Royal LePage’s Q3 2021 House Price Update and Market Forecast

Royal LePage: Canadian home prices soar as persistent supply shortage results in continued seller’s market

National aggregate home price increases 21.4% year-over-year 

Third quarter highlights:

  • Royal LePage maintains its 2021 forecast, with the national aggregate home price expected to rise 16.0% in Q4, compared to a very strong Q4 2020
  • Very low inventory pushes potential buyers to sidelines amid national housing supply crisis, resulting in pent-up demand
  • 5% of regions surveyed saw double-digit year-over-year aggregate price growth in Q3
  • Condominiums continue price rebound in urban centres as return to ‘new normal’ allows Canadians to enjoy more aspects of city life

TORONTO, October 15, 2021 –According to the Royal LePage House Price Survey released today, the aggregate[1] price of a home in Canada increased 21.4 per cent year-over-year to $749,800 in the third quarter of 2021. Market activity slowed as a result of a chronic lack of inventory, a persisting challenge for housing markets from coast-to-coast, coupled with the seasonal summer slowdown.

“During the third quarter, the torrid pace of home price appreciation moderated as both demand and inventory waned, a typical summer market trend in a very atypical year. With easing pandemic restrictions, there was finally something to talk about other than real estate, and people began travelling and socializing again,” said Phil Soper, president and CEO of Royal LePage. “In addition, a year of relentless competition for too few properties drove some would-be purchasers to the sidelines as buyer fatigue set in. Yet their fundamental need or desire for a new home remains and we are seeing pent-up demand grow. We expect another unusually busy winter season building to a brisk 2022 spring market.”

The Royal LePage National House Price Composite is compiled from proprietary property data, nationally and in 62 of the nation’s largest real estate markets. When broken out by housing type, the national median price of a single-family detached home rose 25.2 per cent year-over-year to $790,000, while the median price of a condominium increased 13.0 per cent year-over-year to $533,600. Price data, which includes both resale and new build, is provided by Royal LePage’s sister company RPS Real Property Solutions, a leading Canadian real estate valuation company.

Boosting all segments of the housing market, with more immediate benefits for the condominium sector in large urban centres, immigration will continue to be a critical driver of housing demand. The Royal LePage Newcomer Survey showed that the average duration before newcomers purchase a home is three years after arrival and, nationally, 64 per cent rent their first home.[2]

“While detached houses in suburban and smaller city communities continue to be the primary driver of Canada’s aggregate house price growth, we are seeing prices leveling in many of these regions and expect future growth to track closer to historical norms,” said Soper. “While the price gap between houses and condominiums widened during the pandemic, that too should reverse itself in the months ahead, as buyers see condo units as good value for money. In addition, the revitalization of our cities, as employees return to offices and the businesses that serve them reopen, is driving renewed interest from investors eager to provide much-needed rental accommodation.”

Royal LePage is forecasting that the aggregate price of a home in Canada will increase 16.0 per cent to $771,500 in the fourth quarter of 2021, compared to the same quarter last year. This forecast is consistent with the company’s previous update in July, 2021.

“Looking back to the late spring of 2020, the Royal LePage benchmark value of a home was $580,000. The subsequent ‘Covid-catalyst’ which drove legions of Canadians to upgrade their living situations, has created a period of exceptional home price growth with real estate values on track to grow 33 per cent by year end,” concluded Soper.

Royal LePage House Price Survey Chart:rlp.ca/house-prices-Q3-2021
Royal LePage Forecast Chart:rlp.ca/market-forecast-Q3-2021

REGIONAL SUMMARIES

Greater Toronto Area 

The aggregate price of a home in the Greater Toronto Area increased 17.9 per cent year-over-year to $1,075,900 in the third quarter of 2021. Broken out by housing type, the median price of a single-family detached home increased 24.2 per cent to $1,352,200, while the median price of a condominium increased 12.3 per cent to $645,300 during the same period.

“More than 18 months into the pandemic, and we are continuing to see strong price appreciation in the suburbs, as well as secondary cities outside of the GTA, fueled by a desire for larger homes, more outdoor space and the flexibility of location, afforded by the option of remote work,” said Karen Yolevski, chief operating officer, Royal LePage Real Estate Services Ltd. “This trend began prior to the pandemic, and has been accelerated since March, 2020. The question that remains is what percentage of those who moved away from the city centre will ultimately make their way back. Future newcomers to Canada will also be a significant factor in future demand.”

In the city of Toronto, the aggregate price of a home increased 4.8 per cent year-over-year to $1,110,500 in the third quarter of 2021. During the same period, the median price of a single-family detached home increased 11.9 per cent to $1,566,600, while the median price of a condominium increased 6.7 per cent to $687,700.

