The Canadian real estate market has now entered its third year of record-breaking sales, with more than 580,000 sold and purchased within the first ten months of 2021. These figures greatly surpassed the more than 552,423 homes sold in the whole of 2020.
As the market rages forward, with yet any indication of cooling down any time soon, predictions by Oxford Economics revealed that current prices may only see a decline of 24% by mid-2024. Further research from Oxford Economics indicated that home prices have increased by more than 50%, with the Bank of Canada cutting back on interest rates.
Even with the current estimations, by 2024, real estate prices will still be 15% higher than pre-covid levels, which shows how popular the real estate market has become for both domestic and international buyers.
While demand has remained at an all-time high, the real estate market has remained relatively short squeezed, as investors are buying up popular offerings across Canada. Now some small and first-time homebuyers are considering purchasing real estate as a form of investment.
In March 2021, house prices were up 31.6% from the year before, with the average home price now at C$ 716,828 according to the Canadian Real Estate Association MLS System. 2022 may not look any different when compared to the last two years, and real estate has now become a commodity for some, providing lucrative returns on investment as demand keeps surging.
Although real estate investing remains a risky purchase, first-time buyers, and smaller investors should consider the key factors that can make an impact on their investment purchase. Perhaps the current risk doesn't lie within the investment itself, but rather the future of the Canadian real estate market.
So if you’re sitting on some excess cash, and ready to make your first, or perhaps second real estate purchase, here are the five top places for real estate investment according to major sources.
Greater Moncton - New Brunswick
According to one of the most popular mortgage brokers in Montreal, Nesto, the Greater Moncton area has seen a spike in real estate purchases in recent years, with popularity still on the rise for real estate investors.
The city has experienced a massive economic boom, being one of the fastest-growing cities in the New Brunswick province. The city which has one of the most diverse residential communities, featuring both domestic and foreign homeowners offers some of the most attractive housing opportunities.
With the growing population, and interprovincial migration being at its highest in decades, the city boasts affordable rent, low cost of living, and a fast-paced job market. Much of its recent boom has been contributed by the city’s urban population, while not being overly dense or heavily populated, it’s now the perfect place for the first-time real estate investor who’s looking to enter the property market.
Quebec City - Quebec
Quebec City has remained on the radar for many investors, as the city experienced a healthy rise in Gross Domestic Product (GDP) in 2021. According to PwC predictions, the real estate market in Quebec City is set to start declining between 2022 and 2025, with prices coming down by late 2022.
On average, single-family home prices have been well below C$ 500,000, with the median house price increasing by 24% since 2020. It’s not just in Quebec City that house and condo prices have seen steady price increases, the Quebec province has noticed significant quarterly price increases.
But in Quebec City, development and upkeep on new and existing public infrastructure such as its new tramway project and other transportation services have kept many investors interested even with the steady increase in real estate prices.
Overall, the community of Quebec City has been relatively welcoming of both local and foreign property investors, creating a less challenging and competitive renter market for its residents.
Calgary - Alberta
Low-interest rates and growing demand for more affordable rental dwellings have seen Calgary experience its best property boom since 2007. The Calgary Real Estate Board claimed back in 2021, that property sales averaged close to 2,900 per month, a 147% increase from 2020.
In a PwC report published by the end of 2021, high interprovincial migration from competitive real estate markets in other areas of Alberta has kept demand in Calgary at an all-time high.
As the rest of the Canadian property market is seeing median home prices jump by more than two figures year-over-year, a report published by RE/MAX (Canada) currently predicts prices to rise by 2.5% in 2022.
With more and more people, especially younger residents, migrating out of large and expensive cities, the current demand in Calgary represents a healthy and strong buying opportunity for many property investors.
Saskatoon - Saskatchewan
Similar to Calgary, Alberta, the city of Saskatoon has experienced a strong real estate and healthy real estate market throughout most of 2021, with overall sales increasing by 17%, the highest it's been since 2007.
Saskatchewan Realtors Association (SRA) published statistics on the Saskatoon real estate market at the start of 2021 and found that even with the rapid surge in new property deals month-after-month, and increasing demand, median housing prices are still 3% lower than what it was back in 2014.
What’s kept investors completely interested in Saskatoon, is that condominium prices are more than 17% lower than it was in 2015 according to the SRA.
Even as the local market presents itself as one of growing popularity, real estate experts, and major investors are growing concerned over a decreasing supply of new property available. Current inventory is more than 30% below the 10-year average according to SRA figures, and homes that have been listed since the start of 2022 are at their lowest since 2010.
Perhaps a bit more competitive than what some investors are looking for, but Saskatoon remains a popular, and well-sought choice for newcomers to the property market, offering lower purchasing prices for both single-family homes and modern condos.
Winnipeg - Manitoba
Perhaps a city that has been greatly overlooked by major and small-time property investors, Winnipeg remains one of the most suitable choices for those looking for affordable property investment opportunities.
As of 2022, average prices have increased slightly by 11% compared to a year earlier, with the median sale price being roughly C$ 362,236 according to the latest statistics.
Overall, the city may have not been trailing record-breaking sales and purchases throughout 2020 or 2021, but slower increases in prices and averaging cost of homes have kept the local property market at a healthy pace.
According to figures published by the Winnipeg Regional Real Estate Board, property listings are now averaging around 16 days on the market as of February 2022. Furthermore, residential-detached dwellings in the downtown area have seen prices increase by as little as 0.575 year-over-year, and condo prices up 7.67% for the same period.
All over the city, residential property sales have been subsiding, as the market starts to cool off. Perhaps this is an indication that prices for the year ahead may see a decline, with some investors hoping that prices will stabilize for most of 2022.
There’s no saying exactly what the year ahead will look like in terms of the Canadian property market, as it’s remained relatively active throughout most of early 2022. Investors who are now on the market for potential investment opportunities should consider areas or cities which have experienced minimal price increases from year-to-date of purchase.
Lesser-known cities and smaller metropolitan areas might not have the most active real estate market, but it’s becoming a lot more frequented by younger professionals and small families looking to lower their cost of living or migrate out of larger and densely populated cities.
Overall, it’s clear that 2022 will perhaps be another record-breaking year for most regions, and investors should always consider their risks, alongside financial stability before stepping onto the market.
But, as many experts feel, if there’s any time to jump into the property market, now would be one of the best times to do so, as demands are soaring, with renters eager to find affordable and livable places in smaller cities.