Canadian housing market expected to remain active for the remainder of 2020 due to pent-up demand and low inventory levels, says RE/MAX brokers and agents
The pandemic has prompted many Canadians to reassess their living situations. According to a survey conducted by Leger on behalf of RE/MAX Canada, 32 per cent of Canadians no longer want to live in large urban centres, and instead would opt for rural or suburban communities. This trend is stronger among Canadians under the age of 55 than those in the 55+ age group.
Not only are Canadians more motivated to leave cities, but changes in work and life dynamics have also shifted their needs and wants for their homes. According to the survey, 44 per cent of Canadians would like a home with more space for personal amenities, such as a pool, balcony or a large yard.
“While COVID-19 lockdowns slowed Canada’s housing market at the start of a typically busy spring market, activity bounced back by early summer in many regions, including Vancouver and Toronto,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “Despite the tragic impacts of the pandemic, our optimism in the strength of Canada’s housing market has always remained, and current market activity further exemplifies this. Many homebuyers are now exploring different neighbourhoods that better suit their new lifestyles, and real estate agents are getting busier and working more with buyers from different major cities. According to our brokers and agents across the RE/MAX network, Canada’s fall market is expected to see spring market-like activity.”
Looking ahead: The housing outlook across the country
RE/MAX brokers across Canada were asked to provide an analysis on market activity during COVID-19 lockdowns, assessing how their regions have bounced back with easing restrictions. They also provided a prediction of market activity for the remainder of 2020. Unsurprisingly, most provinces experienced a slowdown in March and April, with significant drops in activity up to 70 per cent year-over-year. Prices, however, have remained stable across the country. Heading into fall, 50 per cent of RE/MAX brokers and agents surveyed anticipate a modest increase in average residential sale prices.
While COVID-19 lockdowns in March and April slowed down the housing market in Western Canada, transactions in Kelowna, Saskatoon and Vancouver resumed by May, with sales in both May and June surpassing year-over-year levels. Many buyers put their plans on hold at the peak of COVID-19 lockdowns, but they returned to the market quickly to make up for lost time. Edmonton’s housing market quickly bounced back to pre-COVID levels in June, while Saskatoon experienced its busiest June in years; this momentum is anticipated to continue into the fall market, with RE/MAX brokers and agents estimating a three-per-cent increase in average residential sale prices for the remainder of the year. Overall, brokers and agents in Western Canada say the potential buyers they are talking to are not too concerned with a potential second wave of COVID-19 impacting their real estate journey, and RE/MAX brokers are estimating steady activity to round out 2020.
With Ontario being one of the hardest-hit provinces in Canada, markets like Niagara, Mississauga and Kitchener-Waterloo experienced significant drops in activity, but bounced back aggressively in June as economies began reopening. Toronto continues to be a sellers’ market with low listing inventory and high demand. An uptick in new listings is anticipated for the fall market, now that buyers and sellers are more comfortable engaging in the housing market, with all of Ontario now in phase three of re-opening. RE/MAX brokers estimate a five-per-cent increase in average residential sale price in Toronto for the remainder of the year. According to the RE/MAX broker network in Ontario, market activity in the province is estimated to remain steady in the fall, with the potential for modest price increases of up to six per cent in regions like Hamilton, Brampton and London.
Regions with low case counts of COVID-19, such as Halifax, Charlottetown and Saint John experienced slower activity in March, but the decline was less pronounced than that of some Ontario and Western Canada markets. Halifax continues to experience a shortage in listing inventory since before COVID-19, and the shortage has caused an uptick in average residential sale price. RE/MAX brokers anticipate a 10-per-cent increase in average residential sale price in Halifax for the remainder of the year. Activity in Atlantic Canada was back to pre-COVID-19 levels by May 2020, and like many sellers’ markets in Canada, multiple offer scenarios continue to happen in these regions.
Pent-up demand causing sellers’ market-like conditions in recreational markets
When it comes to recreational property markets in Canada, the regions surveyed for the report experienced a slight decrease in sales activity in March, similar to most major cities in Canada; however, similar to other markets, this picked up quickly by May. Muskoka, Peterborough and the Kawarthas, and Whistler are all experiencing sellers’ market conditions, with pent-up demand and low inventory driving a modest increase in pricing. According to RE/MAX brokers, average prices in these recreational markets are estimated to remain stable for the remainder of 2020.
In lockstep with the Leger survey revealing increased consumer interest in relocating to rural areas, as well as 48 per cent of Canadians wanting to living closer to green space, RE/MAX brokers and agents have reported that many buyers in Toronto and Vancouver, who are now working remotely, have expressed interest in regions like Muskoka and Peterborough and the Kawarthas, and Whistler, in search of more space and access to nature.
Canada’s luxury market continues to thrive
While the classification of “luxury homes” is specific to each region and differs across the country by minimum pricing, Canada’s overall luxury market has remained strong throughout the pandemic, with market conditions unchanged from the beginning of the year in most regions.
