Homebuyers have survived a rough year, to put it mildly, and with the light of spring finally here, relief could soon be on the way. When the pandemic changed life as we once knew it, nobody could have predicted its effects on the housing market. Initial forecasts indicated a drop in demand and logically speaking, a decline in prices, the opposite occurred. A brief slow-down quickly was replaced by a frothy market saturated with homebuyers and not enough homes to meet their demand. As inventory levels continued to drop in Canada’s big cities and small towns alike, prices skyrocketed to record levels in 2020.
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By all accounts, the first quarter of 2021 looks very similar, but there could be a light at the end of what’s been a long, uncertain tunnel for many homebuyers. For the first time in a long time, inventory has started to creep up. The Canadian Real Estate Association reported that new listings were up 15.7 per cent from January to February. We aren’t seeing any relief in housing prices yet, with the national average sale price up 25 per cent year-over-year, but this meteoric price growth could be coming to an end in the future, thanks to more supply coming on stream.
Spring is classically a busy real estate season, so by virtue of that alone, it’s expected that more homes will hit the market. This should reduce the competition among homebuyers – and the occurrence of bidding wars and inflated prices.
Beyond season, some homebuyers have actually opted to hold off on their purchase, tired of being outbid by hundreds of thousands of dollars every time. And in all honesty, can you blame them? With fewer buyers to contend with, the heated market could start to cool somewhat.
With that being said, the national average price was at a new record high in February 2021, reaching $678,091. In the Greater Toronto Area, prices were up in the 10 to 15 per cent ballpark.
Part of the lower (but still high) price growth in the GTA is the dip we’ve seen in the condo market. However, sales have already rebounded almost 65 per cent, according to the Toronto Regional Real Estate Board’s latest numbers. With this kind of demand, prices could soon be on track to match that upward trajectory.
There are a number of factors at play this spring that make it a great time to buy a home. More detached homes coming up for sale and fewer buyers mean less competition and hopefully, easing price growth. Condo prices are still down and there’s inventory, giving condo seekers lots of options. Mortgage rates are still low, with no increases planned in the near future. And for now, the government hasn’t yet intervened by further tightening mortgage requirements or with other measures to cool the market.
If you’re planning to purchase a home, but have been holding off throughout the pandemic, this spring could be your opening to get into what’s been a very tough market! As always we are here to help with any questions you may have ahead this spring!