For hopeful home buyers, next year may be a good time.
If it’s a condo in big markets like Vancouver or Toronto that they’re looking for, 2021 could be their lucky year.
A recent RBC Economics report forecasts a softening of condo prices in major residential markets.
“The bottom line is we expect condo prices to weaken in larger markets next year…,” economist Robert Hogue wrote.
In September 2020, condo prices declined slightly month-over-month in markets represented by the Real Estate Board of Greater Vancouver.
REBGV covers Vancouver, Burnaby, New Westminster, North Vancouver, Coquitlam, Port Coquitlam, Port Moody, Maple Ridge, Pitt Meadows, Richmond, South Delta, Squamish, Sunshine Coast, West Vancouver, and Whistler.
In its report on October 2, the board noted that sales of condos reached 1,596 last month, a 36.9 percent increase compared to the 1,166 sales in September 2019.
The benchmark price increased 4.5 percent increase from September 2019, but declined 0.3 percent compared to August 2020.
The price of a typical condo in REBGV markets was $683,500 last month.
Compared to three months ago, September’s benchmark price for condos represents a 0.4 percent increase.
However, when compared to six months ago, last month’s price was a 0.9 percent decrease.
Meanwhile, benchmark prices of detached homes and townhouses in the region in September 2020 increased month-over-month by 1.1 percent and 0.4 percent, respectively, in September.
The same happened in areas covered by the Fraser Valley Real Estate Board. These are Surrey, North Delta, White Rock, Langley, Abbotsford, and Mission.
In September 2020, the benchmark price of a condo in FVREB markets was $436,900, a 0.1 percent decline compared to August of the same year.
Meanwhile, prices of detached homes and townhouses in the region increased 1.3 percent and 0.6 percent, respectively, over August.
Hogue made the prediction about weakening condo prices as part of his broader report about the Canadian housing situation and COVID-19.
The forecast comes in the heels of previous observations regarding a shift in buyer preference from condos to detached homes because of the pandemic.
Last July, Statistics Canada predicted such a shift.
“As working from home becomes more prevalent,” the agency stated,” we may see an increase in the demand for larger living spaces that single-family homes can offer, causing a shift in demand from condominium apartments towards single houses.”
On September 4, Hogue released a commentary about the August 2020 housing market, noting that buyers nationwide are “demonstrating a stronger preference for single-detached homes”.
Moreover, the “growing penchant for single-detached homes is supporting stronger price increases in that category”.
In his latest report on September 30, Hogue wrote that the “impact of COVID-19 on the housing market is complex”.
According to Hogue, it will “lead to diverging price trends among regions and housing categories”.
“It is cooling demand for and boosting supply of rentals in large urban areas,” the economist explained. “This, in turn, is reducing investor interest in condos.”
As noted previously, the pandemic is “also altering the housing needs of many current owners who look for more spacious properties in less crowded settings”.
“This is simultaneously shifting demand from condo apartments to single-detached homes and other low-rise categories, and increasing the supply of smaller condos in core urban areas,” Hogue wrote.
Moreover, “Work-from-home arrangements and the lesser appeal of big-city living (with reduced cultural and socializing opportunities during these times of social distancing) are increasingly driving buyers further away from downtown locations into suburbs, exurbs and even cottage country.”