As a Winnipeg real estate team, we understand that the market in Canada is diverse and dynamic, with a variety of unique opportunities and challenges depending on the region. In this blog post, we will take a closer look at some of the key factors that shape the real estate market in Canada, including economic conditions, housing prices, and government policies.
Economy
One of the main factors that influence the real estate Market in Canada is the health of the economy. People are more likely to have greater disposable income to invest when the economy is strong, which will end up causing higher housing prices and increase the demand for homes. If the economy is weak, people won't have as much money to spend on homes, which means lower priced homes and less demand for said homes.
Housing Prices
Another factor that contributes to the real estate market would be housing prices and those vary from location to location. You'll see way higher prices in big cities like Vancouver and Toronto, compared to smaller cities like Winnipeg or Regina. This is due to the fact that Vancouver and Toronto are seen as more desirable places to live than the smaller cities, with the possibility of a higher standard of living and greater job opportunities. But in these bigger cities, you may see a demand in rental properties because the housing prices are so high, people can't afford to buy. Tap here to see what the housing market is looking like for 2023.
The Government
Through different regulations and policies, you will see how the Canadian government plays a role in the real estate market. In cities where the housing prices have risen too high, the government has a put in certain measures to calm down the housing market. One of these measures is putting in place a stress test for mortgage borrowers. This makes it harder for someone to qualify for a mortgage if they can't show that they can afford payments a high interest rate.
Types of Housing
When it comes to types of housing, Canada has a few different options available: Condos, apartments, family homes, townhouses, etc. Where you are more likely to find a greater amount of each of these options, can depend on your location. Family homes are the more popular option for the average homeowner and is usually the type of home most people strive to own. With townhouses and condos being lower priced and in need of less maintenance from the owner, they can be more popular in urban areas. We touched on this in the government factor above but in cities like Toronto and Vancouver, you are more likely to see apartments in high demand due to the high cost of housing.
Interest Rates
Interest rates play a huge part in the real estate market and not just in Canada. It becomes far less expensive for people and businesses to borrow money when interest rates are low. This can lead to a greater demand for homes and other properties. This can end up increasing property prices and leads to what we like to call, a seller's market. Now, let's flip that. When interest rates are high, people are less likely to borrow money and that can lead to lower prices, causing a buyer's market.
Employment Rates
How do employment rates factor into the real estate market? When the economy is flourishing and the employment rates are high, it opens up the door for people to be able to afford a home. They might even make larger investments, knowing they can pay it off down the line. This is when you'll see a lot of people investing in multiple properties. Now, when employment is low, it's the opposite. People can't find jobs and for some, the last thing they can afford is a home, never-mind more than one property. This will ultimately lead to a decrease in demand for housing.
Climate
Climate can affect the real estate market in a variety of ways. Extreme weather events such as hurricanes, harsh winters, and heat waves can damage or destroy homes and other properties, reducing their value. Areas that are prone to such events may be less desirable to buyers, which can decrease demand and lead to lower property values. Climate change can also affect the suitability of certain areas for certain types of development. Additionally, changes in temperature and precipitation patterns can affect factors such as agricultural productivity, water availability, and the distribution of plant and animal species. These changes can have negative effects on the farming, forestry, and tourism industries, which can end up affecting the economy and real estate market.
Demographics
The demand for different types of housing can change depending on the population size, income, age, and household composition. This is true for commercial and industrial properties as well. Let's take a deeper look at it though. Let's say there's a growing population. That's going to cause a demand for new homes and apartment buildings. If the populations age structure changes, you will see a shift in demand for certain types of housing. There could be an increase need for retirement homes and communities. Additionally, if incomes rise, people will be able to afford bigger and better homes, which will lead to an increase in property prices. If you see incomes fall, the opposite will occur. When it comes to the types of housing in demand, demographics are key. Will their be a rise in multi-family homes or single-family homes? For condos and apartments, it could be the trend of urbanization. Immigrants can also drive up the demand for housing in certain areas, either because of their background or due to the jobs available in said area.
Cottage Market
An interesting market that not a lot of people think about or take into account, is the Canadian cottage market. This includes the selling and buying of any recreational property, like a cottage, cabin, vacation home, hunting lodge, etc. Sot your primary home or property. This market is driven by those who are looking for a home away from home, retirees, or just those looking for a little getaway. If you look at the statistics, you'll see that the cottage market in Canada has grown in recent years, mostly in Quebec and Ontario. A lot of this is due to the fact people are more interested in "staycations", rather than leaving Canada. I mean it is beautiful here, why go elsewhere? Click or tap here to find out if you can afford a cottage!
All in all, the real estate market in Canada is always changing and complex. It is influenced by a number of factors and it's important to stay up-to-date and well-informed on it. If you're looking to buy or sell property in the great North, you need to understand the key factors that drive the market so you can make better decisions. No matter what you're looking for, Canada has a wide range of properties, whether it be family homes, apartments, condos, vacation homes. If you have any questions about the real estate market in Winnipeg, please don't hesitate to reach out to us!
