Could Ontario real estate emulate its impressive 2020 performance in 2021? The province’s housing market has all the ingredients for growth: near-zero interest rates, strong demand and limited supply, to produce a cocktail of double-digit price increases. And this applies to smaller communities, too.
Cambridge, Ontario real estate has experienced record growth over the last nine months, thanks to a blend of out-of-town urban dwellers searching for more square feet, and low inventory. But can Cambridge, which is a part of the Waterloo regional municipality, enjoy the same level of activity this year?
The Canadian Real Estate Association (CREA) published a new resale housing market forecast, revealing that the province’s average home prices could soar more than 16 per cent in 2021.
Ontario real estate has seen “strong demand for several years, particularly outside of Toronto, which has eroded active supply in the province,” CREA said in its report. “The strength of demand, particularly for larger single-family properties, will drive the average price higher as potential buyers compete for the most desirable properties.”
As long as the demand is there, Cambridge could continue to be a seller’s market. But before we look ahead, let’s take a look back at the trends that unfolded in 2020.
The Cambridge, Ontario Real Estate Trends That You Need to See
It turns out that Cambridge ended 2020 with a bang, effectively shrugging off the abysmal performance in the early stages of the coronavirus pandemic.
According to the Cambridge Association of REALTORS®, residential sales soared 66.3 per cent in December year-over-year, producing a new sales record for the month of December. Home sales climbed 15.2 per cent to an all-time annual high of 2,722 units in 2020.
Housing prices increased 27.2 per cent to a record $692,822 in December compared to the same time in the previous year. The comprehensive annual average price also surged 20.1 per cent to $626,528. Also, the composite benchmark price, which uses average or median price measures, advanced 21.4 per cent to $631,800.
But how did different property types compare year-over-year in December?
- Single-Family: +21.6 per cent to $644,300
- Townhouse: +24.4 per cent to $471,200
- Apartment: +13.2 per cent to $531,500
Active residential listings declined 60.9 per cent to a 30-year low, while new residential listings jumped 22.4 per cent in December. Months of inventory – the number of months it would take to sell present inventories at the current rate of sales activity, was 0.4 by the end of December. The long-run average is 2.5 months for the month.
“2020 saw many people prioritize more space as well as the safety and security of home ownership,” said John Teixeira, President of the Cambridge Association of REALTORS®, in a statement. “The increased demand for properties saw more homes trade over the course of the year than in any year going back on record, outpacing new listings by a large extent. This has pushed overall inventory levels to extremely low levels and have pushed prices to new highs.”
Are City Slickers Moving to Small Towns?
One of the themes of 2020 was that households in major urban centres were leaving the big cities and relocating to small towns and rural communities. Although the term “exodus” is believed to be overblown, the data are beginning to highlight that a noteworthy number of people are ditching metropolises for smaller Ontario housing markets.
According to a new report from Statistics Canada, the nation’s biggest cities are seeing a record number of urbanites trading in their 700-square-foot units for larger and more affordable homes, within less congested locales – an understandable move amid country-wide social distancing protocols. The report found that Montreal and Toronto saw 24,880 and 50,375 people leave the city, respectively, in July 2019 and July 2020. In the province of Ontario, the fastest population growth was recorded in Oshawa and Kitchener-Waterloo-Cambridge. rising 2.1 per cent and two per cent, respectively.
The same report also highlighted that the combined population of Cambridge, Kitchener and Waterloo is projected to have increased by more than 50,000 people over the last five years. At last count (July 2020), the regional municipality population of tri-cities was 593,882, up from 542,034 in 2016.
Researchers say that the reasons vary, but “urban sprawl is an important trend to monitor.”
“The desire to live outside the largest urban centres was also reflected in the rapidly increasing housing costs in neighbouring real estate markets, a trend that has continued in spite of the pandemic,” the report stated. “Personal health, the ability to work remotely, and higher housing costs are among the most important factors contributing to the decision of many Canadians to continue (or to no longer continue) living in large urban centres hardest hit by the pandemic.”
Does this mean the Waterloo region can repeat its stellar 2020 performance in 2021?
A Peak Inside 2021 for the Cambridge Real Estate Market
The Cambridge real estate market, which also comprises Kitchener and Waterloo, is projected to remain a seller’s market in 2021. A housing supply shortage, climbing demand, and historically low interest rates are expected to send the regional municipality’s housing sector on an upward trajectory. According to the Kitchener Waterloo Housing Market Outlook (2021), residential retail sales are forecast to rise seven per cent to about $674,977 this year across all property types. Whether it is a luxury property or a condominium, Cambridge and its surrounding neighbours have a lot to offer homebuyers attempting to get more for bang for their buck (or loonie).