Despite the fact that Canadians interact with real estate every day, it can be perplexing to experience the market firsthand. And with high stakes associated with real estate dealings, it’s not uncommon — or unfounded — for consumers to feel wary.
In fact, a clear majority (69%) of homebuyers and sellers in Canada’s most overvalued markets are reportedly stressed out by the real estate process. This is according to real estate brokerage Properly.
Properly
Properly’s findings are certainly not a one-off. Real estate conditions have jumped from one extreme to the next this year — chipping away at any sense of certainty — and just a few weeks ago, Bloomberg reported a fifth-straight week of sinking consumer confidence, attributed largely to a “sharply deteriorating outlook for the nation’s housing market.”
Cam Forbes, a Toronto-based broker and Chief Operating Officer at RE/MAX Realtron, echos the sentiment that consumers — buyers and sellers in his network — are facing a variety of stressors and are reluctant to make major moves.
“In this market, there’s more uncertainty, no doubt about it,” he says. Sellers are routinely seeking reassurance about prices — “they’re asking ‘am I selling too low?’ or ‘am I being taken advantage of?’” — while buyers are concerned about the dramatic increase in mortgage rates.
Often, Forbes finds that consumers are more confused by the real estate process than anything else, particularly when it comes to some of the larger forces affecting real estate.
“The average consumer is not an expert in real estate,” he says. “I find most people are not really knowledgeable about what interest rate increases mean, for instance, or what’s going to happen with prices.”
These are precisely the types of sentiments being captured by Properly’s Real Estate Therapy tool, which the proptech company and brokerage launched in October.
Real Estate Therapy is an anonymous public forum with real estate experts on the backend. Users can plug in a real estate query, scroll down, and stay tuned (it can take up to a few days) for a jargon-free answer with links to additional resources.
However, anyone using Real Estate Therapy should bear in mind that Properly currently operates in the Greater Toronto and Metro Vancouver areas, so any questions that might be specific to another market might be better answered by a local expert.
Properly tells STOREYS that the most commonly asked questions from buyers have to do with affordability — think ‘how much do I need for a down payment?’, ‘how much are closing costs?’, ‘are fixed or variable rate mortgages better?’ — and given what Canadians are up against, it’s not hard to see why.
“For buyers in the market today, a very obvious stressor is the impact that interest rates are having on affordability. A buyer who may not have purchased yet, but planned to at the beginning of 2022, has seen their affordability change six times over the past six months,” says Rahim Jaffer, a real estate agent with Properly.
And the growing burden of affordability is reflected in Properly’s backend data. Following the most recent rate announcement, which saw the Overnight Lending rate hiked 50 basis points to 3.75%, Properly observed a spike in activity on the Real Estate Therapy forum.
“Another stressor would be the notion that, in a declining market, it is difficult to know whether the home you purchase may be worth less a month from today.”
Jaffer adds that for sellers, the points of contention “appear to be more emotional in nature. Their homes are not selling as fast as their neighbours did in early 2022, and for slightly less.”
Forbes notes that while these concerns are certainly valid, there is usually a flip side worth considering.
“For example, if you sell your home for less than the peak of the market, that’s okay, because you’re also going to buy less than the peak in the market,” he says. This is also a good environment for sellers to trade up. “Those who are moving from a smaller home to a bigger home, there actually at an advantage now because the difference between the home they’re selling and the one they’re buying is less. It’s actually a smaller gap.”
It’s these types of concerns he urges buyers and sellers to put to rest with the help of a real estate professional.
Written By Zakiya Kassam
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Zakiya is a staff writer with STOREYS. Previously, she has reported on real estate for Post City Magazines, Apartment Therapy, and Curbed. She also writes a quarterly series for a Canadian design publication.
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.
