Even In Downturn, Home Prices Projected To Remain Stable
Home prices in Canada are expected to remain surprisingly stable through the coronavirus pandemic, a new Royal LePage forecast says.
"If the strict, stay-at-home restrictions characterizing the fight against COVID-19 are eased during the second quarter, prices are expected to end 2020 relatively flat," according to the forecast, which was issued in conjunction with the company's 2020 Q1 Home Prices.
The report predicted the aggregate value of a Canadian home would, in the coming months, rise only a modest 1%, to $653,800.
However, like all predictions in the coronavirus era, it comes with a big 'but' built right in.
"If the current tight restrictions on personal movement are sustained through the summer, the negative economic impact is expected to drive home prices down by 3% ($627,900) year-over-year."
Royal LePage says that figure is a 70% reduction from initial predictions in December 2019. CEO Phil Soper noted in a news release that people hit hardest by COVID-19, including young and part-time workers, are "much less likely to buy and sell real estate."
“From our experience with past recessions and real estate downturns, we are not expecting significant year-over-year price changes in 2020," Soper said.
"Home price declines occur when the market experiences sustained low sales volume while inventory builds," he said. "Currently, the inventory of homes for sale in this country is very low, matching low sales volumes as people respect government mandates to stay at home."
According to Royal LePage's accompanying Q1 National Home Prices report, Q1 prices in the Greater Toronto Area rose 7.5% year-over-year to $866,211, though much of that was pre-March 15.
The median price of a Toronto condo saw the biggest rise, jumping 8.8% year-over-year to $580,508. The median price of a two-storey home also rose (7.7%, $1,010,004) while bungalows enjoyed a 3.7% lift ($826,186).
“Toronto real estate appreciated rapidly in the first quarter as the demand that began in the second half of 2019 kept its momentum while inventory remained low," Royal LePage Chief Operating Officer Kevin Somers said. "However, by mid-March both buyers and sellers had pulled back to adhere to social distancing measures and gauge the impact of the pandemic on the market.”
As for the future, that's another big 'what if' for the GTA.
"If business activity resumes by the end of the second quarter, the Greater Toronto Area may see a year-over-year increase of 1.5% to its aggregate home price by the end of 2020, increasing to $861,100," the report concludes.
“If business activity resumes in late summer 2020, the region could see a decrease of 0.5% year-over-year in aggregate home price to $844,200.”
Renters looking for a respite in pricing may also be disappointed.
The March National Rent Report, which analyzes rental rates and trends across Canada, found that Canadian rents increased 1% from February to March to an average of $1,842.
Toronto led all 30 Canadian cities on the survey for average monthly rent in March for a one-bedroom home at $2,213. By comparison, Vancouver had the most expensive average monthly rent for a two-bedroom at $2,945.
Overall, Toronto rents were down slightly month over month, while Vancouver rents increased.