According to the Royal LePage House Price Survey and Market Survey Forecast, the aggregate* price of a home in Canada increased 6.8 per cent year-over-year to $673,072, in the second quarter. Inventory levels, already constrained pre-pandemic, have failed to keep pace.
“Home prices shot up in the second quarter as a crush of buyers entered the market, attracted by extremely low interest rates and the perception of bargains to-be-had,” said Phil Soper, president and CEO of Royal LePage. “Across Ontario and Quebec in particular, the demand for housing outpaced the growth in supply, especially in the early weeks post-lockdown. The surge in the number of first-time buyers was felt acutely, as these housing consumers soaked up supply without contributing to it.”
The Royal LePage National House Price Composite is compiled from proprietary property data in 64 of the nation’s largest real estate markets. When broken out by housing type, the median price of a standard two-storey home rose 8.0 per cent year-over-year to $794,392, while the median price of a bungalow increased 3.9 per cent to $550,289. The median price of a condominium increased 5.3 per cent year-over-year to $503,983.
As low rates and pent-up demand face limited housing supply, Royal LePage has revised its forecast slightly upward, with the national aggregate price expected to end 2020 up 2.3 per cent to $663,000 in the fourth quarter compared the same period in 2019.
“COVID-19 shaped the real estate market during the second quarter in every possible way,” said Soper. “As consumers and REALTORS®** complied with April’s shelter-at-home directives and only urgent housing needs were serviced, sales volumes plummeted to one-third of normal in our largest cities. As the reality of extended and potentially permanent work-from-home employment sunk in, people pondered both the location and size of their homes. Simply put, larger homes in smaller communities have become more fashionable. As competition for these properties heats up, bidding wars are more common in what were our quieter cities and towns.”
As home sellers return to the market, inventory levels are expected to rise, relieving the acute upward pressure on home prices that characterized the supply-constrained second quarter of 2020. Uncertainty clouds Canada’s real estate outlook as a lengthy recovery for the Canadian and world economies is expected. The negative impact on home prices should be muted by the balanced nature of Canadian housing, as chronic housing supply shortages offset dampened medium-term demand.
Access the Royal LePage House Price Survey Chart (Canada’s largest 64 housing markets): rlp.ca/houseprices
Access the Royal LePage Market Survey Forecast Chart: rlp.ca/q2-2020-market-forecast
*Royal LePage’s aggregate home price is based on a weighted model using median prices and includes all housing types.
**The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA.