The Ontario real estate market has been surprisingly resilient during the coronavirus pandemic and has even been an engine of recovery for the overall Ontario economy. Yet, cases of the virus are on the rise in this province and open houses are off the table once again.
As homebuyers and sellers rely on technology to dip their feet into the market, activity continues despite fears and anxieties.
According to the Ontario Real Estate Association (OREA), Ontarians continue to see home-buying as a good investment. Just over one in two Ontarians (51%) in the real estate market report they are currently actively looking to buy a home. Meanwhile, the public is also lobbying for a Land Transfer Tax holiday in order to increase inventory and address some of the supply issues that the province of Ontario is experiencing.
Although the rental market has had some tough blows since many service-sector jobs were lost, home ownership continues to be a priority for many Canadians. This disproportionate demand has created upward pressure on house prices across the province. Below we explore some of the key trends in the Ontario housing market contributing to this persistent price growth.
House Prices in the Ontario Real Estate Market
Last spring, some of Canada’s top economists predicted a sharp decline in house prices up to 18 per cent, yet many weren’t convinced this would be the case. Months later, experts still believe the strength of the market will remain on its upward course, with prices continuing to rise in Q4 2020.
Ontario Submarket Differences
While the province is seeing overall gains in the real estate market, a disparity exists between urban and suburban regions. House prices are reflecting the shift in lifestyle preferences within these markets. Notably, some of the biggest price gains have been seen in suburban cities like Oshawa, Hamilton and Mississauga. Another small city seeing significant, unprecedented growth is Windsor. In fact, at 17 per cent, Windsor had the largest average price appreciation in the past three months.
Social distancing measures have left condo dwellers cooped up, which has contributed to the shift toward larger homes in suburban and rural locations. Over the past six months, “home” has transformed into a multi-use space for living, working, learning, staying fit, relaxing and more. Not surprisingly, homes with spacious multi-level floor plans and home offices are becoming more desirable.
In addition, common areas within condo buildings, such as lobbies and elevators, are turning some people off condo living. Personal space has become more important in light of the pandemic, which can be hard to find in a dense urban setting.
Ontario markets such as Durham and Peel are seeing booming sales activity. While some may have expected the biggest price gains to take place in popular cities such as Toronto, many homebuyers are gravitating towards the outskirts. The opportunity to secure larger homes with more square footage and access to green space are just a few factors luring buyers further from urban hubs.
Supply and Demand
Ontario experienced lingering demand after the traditional spring home-buying season was pushed into the summer and autumn months. As the economy opened back up across the province, people were eager to purchase homes again.
Yet, low housing inventory has led to upward pressure on prices as competition rises. At the local level, several Ontario markets are now into weeks of inventory rather than months. Highlighting supply issues, the majority of the province was close to or just under one month of inventory.
Low Interest Rates
Across the country low interest rates are attracting homebuyers and helping to keep the market afloat. The Bank of Canada has lowered the rate to 0.25 per cent, which is historically the lowest it’s ever been. Those who were previously sidelined can now borrow at a lower cost. This could be enticing for hopeful homebuyers, who can now potentially secure more financing to purchase the home they desire.
The Ontario housing market is continuing to experience soaring prices in various submarkets. COVID-19 has influenced some home purchasing trends as people expand their home search to suburban and rural areas.
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.