“In the city centre, prices continue to rise as supply fails to satisfy growing demand. The condo segment continues to rebound, following a drop in sales and prices early in the pandemic. As immigration levels increase, so too will demand for condominiums in major urban centres like Toronto, which will put more pressure on prices in the coming year.”

Yolevski added that while activity cooled slightly in the third quarter, and fewer listings received multiple offers, a chronic shortage of inventory will continue to create a competitive environment for buyers.

“In some cases, would-be sellers are not putting their homes on the market for fear they will not find another property to buy,” said Yolevski. “I expect, even as the rate of appreciation slows, prices will continue to climb through the remainder of the year and into 2022, when unmet demand from this year returns to the market.”

Royal LePage is forecasting that the aggregate price of a home in the Greater Toronto Area will increase 14.5 per cent in the fourth quarter of 2021, compared to the same quarter last year. This forecast is consistent with the company’s previous update in July, 2021.

Royal LePage House Price Survey Chart:rlp.ca/house-prices-Q3-2021
Royal LePage Forecast Chart:rlp.ca/market-forecast-Q3-2021

Greater Montreal Area 

The aggregate price of a home in the Greater Montreal Area increased 20.8 per cent year-over-year to $517,200 in the third quarter of 2021. Broken out by housing type, the median price of a single-family detached home increased 20.0 per cent to $571,400, while the median price of a condominium increased 12.2 per cent to $410,400 during the same period.

“Signs of a slowdown that we had anticipated were confirmed during the third quarter,” said Dominic St-Pierre, vice-president and general manager of Royal LePage in Quebec. “Quarter-over-quarter price changes have fallen to their lowest rate since the start of the pandemic, below one per cent, whereas the increases of the previous quarters had varied between 5 and 10%.”

St-Pierre added that the lack of inventory nevertheless contributes to upward pressure on home prices.

In Montreal Centre, the aggregate price of a home increased 14.7 per cent year-over-year to $648,700 in the third quarter of 2021. During the same period, the median price of a single-family detached home increased 19.2 per cent to $1,060,500, while the median price of a condominium increased 8.8 per cent to $502,200.

Royal LePage is forecasting that the aggregate price of a home in the Greater Montreal Area will increase 17.5 per cent in the fourth quarter of 2021, compared to the same quarter last year, the highest of all forecasted regions in the country. This forecast is consistent with the company’s previous update in July, 2021.

Royal LePage House Price Survey Chart:rlp.ca/house-prices-Q3-2021
Royal LePage Forecast Chart:rlp.ca/market-forecast-Q3-2021

Greater Vancouver 

The aggregate price of a home in Greater Vancouver increased 20.8 per cent year-over-year to $1,221,400 in the third quarter of 2021. Broken out by housing type, the median price of a single-family detached home increased 23.4 per cent to $1,651,900, while the median price of a condominium increased 8.7 per cent to $697,000 during the same period.

“Vancouver and the surrounding greater region remains firmly in a seller’s market. Although activity showed signs of slowing modestly in the summer and early days of September, the market has picked up again, now that families are back in their usual routines,” said Randy Ryalls, general manager, Royal LePage Sterling Realty. “With inventory as low as it is, competition remains tight in every segment of the market. Most listings receive multiple offers, and it’s very common to sell above the asking price.”

Ryalls noted that having approximately 15,000 available listings in Greater Vancouver is considered a balanced market. The region currently has less than 9,000 listings.

“Supply would essentially need to double in order to meet the current demand. As a result of the shortage, prices continue to rise, forcing some buyers who have been priced out of the single-family detached market to purchase condominiums instead,” said Ryalls.

In the city of Vancouver, the aggregate price of a home increased 12.0 per cent year-over-year to $1,326,600 in the third quarter of 2021. During the same period, the median price of a single-family detached home increased 14.0 per cent to $2,399,600, while the median price of a condominium increased 2.2 per cent to $766,800.

Royal LePage is forecasting that the aggregate price of a home in Greater Vancouver will increase 15.0 per cent in the fourth quarter of 2021, compared to the same quarter last year. This forecast is consistent with the company’s previous update in July, 2021.

“With no major relief to the inventory shortage on the horizon, I expect strong demand will continue to put upward pressure on prices, and that competition will persist through 2022,” added Ryalls.

Interprovincial migration has put further strain on housing in British Columbia. According to a recent StatsCan report, British Columbia saw the largest increase in interprovincial migration nationally in 2020/2021, welcoming more than 34,000 Canadians from out-of-province. This was also the province’s biggest gain since 1993/1994.[3]

Royal LePage House Price Survey Chart:rlp.ca/house-prices-Q3-2021
Royal LePage Forecast Chart:rlp.ca/market-forecast-Q3-2021

Ottawa

The aggregate price of a home in Ottawa increased 20.7 per cent year-over-year to $725,200 in the third quarter of 2021. Broken out by housing type, the median price of a single-family detached home increased 23.0 per cent to $856,900, while the median price of a condominium increased 11.3 per cent to $414,700 during the same period.

