According to the Royal LePage Market Survey Forecast, Canadian home prices are expected to see healthy appreciation by the end of 2020, driven by low single-digit appreciation in both the condominium and detached home segments.
The decline in high price appreciation in the condominium segment, in recent years, reflects a shift in millennial demand towards houses and is expected to reinvigorate sales activity in the suburbs.
The aggregate price of a home in Canada is forecast to rise 3.2 per cent year-over-year to $669,800 in 2020, with the median price of a condominium and two-storey detached house projected to increase 3.6 per cent and 3.1 per cent to $506,100 and $785,400.
Royal LePage’s Newcomer Survey, released in October 2019, states that newcomers to Canada are expected to purchase one in every five homes on the market over the next five years.
Newcomers have high consumer confidence in Canadian real estate (86 per cent) and arrive with savings to put towards the purchase of a home (75 per cent).
“Our 2020 national forecast is based on a continuation of healthy economic conditions,” said Phil Soper, president and CEO, Royal LePage. “Paradoxically, a slowdown in economic growth could cause us to revise the outlook upward. While one month does not a trend make, November’s surprisingly weak employment numbers may be the trigger that causes the Bank of Canada to join the U.S. Federal Reserve in lowering interest rates”.
“Falling rates normally encourage new housing demand,” said Soper. “This would mean further upward price pressure in regions where employment remains healthy, which is most of the country. That window to lower or flat home prices is closing or has closed for most Canadians.”
Most of Canada is seeing a shift in demand from condominiums to detached houses as peak millennials, those between the ages of 26 and 32 and the largest cohort within the powerful millennial consumer demographic, seek houses to accommodate growing families.
“The oldest peak millennials are now in their thirties,” said Soper. “This huge wave of Canadian consumers has been transforming Canadian real estate for a decade, putting more focus and upward price pressure on our condominium housing stock. With kids in hand and dog on leash, these parents are now eyeing the suburbs that their baby boomer parents so coveted. We predict that the period of disproportionately higher price appreciation in the condo segment is drawing to a close as interest in detached homes is reborn.”
The median price of a two-storey detached home in the Greater Toronto Area is expected to increase 4.5 per cent year-over-year in 2020, rising to $1,027,200, while the median price of a condominium is forecast to increase 6.0 per cent to $600,000.
In Greater Vancouver, house price appreciation is expected to stabilize in 2020 after declining in 2019. The aggregate price of a home in the region is forecast to rise 1.5 per cent to $1,125,200.
British Columbia’s economic indicators continue to be bullish, and most forecasters expect growth in B.C. to be above the national average next year.
The Greater Montréal Area and Ottawa’s aggregate home prices are forecast to increase 5.5 per cent and 4.5 per cent to $457,900 and $516,200, respectively, in 2020 compared to 2019.
The Greater Montréal Area is expected to see the highest aggregate home price appreciation of all regions analyzed. Price growth in both regions is fueled by healthy economies with good employment, affordable real estate and strong consumer confidence.
Calgary and Edmonton are expected to see modest home price gains in 2020 as prices began to stabilize on a quarter-over-quarter basis in 2019.
The aggregate price of a home in Halifax is forecast to increase 1.75 per cent in 2020, rising to $323,800. Over the same period, the median price of a condominium is forecast to increase 3.75 per cent year-over-year to $330,400 and the median price for a two-storey detached home is forecast to rise 1.25 per cent to $340,600.
“We are now seeing more multiple offer situations in Halifax,” said Matt Honsberger, broker and owner, Royal LePage Atlantic. “In 2016, it would have been rare to have three offers on a property; now we can see up to 8 to 10. Inventory is tight, and buyers are having to adjust to the competition as momentum and consumer confidence drive the real estate market.”
In 2020, the aggregate price of a home in Winnipeg is forecast to remain flat year-over-year at $321,300. During the same period, the median price of a condominium is forecast to increase 1.25 per cent year-over-year, rising to $235,800.
The median price of a two-storey detached home is expected to decrease 0.25 per cent year-over-year to $352,600. Immigration will continue to be a strong driver in the real estate market.
“Winnipeg is a vibrant city that attracts young professionals looking to live in an affordable place where beautiful homes are not financially out of reach for most residents,” said Michael Froese, broker and manager, Royal LePage Prime Real Estate. “Winnipeg’s diverse economy and steady employment insulate us somewhat from external economic factors, including a potential 2020 recession in the States.”
The aggregate median price of a home in Regina is expected to remain flat at $315,000 in 2020. During the same period, the median price of a two-storey detached home is forecast to decrease 0.5 per cent to $386,000 and the median price of a condominium is forecast to increase 3.5 per cent to $207,300 year-over-year.
Immigration continues to sustain real estate in Regina. The Saskatchewan Government’s initiative to attract more newcomers to the area is expected to increase demand in the coming year.
“Regina’s oversupply of listings has diminished greatly and there are fewer condominiums available on the market than previous years,” said Mike Duggleby, broker and owner, Royal LePage Regina Realty. “Potential buyers who have been waiting for prices to stabilize and begin a recovery are realizing that now is the time to enter the marketplace.”