RE/MAX Canada says smart investment has boosted values in key home segment
When the pandemic locked down the world, many Canadians focused their attention on renovating and repairing their homes. Now, that hard work is paying dividends.
Improved single-detached homes are gaining value, especially as supply of new homes for sale remains tight, and RE/MAX Canada is expecting these homes to play a significant role in future values in the hottest markets of Toronto and Vancouver.
"With all available tracts of land in the city committed to high-density construction, the single-detached home is quickly becoming a unicorn," says RE/MAX Canada President Christopher Alexander. "Existing homeowners who can't find what they want in the market, will buy an older home in an area of their choice and renovate or build their vision.”
The 2024 RE/MAX Canada Changing Landscapes Report, published today (Sept. 24), highlights the rise in renovation and repair spending nationwide between 2019 & 2023 to almost $300 billion, an 8% increase on the previous five-year period.
Statistics Canada data shows that the total value of building permits issued for the Toronto and Vancouver CMAs was $27 billion over 2019-2023 period, down 24% from the previous five-year period, exacerbating supply issues for new homes. This contrasts with a 60% increase for permits issued for multi-family construction.
With densification in the markets also impacting home size, including the impact of infill construction, the increasing scarcity of single-detached homes is having an oversized impact on home value.
The average price of a detached home climbed by almost 35% in the Greater Toronto Area between December 2019 and December 2023, rising from $1,052,081 to $1,418,323, while the benchmark value of a detached home in Metro Vancouver increased almost 38%, from $1,423,500 in December 2019 to $1,964,400 in December 2023.
“We expect this trend will strengthen in the years to come and serve to drive price growth in single-detached housing even further,” added Alexander. “There are a variety of variables at play, but renovation and revitalization is having significant implications for housing supply and affordability."
Wealth transfer, multigenerational living
The report notes that the luxury sector of the housing market will continue to benefit from the intergenerational wealth transfer and the rise in high-net-worth individuals who are choosing Canada’s major cities.
"Robust renovation and infill activity and the resulting lift in detached values has inevitably impacted the urban housing ladder," commented Alexander. "For years now, we've heard about the disappearing or 'missing middle.' Due to rising detached values, that 'middle' is now more likely to be a linked home, a townhouse or a condo unit. Amid population growth and urbanization, the shift in Canada's housing mix has been a natural and progressive evolution – in much the same way that, decades ago, the hallmark of middle-class North America stopped being the stereotypical modest home with a white picket fence."
But the spending on renovations of older homes, many of which date back to the 1960s, includes adding suites for relatives, addressing demand for multigenerational living, or for the rental market, and this too is having an impact on the makeup of urban centres’ housing markets.
Alexander also pointed to high property taxes as a factor driving the ‘renovate versus relocate’ trend that means people are choosing to stay in their current homes and make changes, again impacting the supply of single-detached homes in the tight markets.
"Those in a position to make their moves now may be better positioned than those in 2025, as prices currently remain close to year-ago levels in the Toronto CMA and modestly higher in the Vancouver CMA," says Alexander. "Pent-up demand is expected to increase pressure on the housing market in the year ahead as buyers move off the sidelines amid a more favourable interest rate environment that will set the stage for sales and price growth. In the same vein, better rates will also support renewed renovation and construction activity, as the evolution of city neighbourhoods remains a work in progress. Solid fundamentals support the case for home ownership as a long-term hold. As Mark Twain once said, 'Buy land. They aren't making it anymore.'"