“We’ve seen a gradual yet steady decline in active listings over the last six years, and that lack of inventory remains the greatest challenge for buyers today,” said John Rogan, broker of record, Royal LePage Performance Realty. “Even if demand returned to historic levels, there would still not be enough housing supply to meet that demand.”

Rogan noted that while Ottawa remains firmly in a seller’s market, the usual summer slowdown did occur in the early half of the third quarter.

“Compared to the spring, there are fewer multiple-offer scenarios today, but they have not been eliminated entirely. Much of the demand is coming from first-time buyers looking for larger properties with adequate space to continue working from home long-term,” said Rogan. “I expect the final months of 2021 will look very similar to the third quarter. Sales should continue to moderate, and price appreciation will persist.”

Royal LePage is forecasting that the aggregate price of a home in Ottawa will increase 17.0 per cent in the fourth quarter of 2021, compared to the same quarter last year. This forecast is consistent with the company’s previous update in July, 2021.

Royal LePage House Price Survey Chart:rlp.ca/house-prices-Q3-2021
Royal LePage Forecast Chart:rlp.ca/market-forecast-Q3-2021

Calgary 

The aggregate price of a home in Calgary increased 9.9 per cent year-over-year to $572,200 in the third quarter of 2021. Broken out by housing type, the median price of a single-family detached home increased 11.3 per cent to $643,700, while the median price of a condominium increased 2.9 per cent to $225,800 during the same period.

“Sales activity remains high while inventory is low because as soon as good listings come on the market, they sell quickly. We haven’t seen a September with sales as strong as this year since 2005,” said Corinne Lyall, broker and owner, Royal LePage Benchmark. “Inventory is only modestly outpacing sales and buyers are continuing to push themselves financially to be competitive and make the transaction.”

Lyall added that significantly low inventory in the entry-level market has put upward pressure on middle market home prices.

“During the second quarter, we began to see much stronger demand for larger homes as entry-level home prices appreciated at a faster pace and this trend has continued through the third quarter. However, the first-time buyer market will likely continue to be the most active segment,” added Lyall. “As home prices increase at the lower levels, buyers are realizing that for only a relatively modest amount more, they can shop in a very different home category.”

Royal LePage is forecasting that the aggregate price of a home in Calgary will increase 8.0 per cent in the fourth quarter of 2021, compared to the same quarter last year. The previous forecast, released in July, 2021, has been revised upward to reflect the current state of the market.

“We are continuing to see buyers, especially young families, relocate from the GTA. If parents can do their same job or find a new career in Calgary, they will relocate for a better lifestyle. With half of what they would pay in the GTA, they can afford a large family home in a popular neighbourhood,” said Lyall.

Royal LePage House Price Survey Chart:rlp.ca/house-prices-Q3-2021
Royal LePage Forecast Chart:rlp.ca/market-forecast-Q3-2021

Edmonton 

The aggregate price of a home in Edmonton increased 9.7 per cent year-over-year to $431,500 in the third quarter of 2021. Broken out by housing type, the median price of a single-family detached home increased 11.1 per cent to $470,400 and the median price of a condominium decreased 3.0 per cent to $194,700 during the same period.

“Despite being firmly in a seller’s market, buyers are being discerning about their home purchases. While properties that are priced accurately and in popular neighbourhoods are still seeing multiple offers, seller’s that list higher than market value are not seeing any interest,” said Tom Shearer, broker and owner, Royal LePage Noralta Real Estate.

Shearer added that demand for homes priced between $550,000 and $850,000 continues to increase as buyers stretch their budget to push their options outside of the heavily competitive first-time buyer market. This demand has put upward price pressure on the middle market through to the upper-end market.

“We continue to see demand in previously dormant markets and this has been driven by low mortgage rates over the past year. As it continues, the upward price pressure moves to more expensive properties. Currently, we are seeing demand for homes over $1 million surge more than 30 per cent compared to pre-pandemic levels,” added Shearer.

Although condominium prices have dipped year-over-year, Shearer expects demand to return to the segment when the city-centre becomes more vibrant and demand from international students returns.

Royal LePage is forecasting that the aggregate price of a home in Edmonton will increase 6.0 per cent in the fourth quarter of 2021, compared to the same quarter last year. The previous forecast, released in July, 2021, has been revised modestly downward to reflect the current state of the market.

Royal LePage House Price Survey Chart:rlp.ca/house-prices-Q3-2021
Royal LePage Forecast Chart:rlp.ca/market-forecast-Q3-2021

Halifax

The aggregate price of a home in Halifax increased 16.1 per cent year-over-year to $468,000 in the third quarter of 2021. Broken out by housing type, the median price of a single-family detached home increased 19.0 per cent to $535,000, while the median price of a condominium increased 15.8 per cent to $385,500 during the same period.

