Ontario Housing Market Report
- Average home prices in Ontario have increasedby 26.1% in a year to$857,754
Average Home Prices in Ontario for August 2021
Historical Average Home Prices in Ontario
Ontario Housing Market as of August 2021
Ontario's housing market was muted this August in terms of sales as the market took a breather over the summer months. Ontario home buyers looking for a brief respite in high housing prices were given a paltry 1% decline in average sold prices from June 2021, but they were met with a relatively crunched and constrained housing supply. Home sales are down by almost 11% from last August 2020, yet remain higher than 2019 levels. While sales have dropped by over 40% since this past March, sales volume still remains elevated compared to normal years.
From a city-level comparison, most housing markets in Ontario have seen the same general patterns over the past year. Prices and sales volume peaked in the spring, and has gradually declined over the summer. The outlier to this trend is Brampton’s housing market which experienced a 5% jump in average prices month-over-month to boost its average sold price to an all-time record. Meanwhile, Toronto, Ottawa, Mississauga, and Hamilton all have average sold prices below their 2021 peaks.
Toronto was the only major housing market in the province to post a decline in average home prices compared to August 2020. Conversely, Brampton's average home prices have surged by 24.2% year-over-year to end up with an average price of $1,060,277, even higher than the average price of a home in Toronto. This is driven in large part by the makeup of each housing market. Condos accounted for 33% of Toronto's housing market in August 2021, but only 5% in Brampton. The poor performance and lower average levels of condos dragged down the average Toronto house sold prices for the month, while strong growth in detached home prices in Brampton helped to lift the city's average sold price.
The expansion of the CMHC First-Time Home Buyer Incentive in the Toronto CMA, which spans most of the Golden Horseshoe Region, is likely to provide a small boost to housing demand for sub-$700K properties. In addition, the CMHC recently adjusted their standards for mortgage insurance, broadening the eligibility to allow more levered and lower credit applications. While insured mortgages are becoming a smaller proportion of total mortgage origination volume, this is still likely to help marginal buyers enter the market.
Counteracting these changes, the Office of the Superintendent of Financial Institutions (OSFI) and the Ministry of Finance recently raised the benchmark rate for the mortgage stress test. This is expected to limit the affordability of both insured and uninsured borrowers.
Housing Markets of Major Cities in Ontario
| City | Average Home Prices (August 2021) | Population (2016) |
|---|---|---|
| Toronto | 2,731,571 4.5% vs. 2011 | |
| Ottawa | 934,243 5.8% vs. 2011 | |
| Mississauga | 721,599 1.1% vs. 2011 | |
| Brampton | 593,638 13.3% vs. 2011 | |
| Hamilton | 536,917 3.3% vs. 2011 |
Ontario Housing Market Forecast for 2022
Looking forward, Ontario’s housing market forecast for 2022 depends on a few factors. The primary trigger for a downturn in prices is interest rates, while increased numbers of newcomers will have an upward pressure on prices.
Low mortgage rates have helped to stoke demand and have contributed largely to the massive price increases over the past year. Demand has been fueled by such abnormally low mortgage rates, breaking record-lows in fact, which makes it cheaper for buyers to borrow money. This period of low interest rates is set to end as the Bank of Canada signals that interest rates will eventually increase over the next few years. The impact of a jump in mortgage rates is still up in the air, as it is still not certain exactly how much interest rates will increase by. However, inflation has been creeping upwards, which signals that rates will surely go up, not down.
Immigration, looking mainly at newcomers and international students, has been largely absent throughout much of 2020 and 2021. This is also set to change as schools open back up to foreign students and immigration returns to normal levels. More people looking for a home will boost demand, especially as we head into the fall. Met with a shortage in housing inventory, a surge in buyers will introduce upward pressure on housing prices.
Two factors are now at play: whether an interest rate hike will become the catalyst for a correction in housing prices or if higher immigration levels will be enough to boost demand to ward off a dip in buyers from increased rates. Other factors include unknown policy changes emanating from the upcoming federal election, such as policies affecting supply of housing, along with the rate of Canada’s post-pandemic recovery, population growth, and taxes.
Ontario’s Housing Market Forecast: Things to Watch
| Negative Impact | Positive Impact |
|---|---|
| Higher Interest Rates Government Policies: Mortgage Stress Test Changes Vacancy Tax and Foreign Speculation Tax Zoning and Increased Supply of Housing Rent Control | Higher Immigration Levels Housing Inventory Shortage Stronger Economic Recovery |
A look at house price forecasts by Canada’s major banks gives us a look at what they predict Ontario house prices will be in 2021 and 2022.
RBC predicts that Ontario home prices will increase 15.8% in 2021, and 3% in 2022. RBC also forecasts that home sales in Ontario will increase by 11.3% in 2021 and decrease by 20% in 2022.
TD predicts that Ontario average home prices will rise by 19.8% in 2021 before falling 1.3% in 2022. For Ontario home sales, TD forecasts a 17.4% increase for 2021 and a 16.7% decrease in 2022.
Ontario Housing Market Forecast 2021 and 2022
| Forecast By: | 2021 Price Growth | 2022 Price Growth |
|---|---|---|
| RBC | 15.8% | 3% |
| TD | 19.8% | -1.3% |
Housing Markets Across Canada
Data sourced from the Toronto Regional Real Estate Board (TRREB) and the Canadian Real Estate Association (CREA). Any analysis or commentary is the opinion of the analysts at WOWA.ca and should not be construed as investment advice. Please consult a licensed real estate professional before making a real estate investment decision. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA.