8% year-over-year increase. In the same month, year-over-year home sales in Vancouver increased by 22.7%.
Toronto has also consistently experienced rising home prices during the pandemic period. Data from the Toronto Regional Real Estate Board (TRREB) shows that there was a 42.3% year-over-year increase in sales in September 2020. The same report revealed that the average price of homes sold in September was $960,772, which represents a 14% year-over-year increase.
However, many people are wondering whether home prices will continue to rise in summer. Many believe that the Canadian real estate bubble is about to burst.
Canadian house price predictions
Though real estate experts have mixed opinions about the Canadian housing market, most agree that the prices will keep rising in 2021. Here are some factors that could drive up prices:
Low mortgage rates – Mortgage rates in Canada hit an all-time low in 2020. In June, HSBC bank was offering a five-year, fixed-rate mortgage at 1.99%. This low cost of borrowing means that more people can afford to buy houses. Due to the high demand, home prices are likely to continue soaring in summer.
Relocations to suburban areas – Christopher Alexander of RE/MAX Canada says that many households are considering relocating to less dense neighbourhoods and cities. This migration trend will spark an increase in sales in rural and suburban parts of Canada in 2021. The surge in demand will keep home prices high in 2021.
Low inventory levels – The Canadian housing market was characterized by low inventory levels in 2020. This is expected to continue in 2021, thus driving up home prices even further.
Conclusion
RE/MAX Canada predicts that residential home prices will rise by up to 6% in 2021. If you need help finding a profitable investment property, click here to make an appointment now: https://www.regalwayhomes.com/bookings-checkout/real-estate-investment/book