“Demand was stronger than a typical third quarter but markedly quieter than the first half of the year, which is likely seasonal. However, as inventory also decreased over the past few months, there was still notable upward pressure on prices,” said Matt Honsberger, broker and owner, Royal LePage Atlantic.

In regards to interprovincial buyers, Honsberger said that the majority of buyers are from Ontario but the percentage of those looking to move to Atlantic Canada from British Columbia has been rising. According to a recent StatsCan report, Nova Scotia saw a surge of interprovincial migration. All four Atlantic provinces posted a net interprovincial migratory increase for the first time since 2009/2010, with current migration levels at or near record levels.[4]

Royal LePage is forecasting that the aggregate price of a home in Halifax will increase 9.5 per cent in the fourth quarter of 2021, compared to the same quarter last year. This forecast is consistent with the company’s previous update in July, 2021. Honsberger noted that they have seen a surge of interest from clients looking towards the 2022 spring market to transact.

“There is not much inventory relief expected in the new year but many buyers are hopeful that they will find more selection in the spring market. Developers can’t keep pace and we are expecting demand from interprovincial migration, student accomodation and immigration to remain high,” added Honsberger. “Buyers have been motivated to get organized so they can lock in mortgage rates and get educated on the market. This will help them make decisions quickly if a desired listing becomes available.”

Royal LePage House Price Survey Chart:rlp.ca/house-prices-Q3-2021
Royal LePage Forecast Chart:rlp.ca/market-forecast-Q3-2021

Winnipeg 

The aggregate price of a home in Winnipeg increased 17.0 per cent year-over-year to $351,200 in the third quarter of 2021. Broken out by housing type, the median price of a single-family detached home increased 15.2 per cent to $389,600, while the median price of a condominium increased 25.6 per cent to $242,400 during the same period.

“In the last few months, activity has slowed. And, for the first time all year, sales were down in August and September, although still well above the five-year average,” said Michael Froese, broker and manager, Royal LePage Prime Real Estate. “We’ve become accustomed to a heightened level of activity in the housing market over the last year and a half, that any pace reduction can seem significant. While the market may have de-intensified during the summer months, due in part to buyer fatigue, price appreciation remains at historic levels because demand remains high.”

Froese added that dwindling supply is also contributing to a dip in market activity.

“There is simply not enough inventory to keep pace with growing demand. Although there is less competition now than in the spring, there are still more potential buyers than there are homeowners looking to sell, meaning prices are not likely to decrease significantly,” said Froese.

Froese noted that at the height of the market in May, 60 per cent of detached homes in Winnipeg were selling over the asking price. In September, that figure decreased to 48 per cent. He anticipates activity will continue to moderate heading into the winter months, but does not expect prices to go down.

Royal LePage is forecasting that the aggregate price of a home in Winnipeg will increase 8.5 per cent in the fourth quarter of 2021, compared to the same quarter last year. This forecast is consistent with the company’s previous update in July, 2021.

Royal LePage House Price Survey Chart:rlp.ca/house-prices-Q3-2021
Royal LePage Forecast Chart:rlp.ca/market-forecast-Q3-2021

Regina 

The aggregate price of a home in Regina increased 11.7 per cent year-over-year to $352,100 in the third quarter of 2021. Broken out by housing type, the median price of a single-family detached home increased 12.8 per cent to $380,800, while the median price of a condominium increased 6.9 per cent to $198,900 during the same period.

“Strong competition in the single-family detached market continues to put upward pressure on house prices, although we did see a slight softening in activity over the last quarter,” said Mike Duggleby, broker and owner, Royal LePage Regina Realty. “While there are fewer multiple-offer scenarios today than at the start of the pandemic, competition remains very tight for buyers as a result of a shortage in housing stock.”

Duggleby noted that demand for condominiums has also increased with the return of post-secondary students to the classroom, and anticipates a boost in immigration next year will drive further price growth in this segment of the market.

“Without an impactful increase in supply, the price of entry-level properties like condos will continue to rise, especially if immigration returns to pre-pandemic levels,” said Duggleby. “New development projects are not progressing quickly enough, as materials and labour continue to be in short supply.”

Royal LePage is forecasting that the aggregate price of a home in Regina will increase 11.0 per cent in the fourth quarter of 2021, compared to the same quarter last year. The previous forecast, released in July, 2021, has been revised upward to reflect the current state of the market.

Royal LePage Home Price Data:

Royal LePage House Price Survey Chart:rlp.ca/house-prices-Q3-2021
Royal LePage Forecast Chart:rlp.ca/market-forecast-Q3-2021

For more information please get in touch by email at alasdair@royallepage.ca or call my direct line at 519-590-6118.

For more interesting articles and videos please visit;

Website, http://www.alasdair.ca

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