Looking for Affordable Housing? Try Winnipeg

Winnipeg has the momentum it needs to be a major contributor to the Canadian economy. Like many other cities across the country, the coronavirus pandemic sparked a substantial housing boom in Manitoba’s capital. This revival of the Winnipeg housing market has led to notable economic gains and a population increase. As Canadian households sought more affordable housing options, many found them in Winnipeg, which continues to be a place where families can purchase a detached house below the national average price.

With the Bank of Canada (BoC) raising interest rates, there could be a rebalancing of conditions in the Canadian real estate market. Will municipalities such as Winnipeg sustain their growth, or will conditions return to pre-pandemic ways?

Whatever the case, Winnipeg is a desirable city to live and work – and enjoy hockey again. But are the numbers still in the Winnipeg real estate market’s favour? Let’s look at the data.

Winnipeg Housing Market, the Affordable Option

According to the Winnipeg Regional Real Estate Board (WRREB), residential property sales tumbled 14 per cent year-over-year in May, with 1,723 units trading hands. While transactions were down year-over-year, they were up four per cent over the five-year average.

Residential prices continued their upward ascent, with both single-family homes and condominiums recording significant jumps. Association data show that single-family home prices surged to $454,832, while condo units climbed modestly to $261,910.

“While playing some catch-up this spring on one that has been delayed from a harsh, long winter, prices have been well ahead of 2021 from the very beginning,” said Akash Bedi, 2022 WRREB president. “Rising interest rates are upon us with more to come, and that, in combination with a healthy injection of new listing supply, should help slow the pace of price increases as evident already from this month.”

More supply could also ease price growth going forward. May’s active listings were down less than one per cent year-over-year, while new listings increased five per cent. WRREB’s market report notes that early June data shows more than 3,000 active listings, which may surpass June 2021 levels.

“An influx of new listings into our market is welcome,” said Bedi. “Tight market conditions still prevail, however, as based on current sales we have less than two months of inventory when you want to have at least double that amount to move more into a balanced market.”

In addition, according to Canada Mortgage and Housing Corporation (CMHC), new housing construction activity has ballooned this year. CMHC data show that housing starts increased 21 per cent month-over-month to 480 units in April. Housing starts have swelled nearly eight per cent to 1,898 units on a year-to-date basis.

Overall, the Prairies and most of Atlantic Canada continue to enjoy attractive housing valuations that would allow many Canadians currently sitting on the sidelines of the real estate market to purchase a home.

Will this continue to be the case in a rising-rate environment? The Royal Bank of Canada thinks so, according to a new report from one of Canada’s biggest financial institutions.

“The resilience in Atlantic Canada and the Prairies can be largely explained by their relative affordability,” RBC Economics wrote in a recent research note. “Lower-priced markets are less sensitive to rising rates. This advantage will continue to support demand and prices in those regions though it won’t entirely offset the impact of the Bank of Canada raising its policy rate to 2.5 per cent by the fall as we expect. Buyers in Canada’s most expensive markets (mainly located in Ontario and British Columbia) will be the most affected by higher borrowing costs.”

Buyers Versus Sellers

Industry professionals concede that the Winnipeg real estate market, as well as the broader housing sector in Manitoba, is tilted toward sellers, mainly because of tight inventory levels. But buyers still have many options at their disposal.

The gap between buyers and sellers is not as vast as in other markets such as Toronto and Vancouver. Consider the pricing forecast for the Winnipeg real estate market this year. According to the RE/MAX 2022 Canadian Housing Market Outlook, home prices in Winnipeg are anticipated to grow 3.5 per cent. This growth still benefits sellers, but it is also affordable for prospective homebuyers.

Will the Winnipeg housing market cool down, or will it continue its record-breaking performance? Only time will tell!