6 real estate trends to watch in 2021

6 real estate trends to watch in 2021

As 2020 (finally!) winds down, we’re all looking ahead and hoping 2021 has some better things in store. While we’ve all faced plenty of challenges, we can’t complain too much about the real estate market during COVID: houses have done incredibly well, showing a reassuring confidence in the economy. Condos, especially those in the core, haven’t fared as well, making life more challenging for sellers and investors, but opening up exciting opportunities for buyers and renters.

So what does 2021 have in store? We certainly don’t have a crystal ball, but there are certain trends that look like they’ll be either taking shape or strengthening over the next year. Price Waterhouse Coopers (PwC) recently published a comprehensive report on Emerging Trends in Real Estate 2021, offering some great insights into what experts believe is on the horizon. For those of you who have the time and interest to dive into a 117-page report, great! It’s full of useful information about the Canadian and US real estate markets. But if you’re looking for a quicker read, here’s the bite-sized version, outlining the top trends coming our way in the Canadian and GTA markets.

Coming soon: Watch seasoned real estate pros weighing in on today’s market in our new “Ask the Experts” video series.

Trend #1:

People moving from major cities to smaller centres.

COVID-19 has changed how we work, learn and play. And while the pandemic will end, employers and employees are rethinking whether they will return to their offices. People are realizing they don’t need to live near the office, and they’re eyeing property outside major cities. This move from cities to suburbs or smaller cities is expected to continue, even post-pandemic. If you’re thinking about leaving the city, stay tuned for an upcoming post that will help you weigh the pros and cons.

Luxury Condo

Trend #2:

The desire for living space, quality and flexibility will grow.

In March 2020, the move to remote work happened pretty much overnight. Within days, workers found themselves sharing cramped quarters with family members while still trying to do complex tasks requiring quiet and focus. Given that working from home is a long-term reality for many, people want larger living space with separate, quiet areas to work and study. Outdoors, we want more space as well.

In condos, look for developers to start offering common spaces to work, videoconferencing rooms, dedicated areas for parcel and grocery deliveries, improved amenities and tools to create more connected communities. With many of us working and learning from home, we will continue finding ways to establish individual spaces to plan, hold online meetings and concentrate on projects.

Related info: Your definitive guide to today's Toronto housing market

Trend #3:

The concepts of 18-hour and 15-minute cities are moving into the mainstream.

It used to be only urban planners used terms like 18-hour or 15-minute cities, but today, both are quickly becoming mainstream concepts. An 18-hour city is a medium-sized city which is less intense than a major global centre (which is considered a 24-hour city), with a vibrant urban core that offers a range of attractive amenities. Kitchener-Waterloo, London and Ottawa are three Ontario examples, and other Canadian examples include Victoria, Quebec City and Halifax. All are becoming increasingly attractive places to live because of the personal freedom offered by working remotely.

A 15-minute city offers residents access to daily necessities – groceries, drug stores, libraries and schools – within a short walk or bike ride. Also known as livable neighbourhoods, the Globe and Mail recently reported that only 23% of urban Canadians live in this type of area. While they’re not the norm quite yet, the idea of livable neighbourhoods is growing. The City of Ottawa has adopted the idea as part of its official plan, and Toronto and Vancouver are exploring how to increase density in single-family areas.

suburbs

Trend #4:

Long-term, will people choose suburbs or cities? No clear answer exists.

Industry experts were divided on where they believed people would want to live in the next five years. A significant number said there will be at least some movement away from major cities, even if urban living remains attractive. Additional research supports this: Ontario Real Estate Association stats cited in the PwC report found respondents saw suburbs and rural areas more appealing because of the pandemic.

According to the report, the Conference Board of Canada sees people leaving Canada’s biggest urban centres – Toronto and Montreal – over the next three years, while international migration is expected to maintain urban population growth.

Immigration is a major driver of the economy, and is especially vital to real estate markets. It is down significantly due to COVID, and governments will need to create supportive policies to return immigration to higher levels. The Government of Canada has already announced a commitment to increase immigration to 400,000 a year over the next three years.

Smaller cities connected to transit will be highly desirable, with some downtown residents expected to embrace remote work in a setting that has urban characteristics. This includes suburban areas along transit lines, where the trend of transit-oriented community development is leading to denser, more diverse, and walkable mixed-use communities.

Trend #5:

Market outlook says housing activity to slow – at least for next year

It’s too early to tell if the slowdown in urbanization will become a long-term trend. If it does, people working in a small space might seek a larger home and green space outside the larger cities. In single-family housing, open-concept homes might need to change as people working from home need dedicated workspaces. The report states that according to the Canada Mortgage and Housing Corporation (CMHC), housing activity is expected to slow across Canada, at least for the next year. When things improve, Toronto, Ottawa and Montreal will likely recover faster than Vancouver, Edmonton and Calgary. The CMHC expects condo prices to soften further next year even though supply is down in some markets. Condo living may need to be reimagined since homeowners are increasingly likely to balk at living and working in 500 square feet.

Trend #6:

ESG factors coming into focus.

The growing emphasis on environmental, social and governance (ESG) factors is extending into Canada’s real estate market. While some people interviewed for the report didn’t think ESG is a priority, many agreed that addressing them makes good business sense. These factors cover many initiatives from health and safety ratings to helping struggling tenants during COVID-19.

This year’s events will, of course, trickle into 2021, impacting trends, developments, and the way people want to live. Check back here often for market updates, trend reports, expert advice and more to help you navigate the market in the coming year, and make the decisions that are right for you.

Want to talk to an expert about how these trends might affect you? Connect with a Condo Pro.

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