The growth of Canadian home prices may be expected to slow down this year compared to last, but a new report from RE/MAX is predicting average home price increases up to 20% in Canada's small markets by the end of 2022.
Smaller real estate markets were a big draw during the pandemic for aspiring homebuyers who were seeking out larger, more affordable places to live as they spent more time at home. Dozens of markets across Canada have seen average price increases over 30%, with some even surpassing 40%. Looking forward towards the end of 2022, RE/MAX is projecting further double-digit gains in several small markets.
"This is really pandemic-induced because of the ability of employees to move to remote work environments and the smaller communities having internet access with fiber and and high speed that's relatively inexpensive," said Elton Ash, regional executive vice president of RE/MAX Western Canada. "The combination of moving to more remote work environments with the ability to do that in smaller towns certainly accelerated it, and that graded the demand in the smaller communities."
Nova Scotia is expected to see some of the most substantial gains, with the market in Truro anticipated to have a 20% increase in home prices. This would come on top of the 46% increase that the town already saw from the beginning of 2021 to the beginning of 2022. Halifax is not far behind with a 19% average price increase expected by the end of the year, which would bring the average home price there up to $687,011.
Moncton, New Brunswick, as well as the Ontario towns of Arnprior, Oshawa, and Carlton Place are all expected to see 15% gains this year. Oshawa and Moncton in particular have already seen exponential price growth over the past year, with average home prices there going up 36% and 38% respectively from the beginning of 2021 to the beginning of 2022.
Ontario Residents Are Driving Demand
Ontario residents moving to other provinces has been a big factor in increased demand in smaller markets across the country. With home prices in Canada's most populous province continuing to float of out reach for many would-be homebuyers, they're having to look elsewhere to find the type of home they want.
"Ontario is has really influenced the Nova Scotia market and in more ways than just career Millennials or older Gen Z, but also retirees, and that has been a big thing in the Maritimes and a for the interior of British Columbia and Vancouver Island as well," Ash said. "I think this this trend is here to stay. We're certainly hearing from our realtors that this isn't a one-off situation."
Interestingly, the RE/MAX report found that it's not necessarily affordability that's the biggest draw for homebuyers to move to these smaller markets. Livability factors like the amount of green space and neighbourhood dynamism were ranked as more important draws. Although that may come as a surprise to some, Ash says it's a continuation of a trend that's been happening for some time now.
"There's been this whole sort of theme around Millennials over the years and how they are urbanites and they want to live downtown and close to all the action," Ash said. "We started to see this transition prior to the pandemic with younger families realizing that the suburbs might not be so bad, especially once you started having children and a desire for a yard and space. Certainly the pandemic accelerated that sense of desire but livability is the big thing and maybe that shouldn't be surprising given the demographic -- the millennial mindset of being a little more lifestyle-oriented and not doing the old nine to six grind."
The Bank of Mom and Dad
Of course with the market being as hot as it is, not all homeowners can afford to buy a place on their own. RE/MAX found that 25% of Canadians were using financial support from family in order to purchase a home. Although this is also not a new trend, it was again accelerated by recent skyrocketing prices.
"We saw this starting to occur 10 years ago as the Baby Boomer segment was reaching the midpoint in the retirement sector, or reaching a point in their lives that they could help their children and grandchildren get into housing," Ash said. "We've seen that accelerate as well because of that overall size of that demographic. The affordability issue is a real concern, and with these escalating prices, especially in Toronto and Vancouver, the bank of mom and dad is alive and well."
