What A Realtor Wants You To Know About Buying A Home In 2021

Designed by Yazmin Butcher.
Winter is typically the sleepiest season for real estate. The post-holiday pinch on our wallets, paired with our hibernation habits, aren't exactly conducive to selling (or buying) homes. Not so for 2021. We’re barely two months into the new year and the hot spring market has already started.
“The housing market was competitive before, but in the first few weeks of January, it’s become even more so,” says Davelle Morrison, a Toronto agent with Bosley Real Estate, who has witnessed bidding wars with up to 70 offers in the GTA. Not exactly the slowdown experts predicted would happen at the start of COVID-19. But is this just a — 10-month — blip? Will this year we finally see a softening in the country’s (frankly crazy) housing prices to make buying a home more affordable for those of us without a six-figure salary or a down payment from the bank or mom and dad?
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If you’re thinking about buying and have no idea where to start, or if you can even afford it, we got you. Here’s what real estate and housing experts want you to know about Canada's real estate market in 2021.

What's happening in the Canadian real estate market in 2021?

Despite COVID, last year, the market took off once real estate was deemed an essential service and people working from home quickly realized that “cozy” and “intimate” in housing speak is really code for “cramped.” That desire for more space will continue to strengthen the market in 2021, Morrison says — for sellers at least. Record high demandespecially for homes — and a low supply in cities like Toronto and Vancouver are driving prices way, way up.
How up? In 2020, the average Canadian house price climbed 17% year-over-year. This year, realtors predict the sellers' market will continue, forecasting princes to rise between 4% to 6%. How those figures will actually play out depends on how many homes are put up for sale in the months ahead. (For example, the end of COVID mortgage deferrals did not result in homes foreclosing and more properties on the market as was expected.) “Home buyers right now really need to pack their patience,” Morrison says. 
Still, that doesn’t mean homes in *every* Canadian city are selling faster than Lysol wipes. While markets like Ottawa, Ontario's cottage country, and Halifax have soared, in Alberta, where the province’s economy has been hit by declining oil prices, homes in Calgary and Edmonton aren’t expected to surge in cost. You might also score a bit of a deal in Saskatchewan where properties in Regina are expected to remain steady or decrease ever so slightly due to a weakening economy.
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Is it a good time to buy a condo?

Last year, the demand for condos dipped in major cities including Toronto, Vancouver, and Montreal. Units flooded the market as people left for the cheaper-ish suburbs, renters gave up leases to move back home (hi, mom!), Airbnbs sat empty, and fewer international students needed accommodation. Toronto’s condo market, which dipped 8.5% last October, is slowly coming back to pre-COVID prices, but there's still quite a bit of inventory on the market, Morrison says. Which means if you’re looking to buy one, you may score a bit of a deal. Prices will return to “normal,” she believes, when people can move around and travel again. So, 2022?

So, what I’m hearing is *no* predicted housing crash.

Depends on who you ask, but the majority of experts predict the market will remain mostly strong. An outlier? Federal housing agency, the Canada Mortgage and Housing Corp (CMHC). Last September, it forecasted that the market is heading for a major correction. While CMHC initially predicted that average prices would fall in 2020 and wouldn’t recover until 2021, the corporation says its timing may be off. Its chief economist says they still believe prices will decline in 2021 because the current demand is unsustainable due to the COVID-weakened economy.

What about Canadian mortgage rates?

Finally, some good news! Historically low interest rates — under 2% in the second half of 2020 — aren’t going anywhere this year. If you are already a homeowner, it could be a good time to break your mortgage (note: there can be penalties with this, so ask your broker) to get a lower interest rate before they start climbing up again. The Royal Bank of Canada says while it expects interest rates to stay low, we may see “long-term rates starting to creep slightly higher."
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Even with the tiny win that is low interest rates, Canada has a housing crisis that shuts many people out of the markets. The pandemic has only magnified these socioeconomic gaps, says Andy Yan, an urban planner and director of The City Program at Simon Fraser University. Those who could afford to buy a home in 2020 were likely the people who easily transferred to WFH set-ups, while those in sectors greater hit by the pandemic, like the service or tourism industry, are more likely to be shut out, say Yan. “You have a population who faces some serious challenges in terms of housing.”

This is a lot of info. I feel anxious.

That’s perfectly normal, Morrison says. It’s a lot to take in — even if you’re far from ready to sign an offer. “Whenever someone buys a home for the first time, it’s common to feel like you want to throw up a little bit,” she says. 
It’s also normal to be hella anxious over the idea that you may not be able to get into the housing market right now. Or maybe you just don’t want to. Ownership isn't for everyone. Housing costs shouldn’t be more than 30% of your monthly income — a number that might be more attainable if you rent, especially now that rents have dropped an average of 7.1% across the country.
Whether you can buy, want to buy, or just want to get through another day of this pandemic, purchasing property isn’t the be-all end-all — especially in a market where more people are being priced out every second. For most of us, life isn’t an episode of Selling Sunset, but you can make smart real estate investments by doing your homework, being patient, and making a home in a place that’s best for you.
Buying a home is the biggest purchase you'll ever make — but who says you have to make it? Welcome to New Lease, a series that examines our long-held beliefs about home ownership and renting in Canada.

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