Kelowna, BC (November 7, 2011) -- Billions spent in new construction, renovation, and infill over the past decade have contributed to a serious upswing in the calibre of Canada’s housing stock, propping up residential average price in the country’s major centres, according to a report released today by RE/MAX.
Since 2000, the value of a Canadian home has doubled, rising from $163,951 to $339,030 in 2010. Nowhere has the upswing been better captured than in both the value of residential building permits issued nationally between 2000 and 2010—at $340 billion—and the estimated $450 billion spent in renovation. The impact of these two forces alone has fuelled the Canadian residential real estate market—as well as the construction industry—for more than 10 years.
As a result, investment in Canada’s housing stock is at an all-time high in the 16 Canadian residential real estate markets examined in the RE/MAX Housing Evolution Report. Higher quality housing translated into extraordinary price appreciation across the country – with 62 per cent (10 markets) experiencing increases in excess of 100 per cent since 2000.
“Revitalization, renovation and new construction have been largely underestimated in terms of overall impact on rising average price,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “Yet, outside of supply and demand, these have been among the foremost variables influencing real estate values. The overall result is tremendously positive for real estate and our major centres—and there’s much more to come.”
The report found that the unprecedented sum funneled into housing has effectively changed the landscape of Canada’s major centres. New home construction has advanced suburban sprawl, giving rise to new sought-after pockets in virtually every centre across the board.
Infill continues to redefine neighbourhoods, particularly in areas where the value of existing structures have not kept pace with escalating land values. Bungalows on large lots are prime targets, making way for custom builds that transform working-class subdivisions of yesteryear into up-and-coming upper-end pockets. Infill is also maximizing land potential, often replacing one, two or several tired structures with a block of townhomes or mixed-use residential, even high-rise apartments.
“The wildly popular renovation phenomenon has also swept the nation, blanketing the country in a tide of renewal,” says Ash. “It’s permeated our culture, giving rise to famed television shows and channels, helping everyday contractors to reach icon status and inspiring an explosion in the do-it-yourself and home improvement industry. Our homes have reaped the benefits as residential renovation spending consistently climbs year-over-year, now exceeding $60 billion annually.”
The trend has not been limited to single-family homes—although that activity has been nothing short of remarkable. Canada’s cities have also mounted ambitious renewal of their own, particularly in the heart of most major centres—the urban core. Strategic smart growth plans are altering cityscapes, challenging our concepts and perceptions—including our purchasing patterns—and creating partnerships that are working to escalate our markets to world-class status. Non-residential construction, including infrastructure spending has had a positive secondary impact, in turn boosting spending on the residential side.
“Condominiums are undeniably the biggest game changer for real estate over the past decade, especially in British Columbia and Alberta, where they comprise 25 to 50 per cent of residential sales,” notes Ash. “As the product has gained widespread acceptance, it’s upside effect on the housing mix stands out, keeping homeownership within reach for first-time buyers, creating trendy urban pockets coveted by young professionals and offering aging baby boomers exciting advantages from low-maintenance living, to an active lifestyle and even luxury, with some suites now commanding prices in the millions.”
Condominiums have changed the urban landscape, driving residential neighbourhoods up, instead of out, and bringing to market a bevy of new options from mixed-use residential, live-work studios, lofts, townhomes, and condo bungalows. Townhomes, in particular, have experienced a serious rise in popularity, bridging the gap for empty-nesters and retirees not yet ready for apartment-style living.
With construction of rental product few and far between in many Canadian centres, it’s no surprise that investors have also been particularly active in the condominium market, especially in college/university towns or where vacancy rates remain tight.
Redevelopment holds the greatest potential for cities on the cusp of exciting rejuvenation. While former brownfields can present challenges, many have opened up and revitalized entire areas. Brandt Creek Crossing in Kelowna, The Carlings of Arbutus Walk in Vancouver’s Kitsilano neighbourhood, and Garrison Woods in Calgary are prime examples of projects that have changed stagnant land into bustling residential hubs—some mixed with lively commercial, office and retail space. Conversions also continue to breathe new life into existing structures with good bones, while supporting the move to higher-density and the introduction of affordable options.
“Our communities depend on sustainability,” explains Ash. “We want cities that are attractive, where homeownership is attainable, and quality of life is high, where there’s balance between suburban sprawl, overall urbanization and environmental preservation. We want spaces where heritage co-exists with modern lifestyles. These characteristics allow cities to thrive in terms of price growth and demand, and earn distinction on the world stage. It’s a complex goal that requires vision, and it all hinges on an ongoing cycle of development and redevelopment.”
Lastly, population growth has been a key factor making housing evolution possible. Since 2000, Canada’s population has experienced double-digit growth of 11 per cent. By 2031, over 42 million people are expected to call Canada home.
“Population growth is a central to housing evolution, supporting steady household formation, which in turn will boost revitalization, new construction and investment in Canada’s housing stock for years to come,” says Ash. “Ultimately, a rising population bolsters the health of the real estate sector and fuels the trends that lead to continued average price growth on all fronts.”
RE/MAX is Canada’s leading real estate organization with over 18,500 sales associates situated throughout its more than 700 independently-owned and operated offices in Canada. The RE/MAX network, now in its 38th year, is a global real estate system operating in 80 countries, with over 6,200 independently-owned offices and over 89,000 member sales associates. RE/MAX realtors lead the industry in professional designations, experience and production while providing real estate services in residential, commercial, referral, and asset management. For more information, visit: www.remax.ca.