Canadian real estate expected to appreciate by 2.5% in 2016
High demand and low supply continued to characterize Vancouver’s and Toronto’s housing markets throughout 2015 as competition from buyers over the limited inventory of single-family homes pushed prices higher.
The average residential sale price increased 17 per cent in Greater Vancouver and 10 per cent in the Greater Toronto Area, to approximately $947,350 and $622,150, respectively. As demand shows no signs of waning, these markets are expected to continue to see price appreciation in 2016, of seven per cent in Greater Vancouver and five per cent in the Greater Toronto Area. In these competitive markets, sellers want to ensure they maximize the value of their homes, while buyers look for guidance during the fast-paced bidding process. In a recent Leger survey conducted for RE/MAX, 70 per cent of homeowners agreed REALTORs® provide value when buying or selling a home.
Regions outside of Canada’s highest-priced cities reported a spillover effect from the price increases in Greater Vancouver and the Greater Toronto Area continuing a trend that RE/MAX reported this spring. There were significant year-over-year price increases in Victoria (13%), Fraser Valley (10%), Hamilton-Burlington (12%) and Barrie (8%).
RE/MAX 2016 average residential sale price expectation for Canada is an increase of 2.5 per cent as Canadians continue tosee home ownership as an important milestone as well as a good investment.
Toronto and the GTA
The Greater Toronto Area remained in a brisk seller’s market throughout 2015. The record sales year is expected to end with sales up approximately eight per cent over 2014; there were 89,071 sales between January and October 2015, compared with 81,974 during the same period the previous year. The average residential sale price in the GTA is approximately $622,150, up 10 per cent over 2014.
Move-up buyers continued to drive the market, and single-family homes remained in high demand and low supply. The average price for a single-family home in the GTA was $804,079 as of October 31.
The GTA’s average residential sale price is expected to increase approximately five per cent in 2016, driven by continued low inventory for single-family homes and low interest rates.
In the City of Toronto, first-time buyers typically enter the market by purchasing a condo, where they can find affordability while remaining in the city centre. Outside the city’s core, first-time buyers may purchase a semi-detached or townhouse in Mississauga, or a fully-detached home in one of Brampton or Durham’s more affordable neighbourhoods. As prices in the GTA rise, buyers have been looking farther out for value and affordability. Areas like Keswick, located an hour north of the city, have been increasingly in-demand from first-time and move-up buyers seeking single-family homes within their price range.
Inventory is higher in condos than in single-family homes, though new building has slowed compared to the last several years and the units on the market are being absorbed. Price increases for single-family homes have outpaced the condo market, making it difficult for condo owners to trade up. Many of these move-up buyers have been selling their centrally-located condos and moving to single-family homes in the outer suburbs.
High-end homes continued to sell well in 2015, appealing to local move-up buyers as well as foreign buyers, primarily from China and the Middle East. A number of luxury condo projects are currently under development in the city, appealing primarily to retirees and empty nesters looking to downsize without downscaling. When these projects are completed in two to three years, there may be a small boost in higher-end freehold inventory as these downsizers put their houses on the market