How does the demand for larger homes affect the market?
Competitive market conditions have persisted long after the first wave of lockdowns in spring 2020, which has influenced supply and demand for homes with a larger square footage.
Cathcart explains many communities were already in seller’s market territory prior to the pandemic. Since March 2020 however, more buyers entered the picture and were clamoring for the comparatively smaller number of listings that were available, leading to multiple offer scenarios on larger homes, he said. With the supply of homes already imbalanced compared to demand, CREA reported in its most recent national housing update that the number of newly listed homes dropped by 6.4% from April to May.
The desire for larger living spaces may have also played a role in fueling higher demand and prices in recreational and suburban areas over the last year. Commonly referred to as the Urban Exodus, the pandemic saw an accelerated trend of city dwellers with the ability to work remotely relocating to rural or suburban communities, locations that would typically offer more house for less money.
For instance, average sale prices for homes in some recreational markets are expected to see annual increases in the 20% to 40% range, according to research published in the 2021 RE/MAX Recreational Property Report.
What home trends will we see in the near future?
With the end of the pandemic on the horizon, the home buying frenzy looks to be slowly cooling off.
“A lot of the frenzy we’ve seen in the last year has seen people looking to find a place to ride out this pandemic in, and so you’d expect some of that urgency is going to fade at this point because we’re sort of near the finish line,” said Cathcart.
In June, CREA reported a 7.4% monthly decline in home sales from April to May. This can be attributed to freshly implemented lockdowns, high home prices, buyer fatigue, and increases in interest rates. The greatest deceleration of month-to-month price growth was found in the single-family segment when compared to townhome and apartment property types.
When it comes to buyers moving out of cities and into other areas, largely thanks to the freedom of remote working, Cathcart believes this trend will continue for some time after the pandemic, but not at its current rate. It will take time for companies and individuals to settle into the post-pandemic world, which will result in some continued movement in and out of cities in the meantime.
“Housing is typically a long-term thing you would plan for, but there’s not a lot of certainty about what a post-COVID world is going to look like yet,” explained Cathcart.
For urban buyers who may have traded in their single-family home and relocated to a more affordable place in the country, Cathcart predicts some people may purchase a smaller condo near their city workplace as a go-between.
“There have been lots of questions about whether this urban exodus will continue or reverse itself, but it’s more complicated. Maybe you buy that retirement place up in cottage country, but you also get yourself a condo in Toronto and that’s your pied-à-terre to go back into the office when you do have to do it,” he said. “Maybe your place of employment moves away or closer to you, or maybe you decide to take a new job closer to your new home, or one that is entirely remote work? There are a lot of moving parts to this.”
If you’re looking to upgrade to a larger property, or want more insight on COVID-19 trends in your local market, consult the advice of a qualified REALTOR® for the most up-to-date insights.