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  • Barbara Singh

Real Estate Prices In Canada 2021

Real estate experts had painted a rather stark picture for homeowners across Ontario and the country as the pandemic tightened its grip last year. Predictions were dire for the real estate sector as a whole.

Did the worst-case scenario play out as predicted? Will the real estate sector thrive in 2021?

Contrary to what some real estate experts had predicted, the real estate sector is doing extremely well. Last year saw very few mortgage defaults and property prices continued to appreciate despite many job losses and hits to the overall economy.

Sweeping Government-backed initiatives included a mortgage deferral plan that helped offset the potential for Ontario and Canadian homeowners falling into arrears in a record high number. As of September 2020, it was clear that just under 800,000 Canadians had applied for deferred mortgage options.

According to the Canadian Mortgage and Housing Corporation (CMHC), the mortgage deferrals represented approximately 1 billion dollars a month of deferred mortgage debt. The numbers indicate that roughly 1 in 6 Canadian homeowners took advantage of these broad mortgage deferral programs offered by the banks and credit unions.

The year ended with not only historically low-interest rates as dictated by the dramatic cut in the BOC’s overnight rate, but also, year-end saw the 5 year Government Bond down 130 basis points. The 5 year Government bond is viewed as the benchmark for fixed-rate pricing.

These dramatic Government measures coupled with drops in interest rates affected Ontario homeowners who held both fixed and variable mortgages. A variable mortgage lending rate is directly affected by changes to the BOC’s key lending rate and fixed mortgage rates are determined in large part by the Bond Rate.

As a result, Ontario homeowners started to see mortgage rates fall on most types of mortgage arrangements. The decline in interest rates for most mortgages has fallen to below 2.00%. These numbers represent historically low numbers. As we enter the first quarter of 2021 we have witnessed interest rates on some mortgage arrangements with a 0.99 percent interest rate according to statistics recently provided by CMHC.

Real Estate Prices In Canada 2021

Across the country from coast to coast 2020 saw a historically high number of house sales and double-digit increases in housing prices. Real Estate appreciated, rather than losing ground during the pandemic. This trend is expected to continue through 2021.

As of January 2021, the average selling point for a single dwelling property across Canada reached an all-time high of 607,280 which represents an overall increase of 18% from January 2020.

Although real estate hot spots such as Toronto and Vancouver account for the overall higher average selling price, other areas including Atlantic Canada have seen increased prices into 2021. In New Brunswick properties have appreciated 11.6% from January of last year. Nova Scotia has seen a 22.39% overall increase.

Forecasts by the Royal Bank of Canada for the first half of 2021 see no end in sight in appreciating property numbers as interest rates have remained extremely low and inventory remains tight relative to the number of buyers. The number of properties sold is projected to continue at the same rate well into 2021.

The Most Affordable and Least Affordable areas to Buy in Ontario 2021

It is no secret that Toronto remains the least affordable area to buy in the Province of Ontario; outlying areas of the GTA have also become quite expensive to buy as more and more people have chosen to move further out from the metropolitan area due to working from home during the pandemic. It is no longer essential to live within easy commuting distance to Toronto making other areas of the GTA more desirable to the Ontario homebuyer.

In January 2021, Toronto saw a record number of house sales with 6,928 properties sold. This represents a 51% increase in housing sales compared to January 2020 according to the Canadian Housing Market Report 2021. The average house price appreciated an impressive 15% by January 2021. The average house price in Toronto is now $967,885.

For the Ontario homebuyer looking for more affordable housing prices, Remax Canada Housing Market Outlook Report for 2021 has listed several cities where you will have more bang for your buck. Both housing costs and the average house price is much lower than their Toronto counterparts.

The cities with the most affordable housing prices include Thunder Bay with an average house price of $273,308, North Bay ( $305,000), Sudbury ($327,000). London and Cornwall also made the list of the most affordable housing prices in the Province.

With rates remaining low, inventory tight, and the trend of buyers wanting more space as many will continue to work from home, 2021 remains a very attractive year to buy. It also remains a very attractive year for current Ontario homeowners who may be considering the idea of selling as homes continue to appreciate and sell in high numbers well into this year.

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