A longstanding Tembo tradition is to discuss the buffet of real estate predictions for the coming year. There have been many price predictions floating around. Banks have best case, moderate, and worst case scenarios, as do most financial institutions. Realtors and real estate sites and blogs suggest 2021 will be a golden age of price growth, as always, and the YouTube commentariat suggest that prices can’t go down in Canada, regardless of COVID-19, so here’s the summary:
The Canadian Real Estate Association (CREA) predict a 9% overall increase in national home prices, taking the average to $620K. CREA believes that prices will go up over 13% from 2019 figures, with Ontario prices rising over 16% to $820K.
Evan Siddall, CEO of the CMHC (Canada Mortgage Housing Corp.) made a prediction several months ago that real estate prices would fall nationally by the early 3rd quarter of 2021 due to the lingering aftershocks of COVID-19. Siddall believes that bankruptcies, job losses, and broader uncertainty will force the real estate market’s hand and that the real effects of COVID-19 won’t be felt until months from now. He does believe, however, that a worse case scenario he feared has been averted.
Keep in mind that the CMHC were very bearish on prices when COVID hit, but their prediction of declines did not happen, big price increases occurred instead.
Fitch predicts a 3-5% drop in prices in 2021 due to unemployment issues and affordability concerns. They say that the market will rebound strongly in 2022. Like Siddall, the agency believes that COVID will have economic impacts that will take more time to be fully felt.
ReMax notes that 84% of brokers polled expect a sellers market in 2021 as the demand for houses outside of cities with more space and quiet will continue to drive demand.
Royal LePage predict a modest but sustained increase in prices, citing that many buyers who wanted to move or buy homes this year could not affect their transactions, and will wait to regroup for a purchase in 2021. The real estate firm predict that the national average price for a two storey detached home will hit just under $900K, while condo prices will hover in and around half a million dollars.
One thing everyone predicts is that mortgage rates will remain affordable. For this reason alone, expect the demand for housing to remain very strong in this country, one way or another.