In the past few months and to date, we are experiencing a layering of things that affect real estate markets – supply chain issues, inflation and interest rate hikes for example.
The luxury market can be an $8-million home or a $50-million home, and there are potential differences in how they fluctuate.
The properties have to be priced strategically to reflect the current market conditions and in anticipation of how we believe the market will play out.
People still want to negotiate regardless of the price point; everyone wants to feel like they have won.
We currently see tighter movement in the mid-tier of the luxury real estate market, around $6 million to $8 million. The higher ends of $10 million-plus and $20 million-plus continue to see similar levels of activity relative to previous months prior to the interest rate hikes.
Question: Do you expect to see sales decreasing or increasing in the coming months?
Answer: Realtors who are actively working in the marketplace will start to see market shifts prior to the statistics coming out that bear fruit to what they are experiencing.
We are seeing a little slow-down in sales, and this softening will likely continue in the coming months.
When new policies are implemented, and also having come off a stellar previous year of (exponential) increase in sales points, it stands to reason that there may be a “wait and see” attitude among purchasers and sellers alike as they try to make sense of a changing market.
Supply and demand are always key factors, and currently, the supply is still low.
The supply/demand ratio needs to be understood from a granular neighbourhood perspective and from the property type (condominiums, attached properties and single-family homes). It’s clear that areas and neighbourhoods and property types don’t react the same way across the board.
Question: Luxury homes are often on the market for some time (for example, this mansion has been for sale for two years, and the price recently dropped. Why is this the case?
Answer: Simply put, the more expensive a property is, the number of buyers that can afford that property diminishes.
An important note is that the number of days on the market is, to a certain degree, correlated with value and pricing – although it is interesting that you can have an amazing property that you put on the market, and if the right buyer is there, it sells quickly.
Question: What can you tell us about the buyers of luxury homes, and have you found the foreign buyers tax a deterrent?
Answer: B.C.’s luxury buyers can come from anywhere, but there are many local buyers.
Of course, as Canada has always had a large immigrant population and is recognized for its diversity, people often want to move to Canada. When they look at where in Canada they want to relocate, B.C. stands out with its scenic natural mountain and water landscape, excellent schools and cultural diversity.
Our buyers are coming globally, although most appear to have Canadian citizenship or permanent residency.
(The tax) is an important topic and one we should be paying close attention to, but questions around it are better directed to provincial and federal real estate associations.
What I can tell you is we don’t anticipate the foreign buyers’ tax will affect our luxury property listings, as many buyers we’re seeing are from the Lower Mainland, Okanagan and Canada in general.
Some of Wilson’s answers have been edited for clarity and length.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
