Canadian real estate has been red-hot this summer, following a short-lived decline in activity last spring during the height of the pandemic. The big question on everyone’s lips now is, what’s next for the housing market? Christopher Alexander, Executive Vice President and Regional Director at RE/MAX of Ontario-Atlantic Canada, recently appeared on BNN Bloomberg to discuss the RE/MAX 2020 Fall Market Outlook Report, pent-up demand, immigration, and why Canada’s housing markets are expected to remain healthy for the foreseeable future.
Alexander told BNN reporter Greg Bonnell that the delayed spring market picked up where it left off in March, and is expected to keep pace into the fall season and close out this whirlwind year.
“We’ll see more of the same,” Alexander said in an interview. “There’s just so much demand, and ‘home’ has become more important than ever before…I expect a very busy market to finish off the year.”
The latest RE/MAX report examined 27 key Canadian real estate markets and estimates that prices will either hold steady or rise across the board. RE/MAX brokers suggest that the average price of residential Canadian real estate could rise 4.6% during the remainder of 2020 (revised from the 3.7% increase anticipated in late 2019). Strong seller’s market conditions were reported in a number of regions, with low inventory and high demand putting upward pressure on prices. The report also revealed some interesting consumer trends borne out of COVID-19 – namely that 32% of Canadians surveyed would prefer to live in a suburban or rural location over an urban setting.
RE/MAX brokers have reported that with the growing work-from-home trend, people are increasingly looking to leave big cities in favour of larger homes and more green space – but will this trend persist, and what will demand for Canadian real estate look like as we move through the remainder of 2020?
Housing Market Trends in Context
Alexander stresses the importance of viewing these trends in context. “Yes, over 30% of Canadians are looking to move outside of urban centres, but in Vancouver, Montreal or Toronto, those 30% have multiple people interested in purchasing their homes when they put them up for sale. Especially in downtown Toronto and Vancouver, there’s still a tremendous desire to be in these cities, but now you have this big cohort of people who are no longer being forced to come into their offices anymore, and they’re saying ‘Well, I never really enjoyed living in the city, so here’s my opportunity to move outside and work remotely as long as I’ve got a good Internet connection and cell service.”
According to RE/MAX, pent-up demand already existed prior to the pandemic was further inflamed by the lockdowns. This surge in demand is expected to persist into the fall, and money is cheap right now, prompting more buyers to enter the market. Bonnell asks what many are thinking: “At some point, are we going to see a cooling down?”
“Well, there’s certainly a concern. There are a lot of businesses in the restaurant, retail and hospitality sectors that are going to be making difficult decisions in the near future,” Alexander says. This may prompt a flood of new listings, “but in the long term, there’s no real solution for our inventory problems, and there’s enough demand for Canadian real estate to sustain this additional supply that could be coming on stream,” Alexander explains. “We’ve been very careful not predict into 2021 because we don’t really know what’s in store, but based on supply, demand and simple economics, I’m confident that things look pretty good.”
Immigration & Demand for Canadian Real Estate
Immigration – or lack thereof – is also a factor in the demand for Canadian real estate, but this show-down could prove temporary as well. Before the pandemic closed borders around the world, Canada was welcoming roughly 300,000 new Canadians every year, which carried a substantial demand for homes. “We know those numbers have been cut dramatically because of the pandemic,” says Bonnell. “If we don’t restore that flow of new people into this country, could that undermine our housing strength?”
“It could, but I’m not sure that this is going to be a long-term effect in Canada.” Alexander points out, “We’re continuing to attract people. Yes, travel has been restricted and it’s been more difficult to move freely around the world, but as the United States continues to get stricter on its immigration rules, Canada is going to become even more appealing. While 2020’s [immigration] numbers are way down, we expect that once travel resumes and people can move freely, that number will tick back up again.”