Despite double-digit aggregate gains with house prices in Canada year over year, one of the country’s largest real estate companies is suggesting competition seen amid the COVID-19 pandemic will likely slow.
Royal LePage’s latest house price survey revealed the aggregate price of a home in Canada increased 25.3 per cent year-over-year to $727,000 in the second quarter of 2021.
In Hamilton, the price moved 23.8 per cent to $760,000 in the same period from $613,750.
Burlington was up 13 per cent to $1,000,500, and Niagara/St. Catharines up 36 per cent to $612,000 year over year.
Phil Soper, president and CEO of Royal LePage, says after the record growth he expects the ‘torrid pace’ of the home price appreciations to become ‘more moderate.’
“We’re moving out of that season, early part of the year, into just what one might call a ‘boisterous’ real estate market, ” Soper told Global News.
Royal LePage is forecasting that the aggregate price of a home in Canada will increase 16 per cent to $771,500 in the fourth quarter of 2021, compared to the same quarter last year.
In June, the Realtors Association of Hamilton-Burlington (RAHB) said home sales were the highest seen in the region in years.
The agency recorded the sale of 1,607 units last month, which is 14 per cent above the five-year average and 11 per cent above the 10-year average.
There was a 10 per cent increase in sales year over year for the month of June.
Soper believes the market will still have legs until the spring of 2022 and that home prices likely will remain high since supply isn’t keeping up with demand.
“We’ve got this structural housing shortage in this country as our millennial population sets out and sets up their own homes as new Canadians join the country,” said Soper.
Murtaza Haider, professor with the Ted Rogers School of Management at Ryerson University, told Global News there appears to be a big disconnect in Canada with the type of housing that’s been built in the last couple of decades that appears to not match the needs of potential buyers.
He says more people are chasing fewer homes resulting in price escalation.
“We have essentially built high rise housing over the last two decades, whereas now we see that there’s an increasing demand for low rise housing,” said Haider. “Especially housing, where people can raise families.”
Tim Hudak, CEO of Ontario Real Estate Association (OREA) and former provincial Conservative Party leader, calls the situation in Ontario a “five-alarm” occurrence and has concerns over the future of highly educated young people who won’t stay because they can’t afford a home.
“That is hugely concerning for our province for two reasons: No. 1, the major dislocation, disruption of families, the emotional impact; and No. 2, this is the most educated, talented generation in Canada’s history. We’re going to lose that young talent to other provinces,” Hudak said.
A recent OREA online poll involving 2,000 Ontario residents discovered that 45 per cent of potential buyers aged 18 to 29 years have considered moving out of the province in search of more affordable housing.
Even larger was the overall number of would-be homeowners in the province — 56 per cent — that essentially have given up or are pessimistic they will ever own a home.
Eleven per cent of those aged 29 and under say they will definitely move to another province.
Hudak says with recent interest from residents in the GTA in Hamilton, Niagara and Burlington to accommodate for more space amid the pandemic that saw many resort to working from home, many survey responders said they could no longer stay where they were, particularly those that were still living with parents.
“Huge levels of people are looking outside of the province instead of being patient anymore,” said Hudak. “Their patience has run dry.”
In Hamilton, the price of a single-family home is up 23.4 per cent year over year to $788,000 in the second quarter of 2021, according to Royal LePage.
The same type of home in Burlington is up 35.7 per cent to $1.33 million while Niagara checks in at $636,900 – up 40 per cent year over year.
The average price of a condo checks in at $475,000 in Hamilton, $577,200 in Burlington and just $380,000 in the Niagara area.