Could Winnipeg attract homebuyers from other major Canadian cities? Winnipeg has always been on the cusp of a major economic breakout. With the recent economic diversification initiatives of the past few years, the city has witnessed growth, but the path has been slow and long. Could the post-coronavirus economy speed up the momentum for this prairie city?
The Manitoba Real Estate Association (MREA) was blunt in its assessment that Winnipeg and the broader province have seen the housing market blossom in the aftermath of the COVID-19 public health crisis. MREA president Glen Tosh called it an “extraordinary rebound,” particularly after it seemed like residential sales would plummet for a lot longer than just the March-to-April period.
Although the city appears to be playing catch-up, the Winnipeg real estate market has generally had a good 2020. In fact, despite the pandemic, this year is shaping up to be better than in 2019.
“Overall, 2019 was a good year for residential sales in Manitoba, and considering the ongoing challenges of COVID-19, catching up to and surpassing last year’s totals at this time is quite an achievement,” said Tosh in a statement. “While there are more challenges to come in fighting the global pandemic, we believe owning a home in Manitoba can offer a safe haven in an uncertain world.”
So, what do the numbers say?
The Winnipeg Real Estate Market Continues to Grow
According to the Canadian Real Estate Association’s (CREA) Winnipeg REALTORS, Winnipeg recently enjoyed its best month on record. In August, sales surged 28 per cent from the same time a year ago and above the five-year average.
New listings failed to keep up with rising sales. Last month, 2,374 new listings were added to the Winnipeg real estate market, which is down one per cent from the same time a year ago. It is also down nine per cent from July. Overall, the present supply stands at 4,232 listings, down 30 per cent from last August, and the number of sales that account for the current inventory is 44 per cent.
Put simply, demand is ballooning, but there is a shortage of listings to match buyers. This has created a situation of bidding wars and multiple offers.
What may surprise some market observers is that there has been an incredible increase in the move-up market as Winnipeg households seek more space. In fact, the highest sale price ever occurred in August: $3.9 million.
“A work from home trend is changing the way one thinks about the kind and extent of space and has definitely garnered more thought and attention,” said Catherine Schellenberg, RE/MAX Professionals, president of WinnipegREALTORS®, in a news release. “This coupled with historically low mortgage rates are motivating factors for a number of sellers and buyers to make a change during this pandemic.”
Since there is plenty of uncertainty in the broader economy with the cold and flu season on the horizon, homebuyers and sellers are wondering if Winnipeg can maintain the upward trajectory in housing. The consensus appears to be a resounding “yes”.
Can Winnipeg Sustain the Momentum in the Fall?
The Canadian real estate market is expected to benefit from ultra-low borrowing costs. Rates are at historical lows, and they could remain this way for several more years. The Bank of Canada (BoC) has all but confirmed that low interest rates are here to stay for a few more years. As part of the central bank’s efforts to cushion the economic blow from the virus outbreak, rates across-the-board will remain lower for longer. The five-year benchmark mortgage rate, for example, was lowered to below five per cent.
When borrowing is this low, it allows homebuyers to consider other options, like relocating to another city or upgrading their residences. Winnipeg could see an inflow of capital over the next couple of years, particularly as more people become concerned over hyperdense urban centres. The same trend is playing out in other Canadian urban markets like Halifax, which is in the beginning stages of a population boom and a capital influx.
Winnipeg is still recovering from the coronavirus-induced economic downturn, and its housing sector will play a role in its recovery. As pent-up demand and low inventory levels impact the real estate market, you can anticipate that prices will sustain their upward trajectory. According to the RE/MAX Winnipeg Housing Market Outlook (Fall 2020), real estate prices are forecast to rise two per cent for all property types for the remainder of 2020.
What better way to emerge from an unprecedented public heath crisis than seeing housing valuations climb! The future looks promising for this dynamic prairie city.