The pace of home sales in Ontario in 2023 hit lows not seen the turn of the century, and with little evidence that mortgage rates will drop significantly any time soon, forecasts are predicting the sluggishness to continue into early 2024.
While prices have dropped somewhat from their pandemic-driven highs, the combination of high-interest rates and buyers waiting for prices to tumble further has created a slow sales market throughout much of the province, according to a range of industry information.
The number of home sales in the Greater Toronto Area in 2023 is on track to be lower than in any year since 2001, when the region’s population was roughly 25 per cent smaller than it is today.
The latest figures available show the number of homes sold across Ontario last year to be down nearly 13 per cent from the previous year, described by the Canadian Real Estate Association as a substantial decline.
CBC News interviewed three experts on the real estate market to find out what they expect to happen in 2024.
While home prices in Ontario have dropped somewhat from their pandemic-driven highs, a combination of high interest rates and buyers waiting for prices to tumble further has created a slow sales market throughout much of the province. (Michael Wilson/CBC)
Expect ‘continued stagnation’ in sales
There’s general consensus among those experts that sales volumes will remain sluggish in the first part of 2024, until or unless mortgage rates come down significantly, or sellers start accepting lower bids.
“The general trend we’re probably going to see is one of continued stagnation,” said Ron Butler, a broker with Butler Mortgage.
He doubts that mortgage rates will drop quickly enough or low enough to jolt reluctant buyers off the sidelines in the early part of 2024.
John Pasalis, president of Realosophy Realty Inc., adds that sellers have yet to bring down their asking prices deeply enough to offset the increased borrowing costs that buyers face.
“It’s the combination of these high prices and high interest rates that is keeping a lot of buyers out of the market right now,” Pasalis said.
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TD economist Rishi Sondhi predicts sales volumes to remain relatively low in the coming year, although better than what the numbers were in 2023.
“We think that the bottom has probably been reached,” Sondhi said. “Sales levels were just so darn low in Ontario [in 2023]. It’s hard to go lower from there.”
Real estate firm Royal LePage is forecasting a six per cent rise in the average home price in the Greater Toronto Area in 2024, while real estate firm ReMax is forecasting an average three per cent drop. (Patrick Morrell/CBC)
Where will prices head?
There’s not a lot of consensus on what will happen with prices, in part because of supply and demand factors that are expected to have conflicting effects.
For instance, while decade-high mortgage rates are suppressing demand, rapid population growth is pushing it upward and new construction isn’t keeping pace.
Real estate firm Royal LePage is forecasting a six per cent rise in the average home price in the Greater Toronto Area by the end of 2024, and a 4.5 per cent rise in Ottawa.
By contrast, real estate firm ReMax is forecasting an average three per cent drop in prices in the GTA for 2024 and a two per cent increase in Ottawa.
Butler says “buyer sentiment” will have a significant impact on prices in 2024.
“If you feel that these prices are really too high and that they will come down, no matter how motivated you are to buy a home, you will have a tendency to wait and see,” he said. “It’ll turn around eventually, but right now I think that buyer sentiment is entrenched.”
TD economists are predicting the number of new home construction starts will fall in 2024, following reduced sales in the pre-construction market. (CBC)
New home construction forecast to slow
Premier Doug Ford’s government is now entering the third year of its 10-year timeframe for the promised construction of 1.5 million new homes in Ontario, and has yet to achieve the annual pace needed to achieve that target.
Final figures for 2023 aren’t in yet but, as of November, the pace of new construction was slower than the 96,000 housing starts in the previous year.
Forecasts are now predicting the pace will slow even further this year. That’s because developers are struggling to finance projects because of high interest rates, inflation has pushed up the price of building materials and a labour crunch continues to hamper the construction industry.
“We’re expecting housing starts to fall in 2024,” said Sondhi. The evidence is based on a drop in sales in the pre-construction market over the past two years after mortgage rates began to climb.
Sondhi is not forecasting a collapse in new home construction, partly because of expected growth in purpose-built rental housing, fuelled by the provincial and federal governments exempting those projects from HST.
Meanwhile, figures show that around 30 of Ontario’s largest municipalities will fail to qualify for a share of the government’s $1.2 billion Building Faster Fund in 2024 because their housing start numbers in 2023 fell short of the mark.
Sales of new condos in the GTA fell 47 per cent in a year, according to a November 2023 report from research firm Urbanation. (John Rieti/CBC)
Uncertainty for the condo sector
Condominiums are the segment of Ontario’s housing market that looks to be in the roughest shape in 2024, in part because a large proportion are owned by investors.
“As their mortgages come up for renewal, it’s going to be harder to afford those condos,” said Pasalis.
“Over the next 12 to 18 months, we’ll probably see more investors unloading properties just because they can’t afford to have so much debt at today’s interest rates,” he said.
Butler adds he expects to see many investors trying to sell off small condos in urban centres because their plans to turn them into short-term rentals fell through.
As of the end of November, the Toronto Region Real Estate Board had reported 23,128 condo sales in 2023 — a 44 per cent decline from the same period in 2021.
Sales of new condos in the GTA appear to have fallen even more sharply, dropping by 47 per cent in a year, according to a November report from research firm Urbanation.
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