When it comes to Canada’s hottest real estate markets in Toronto and Vancouver, the luxury markets are considered balanced, with Vancouver pushing into a sellers’ market. Vancouver is beginning to see more interest from move-up buyers instead of the foreign buyers who drove demand in Vancouver’s luxury market prior to COVID-19. This was likely due to travel restrictions brought on by the pandemic. In Toronto, activity was slower than usual this spring as buyers did not have any urgency to transact during the pandemic. Both luxury markets are could likely remain balanced for the remainder of the year, according to RE/MAX luxury specialists.
The luxury segment in secondary markets such as Hamilton are seeing a slight uptick in activity, with high-end buyers also seeking more square footage and larger properties outside of city centres. Hamilton has experienced an increase in buyer interest from residents from Brampton and Mississauga looking to relocate to the region.
“The classically hot spring market that was pushed to the summer months due to the COVID-19 pandemic created a surprisingly strong market across Canada and across all market segments,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario–Atlantic Canada. “Looking ahead, government financial aid programs may be coming to an end in September, which could potentially impact future activity; however, the pent-up demand and low inventory dynamic may keep prices steady and bolster activity for the remainder of 2020. Overall, we are very confident in the long-term durability of the market.”
Canadians equally split on their confidence in the housing market
The survey found that Canadians are almost equally split in their confidence in Canada’s real estate market, with 39 per cent as confident as they were prior to the pandemic, and 37 per cent slightly less confident. When it comes to the prospect of a second wave of COVID-19, 56 per cent of Canadians who are feeling confident in Canada’s real estate market are still likely to buy or sell.
In re-contacting the respondents who lost confidence about their local housing market from the RE/MAX Canada Housing Outlook survey that was conducted in May 2020, asking if their confidence level in their market has changed since the start of the pandemic, 40 per cent are now as confident as they were before the pandemic. This is compared to their responses in May, which found that 58 per cent were less confident in their housing market, alluding to growing optimism in the market as COVID-19 lockdown restrictions continue to ease across the country.
Additional highlights from the 2020 RE/MAX Fall Market Outlook Report Survey:
- 48 per cent of Canadians would like to live closer to green spaces
- 48 per cent of Canadians say its more important than ever to live in a community close to hospitals and clinics
- 33 per cent of Canadians would like more square footage in their home and have realized they need more space
- 44 per cent of Canadians want a home with more outdoor space and personal amenities (i.e. balcony, pool etc.)
About the 2020 RE/MAX Fall Market Outlook Report:
The 2020 RE/MAX Fall Market Outlook Report includes data and insights from RE/MAX brokerages. RE/MAX brokers and agents are surveyed on market activity and local developments. Regional summaries with additional broker insights can be found at REMAX.ca.
Leger is the largest Canadian-owned full-service market research firm. An online survey of 1523 Canadians (excluding Quebecers) was completed between July 17 and July 19, 2020, using Leger’s online panel, LegerWeb. Leger’s online panel has approximately 400,000 members nationally and has a retention rate of 90%. A probability sample of the same size would yield a margin of error of +/- 2.51%, 19 times out of 20.
About the RE/MAX Network
RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. Over 130,000 agents provide RE/MAX a global reach of more than 110 countries and territories. RE/MAX is Canada’s leading real estate organization with more than 20,000 Sales Associates and over 900 independently-owned and operated offices nationwide. RE/MAX, LLC, one of the world’s leading franchisors of real estate brokerage services, is a subsidiary of RE/MAX Holdings, Inc. (NYSE: RMAX). With a passion for the communities in which its agents live and work, RE/MAX is proud to have raised millions of dollars for Children’s Miracle Network Hospitals® and other charities. For more information about RE/MAX, to search home listings or find an agent in your community, please visit www.remax.ca.
Forward looking statements
This report includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “believe,” “intend,” “expect,” “estimate,” “plan,” “outlook,” “project” and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions, including statements regarding the recovery of housing markets and the timing of recovery and the Company’s results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Such risks and uncertainties include the global outbreak of the coronavirus (COVID-19), which poses significant and widespread risks. The Company has already experienced significant disruption to its business as a result of the COVID-19 pandemic. The magnitude and duration of the negative impact to the Company’s business from the COVID-19 pandemic cannot be predicted with certainty, but the Company believes COVID-19 is likely to result in an adverse impact on its business, liquidity, results of operations and financial condition. Other important risks include, without limitation, (1) changes in business and economic activity in general, (2) changes in the real estate market, including changes due to interest rates and availability of financing, (3) the Company’s ability to attract and retain quality franchisees, (4) the Company’s franchisees’ ability to recruit and retain real estate agents and mortgage loan originators, (5) changes in laws and regulations that may affect the Company’s business or the real estate market, (6) failure to maintain, protect and enhance the RE/MAX and Motto Mortgage brands, (7) fluctuations in foreign currency exchange rates, (8) the Company’s ability to obtain any required additional financing in the future on acceptable terms or at all, as well as those risks and uncertainties described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) and similar disclosures in subsequent SEC filings. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.
SOURCE RE/MAX Canada
For further information: Danielle Scott, [email protected], 416-909-5185; Kayley Jackson, [email protected], 250-860-3628; Lydia McNutt, [email protected], 905-301-5980