If you were waiting for home prices to drop before buying, you may have missed your chance. There was a slight cooling period through 2018 and even earlier this year, but according to a new study, prices are on the rise.
The Royal LePage House Price Survey discovered that low interest rates and healthy employment on a national level will lead to modest price appreciation. The National House Price Composite takes data from 63 of Canada’s largest markets and found that house prices went up 1.1% in the second quarter of 2019 to $621,696.
The median price of a two-storey home increased 1% to $727,165, while the median price of a bungalow fell 0.4% to $516,048. Condos led the price growth, increasing 3.8% to $452,451.
"We now have evidence of a sustained market recovery in some of the nation's largest markets, and signs of a price floor in other regions hit hard by the eighteen month-old housing correction," says Phil Soper, president and CEO, Royal LePage. "Only in the West do we see a significant number of home buyers remaining on the sidelines, depressing sales volumes and causing prices to sag. Buoyed by supportive economic conditions, many stubborn homeowners in B.C. and Alberta remain unwilling to let their precious real estate go for less than what they perceive as fair value, which has gone a long way to protecting existing home values."
In Ontario, Royal LePage says pent up demand, a slow first quarter, strong job growth, and a population influx will fuel housing market activity for the next half of the year.
Looking specifically at Toronto, the average home price increased 4.3% year-over-year in the second quarter to $898,013. Two-storey homes increased 2.8% to $1,260,823, and bungalows had similar price growth, jumping 2.4% to $875,360. Condos experienced the greatest price growth, rising 7.9% to $596,995, significantly above the national average for condos. The average for the Greater Toronto Area went up 2.6% to $841,729 in the second quarter.
"The market in the GTA began to tighten this spring, as sales outstripped new listings," says Soper. "In the City of Toronto, prices rose above inflation across all housing types, led once again by strength in the condo market. But the most encouraging signs came from the suburbs, where areas that saw the most significant price corrections such as Oshawa and Richmond Hill started to rebound."
Nationally, Royal LePage predicts home prices will increase 0.4% year-over-year by the end of 2019. The GTA will drive price gains, along with the Greater Montreal Area. GTA prices are expected to increase 1.4% compared to 2018.
Earlier this year, the maximum you can withdraw from your RRSP for the purpose of putting a down payment on a home was changed from $25,000 to $35,000. Royal LePage hasn’t noticed this making a large impact on home prices.
In September 2019, the First-Time Home Buyer’s Incentive will kick into action, which will allow qualifying first-time buyers to receive a payment-free loan from the Canada Mortgage and Housing Corporation to put towards a home purchase. Though there will be more first-timers pulling the trigger on a purchase, Royal LePage believes the FTHBI will not significantly impact prices.