Why are Home Prices on the Rise in Canada?
We have all been through a lot in 2020. The housing markets began the year strong, then fell flat in March and April as the pandemic triggered a global lockdown. During the previous quarter, we saw a bit of a slow down in the housing market. Despite all of this, housing prices are on the rise once again in Canada and are expected to finish the year 7% higher than last year.
As life slowly returns to normal, why are home prices rising in Canada? The biggest factor driving this increase is pent-up demand, according to Phil Soper, President, and CEO at Royal LePage. Some of this pent-up demand can be attributed to low-interest rates and families reallocating funds to real estate investments because they have been able to save money by working from home during the pandemic. He also attributes the increased home prices in Canada to the stress test introduced in 2018/2019, when there was a bit of slow down and it caused a correction in the market.
What about the condo market?
The condo market has seen an increase of 5.3% compared to 10% in the detached housing market. The demand for condos is solid, but there is more of a demand in the investor market because of the reasons previously listed.
My personal work experience this year matches what Phil Soper described. My clients have been first-time homebuyers, have had life situation changes, or were wealthier people who had money to allocate to the real estate market because of low-interest rates alleviating money depreciation. Demand for property in the Tri-Cities continues to be strong.
If you are in the market for a new home, give me a call and I will be happy to go over all the details with you, so we can find you the right home together. Whether it is your first home or an investment property, I’m here to help.