Ontario Housing Market Trends [2021]

The global pandemic brought about so much change to many aspects of our modern way of living, and some of the most significant shifts are seen in housing market trends.

The lockdowns and the switch to remote-working have resulted in large numbers of people searching for larger homes in less crowded areas. Especially as the trend towards remote working appears set to long-outlive the lockdown restrictions, people are looking for properties that allow them the space to enjoy more work/life balance from home.

Although some are certainly returning to metro areas as the world opens back up, many still have their sights firmly set on the attraction of smaller towns and suburban living over the hustle and bustle of city life. Ontario’s housing market trends, like so many, are currently reflecting this. Keep reading for an in-depth look at the most important current trends in the Ontario real estate market.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Lack of Supply Drives Up Housing Prices

When a property market is balanced, the demand for properties is in proportion to the supply of available houses on the market. Perfect market balance conditions mean that all listed homes can be sold and replaced with new listings within three months.

In Ontario, however, there has been a significant lack of new listing supply for some time now. This has continued to put pressure on the market, driving city prices up, and, to an extent, this upward pressure has spilled over into surrounding markets, too.

That said, this is certainly not a problem specific to Ontario, as there has been a significant decline in the supply of residential new construction in Canada. As restrictions have eased, developers are desperately trying to play catch-up and bring inventory back into balance with the level of demand from buyers.

Suburban Relocations Continue

As property prices continued to rise in Toronto, many opted for suburban relocations, which has created property price increases in these areas, too. In response to this trend towards migrating away from big city centers, average property price hikes in Toronto have cooled as suburban price tags continue to climb.

Currently, the average price of a property in Toronto sits at around $1,112,899, which is 3.7% above last quarter and 8.5% higher year on year. This increase is still not as significant as some of the following suburban areas.

Here are some of the key area statistics outside of Ontario’s capital city of Toronto:

The average price of a home in Collingwood is currently about $839,000, up 15% from the previous quarter and 33.5% yearly change.

Midland’s average price of a property is currently around $694,000, up 2.4% from the previous quarter and 5.9% up year-on-year.

The average price of homes in Innisfil is approximately $1 million, up 9.8% from the previous quarter and 42.9% up since last year.

Properties in New Tecumseth cost about $958,000, up 12.2% from the previous quarter and 46.7% up year-on-year.

Albeit a city, even the most affordable neighbourhoods in Barrie are also experiencing some significant year-on-year growth in prices, with homes in Barrie currently averaging around $776,000, up 4% from the previous quarter and up 27.4% year-on-year.

Meanwhile, properties in Orillia are sitting at a relatively affordable average cost of about $668,000, up a staggering 41.3% from 2020.

Condo Market Expected to Fare Well Into 2022

The continued price hikes of single-family homes and remote working trends should see condos becoming a more popular option as we head out of 2021 and into the new year. The market for condos was slow to bounce back after the initial pandemic-related slump, but as the property market conditions have tightened, they are back in the game.

With minimal space left for new developments in rural towns like the Blue Mountains and Collingwood, condos are set to become a popular, affordable solution, especially for first-time buyers making a down payment.

Lending Rule Changes Make Little Difference

New lending rules rolled out in June 2021 were designed to minimize the number of eligible borrowers and bring some balance back to the skewed supply and demand ratio. The increased stress test requires all borrowers to prove that they can afford mortgage repayments at 5.25%. As yet, property market analysis is not demonstrating that this has any natural effect on the market.

That said, the government initiative to combat rising mortgage rates in Canada is likely to remain for the foreseeable future, encouraging many to get onto the property ladder and keeping such a squeezed property market nevertheless buoyant.

Final Thoughts on Ontario Real Estate Trends

The increases in property prices are forecast to continue climbing well into next year, as it will take time for inventory levels to reach a point at which demand is primarily met in the market.

Despite these price increases, however, the Ontario market is currently offering up plenty of lucrative options for Canadian real estate investment, with many suburban and rural areas still climbing and not yet reaching their peak price-wise.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.