Sustained price appreciation in Vancouver and Toronto revitalizing surrounding areas according to new RE/MAX report

  4/21/2016 |   SHARE
Posted in Real Estate Market by Vanguard Realty | Back to Main Blog Page

Vancouver and Toronto continued to see significant price appreciation in the first quarter of the year. Greater Vancouver's average residential sale price in the first quarter of 2016 compared with the same period in 2015 rose 24 per cent, while single-family homes in the city of Vancouver crossed the $2 million threshold. In the Greater Toronto Area, the average residential sale price during the first quarter rose 14 per cent to $675,492.

The competition in both Vancouver and Toronto among buyers has discouraged sellers from listing their properties, thus further reducing inventory. While sellers know their homes would be quick to sell, many are reluctant to become buyers themselves and enter the highly competitive market. Also, some potential sellers are hesitant to list their homes believing that home prices could appreciate further. However, not all Canadians can wait out the housing market as many are relying on their homes as a source of retirement income. According to a recent RE/MAX poll conducted by Leger, 56 per cent of Canadians 55-64 who are considering selling their homes are doing so to release equity for retirement.

"The ripple effect on the housing markets outside of Toronto and Vancouver is quite significant when you look at the Canadian housing market overall," said Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "As a result, when you remove Toronto and Vancouver from the equation, the national average house price still rose approximately 10 per cent in the last year."

Outside of Vancouver and Toronto, surrounding regions continue to experience a spillover effect as buyers move farther out in search of affordable single-family homes. The population growth in these regions, driven by housing demand, is growing local economies as restaurants, shops and services expand.

In Canadian housing markets where prices have softened, construction has also slowed to align with decreased demand. This is expected to stabilize prices as population growth catches up to inventory levels. Canada is on track to welcome approximately 300,000 new permanent residents this year: the highest number since 1913.

Effects of low oil on Alberta, Southern Ontario, Atlantic Canada

In Canadian cities that have experienced an economic slowdown due to the low price of oil, two factors have been mitigating the short-term economic effects. Calgary has a diversified economy after years of population growth, while Edmonton and St. John's are benefiting from numerous capital projects in the region including infrastructure investments and continued investments from the oil industry. Other regions have benefited from the return of workers who had left for employment opportunities in Canada'soil.

"Regions that for years have seen many of their young working population look to Alberta for employment opportunities have started to see that trend reverse," said Gurinder Sandhu, Executive Vice President, RE/MAX INTEGRA Ontario-Atlantic Canada Region. "In Atlantic Canada, for example, young people from outside the urban centres who would have moved west several years ago are now going to cities like Halifax, which is having a positive effect on those economies."

This is notable in Southern Ontario, where manufacturing cities are able to provide good employment opportunities as a result of the low Canadian dollar. Windsor, which once had one of the highest unemployment rates in Canada, is now trending below the national average.

Millennials across the country look to parents for help

Across Canada, parents are increasingly helping their children enter the real estate market. In cities where prices have appreciated, parents who own property have financially benefited and are in a position to help. In other cities where prices have softened, financing has become more difficult to secure and first-time buyers are also relying on their parents. This is consistent with the recent RE/MAX poll that shows 37 per cent of Canadians 18-34 who are considering buying a home expect help with their downpayment from a family member, co-buyer or friend. Of those who are expecting help, 60 per cent anticipate it will come from their parents. Despite additional challenges facing first-time buyers, millennials across Canada are optimistic about both home ownership and job prospects; 78.5 per cent of Canadians 18-34 agree that owning a home they love is attainable.

Key Findings from 2016 RE/MAX Spring Market Trends Omnibus Survey

Nearly 80% of Canadians agree that owning a home they love is attainable:

• BC: 64.9%
• AB: 87.8%
• SK/MB: 83.2%
• ON: 77.0%
• QC: 82.3%
• Atlantic: 89.3%

Consumer confidence is high among Canadians 18-34:

• 78.5% agree owning a home they love is attainable
• 81.6% agree finding a good job in their field is attainable
• 68.2 agree saving for a downpayment is a priority

The survey also found that across age groups, 79.9% of Canadians agree that saving for retirement is a priority, while 48.2% agree that saving for a downpayment is a priority.

Source: RE/MAX Ontario-Atlantic Canada

Canadian Housing Market, Home Buyers, House Prices, Millenials, Real Estate Market, Toronto, Vancouver