The Canadian housing market outlook for 2020 started strong. Ontario, the country’s most highly populated province, continues to attract homebuyers. While the coronavirus pandemic may shift this expectation in the short-term, the market will rebound quickly.
For buyers who want to purchase a home in Ontario, it can be challenging to decide where to settle down. Home prices vary across the province, and external factors can affect how much these prices increase. In 2019, among cities in Ontario, Oakville was the housing market with the most expensive sale price while Cornwall was the housing market with the least expensive sale price.
Here are some factors that determine Ontario real estate prices:
The Bank of Canada has reduced interest rates to 0.25%, from 1.25%. This new rate will stimulate more demand in the market to help lift the economy. However, low inventory will cause price increases, since sellers will want to get the best possible price.
The positive is that homebuyers are able to borrow more money at a reduced rate. This could lead to huge cost savings over time for buyers.
Some first-time buyers were challenged in entering the market previously due to the mortgage stress test. However, the lower interest rate can help buyers qualify for a mortgage and buy a larger or better home in more affordable areas.
Differences between Ontario’s housing markets
In Ontario, various housing markets outside the GTA are generally less volatile. Many people start their home search outside of the city, where greater affordability can be found.
In February, the average residential selling price in Toronto was up by 16.7%, to $910,290. A year-over-year double-digit price increase was seen in detached houses and condominiums. Great news for homeowners and sellers, but challenging for buyers on a budget.
Price-conscious buyers are thus choosing to live in the suburbs or rural areas of the province and commute to Toronto for work. The closer you get to the city, the more expensive housing becomes.
In other parts of Ontario, house prices are lower, since they don’t experience the level of demand seen in Toronto. This means homebuyers can take advantage of lower mortgage rates and less expensive property prices to purchase homes in these areas.
Yet, there are other cities in Ontario that are now showing similar trends to Toronto. For example, Ottawa and Windsor were experiencing seller’s market conditions, showing substantial year-over-year increases in average residential sale price at 11.7% and 11% between 2018 and 2019. Both cities continue to attract young professionals, especially with improved transportation features such as the Ottawa LRT.
Supply and demand
Whether homebuyers move to Ottawa for job opportunities, better amenities or to be closer to transit, as this city continues to develop, it is expected that demand will grow alongside it.
According to a recent report by the Ontario Ministry of Finance, the population in this province is expected to increase by 38% by 2046. This is a jump from an estimated 14.3 million in 2018 to almost 19.8 million.
Yet, the number of listings continues to dwindle in the Ottawa market. These market conditions result in bidding wars and more competition for desired homes. A seller’s market continues to prevail, making it difficult to enter this market as a buyer.
Seasonal real estate trends
Seasonality trends in the Ontario market can also play a role in real estate price increases.
During the winter, many people pause home searching to avoid poor weather conditions. If sellers are intent to sell during the winter season, the decrease in demand may require sellers to lower their asking price.
Spring and summer are when Canadians come out of “hibernation” to purchase homes. For sellers, the good weather can boost curb appeal to make their homes look better to homebuyers. Therefore, sellers can increase prices because of demand.
When the fall season rolls around, it can bring less inventory on the market because of the busy home purchasing activity which happened during the spring and summer seasons. Yet, demand remains stable, so homebuyers can expect competition when trying to secure the house they desire.
Ontario’s real estate prices haven’t shown signs of decreasing. Trends from earlier this year show that market activity continues despite social distancing measures from the coronavirus pandemic. Many housing markets in Ontario are considered seller’s markets. Yet, homebuyers can leverage low-interest rates to qualify for mortgages, purchase homes in areas with less demand, and use seasonal real estate trends to try to get a leg up on the competition.
Pilon Real Estate Group Featured Listings: Click here!
We Keep You Covered When You Buy a Home With Our 12 Month Buyer Protection Plan!
Details at: www.HomeBuyerProtectionPlan.ca
Free Home Search With Proprietary MLS Access – New Listings – Faster Updates And More Accurate Data!
Find Homes Now: www.FindOttawaHomesForSale.com
Find Out How We Get Our Sellers More: Click here!
RE/MAX Hallmark Pilon Group Realty