What Does 2021 Have in Store for Home Values? - January 14, 2021
Ian Walterhouse
Thursday, January 14, 2021
What Does 2021 Have in Store for Home Values?
According to the Toronto Regional Real Estate Board’s latest statistics, in the Greater Toronto Area the average selling price reached a new record in 2020 up by 13.5 percent compared to 2019. This included an average year-over-year increase of 11.2 percent. And the strongest average price growth was experienced for single-family home types in the suburban regions of the GTA.
According to the latest TRREB report, the dramatic rise over the last twelve months was brought about as the inventory of homes for sale reached historic lows at the same time buyer demand was buoyed by record-low mortgage rates. As Lisa Patel, Toronto Regional Real Estate Board President explains:
“The Greater Toronto Area housing market followed an unfamiliar path in 2020. Following the steep COVID-induced drop off in demand during the spring, home sales roared back to record levels throughout the summer and fall. A strong economic rebound in many sectors of the economy, ultra-low borrowing costs and the enhanced use of technology for virtual open houses and showings fuelled and sustained the housing market recovery.”
Where will home values go in 2021?
Home price appreciation in 2021 will continue to be determined by this imbalance of supply and demand. If supply remains low and demand is high, prices will continue to increase. The number of new listings is now higher than it was last year at the same time.
Housing Supply
There is some speculation that the inventory crush will ease as we move through the new year for two reasons:
1) As the health crisis eases, more homeowners will be comfortable putting their houses on the market.
2) Some households impacted financially by the pandemic will be forced to sell. Housing Demand Low mortgage rates have driven buyer demand over the last twelve months.
Mortgage rates are at least one full percentage point lower than the same time last year. Low rates create a great opportunity for homebuyers, which is one reason why demand is expected to remain high throughout the new year.
Taking into consideration these projections on housing supply and demand, real estate analysts forecast homes will continue to appreciate in 2021, but that appreciation may be at a steadier pace. According to a recent report by Royal LePage, the aggregate price of a home in 2021 is forecast to increase by 5.75% year-over-year.
Bottom Line
There’s still a very limited number of homes for sale for the great number of purchasers looking to buy them. As a result, the concept of “supply and demand” mandates that home values in the country will continue to appreciate.
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