Ah, the Canadian housing crash. Always just around the corner, yet never seeming to materialize. People write and talk about the derailing of the real estate gravy train so frequently that a person could be forgiven for thinking some portion of the population is secretly rooting for it to happen.
So, what then to make of Lowestrates.ca’s report: Will the Canadian Housing Market Crash in 2021?
To the credit of authors Lisa Coxon and Zandile Chiwanza, the report tries to present the possibility of a housing crash from opposing angles – one arguing the unlikelihood of a crash and the other saying a crash has “already started”.
Why a crash isn’t likely
For the pro-crash perspective, Coxon and Chiwanza lean heavily on the fact that both corporations and households are more indebted now than they were in 1990, the last time the Canadian housing bubble was said to have popped due to a recession. While debt levels in Canada are far higher today than they were 30 years ago, interest rates are also far lower. According to Statistics Canada, the conventional rate on a five-year mortgage was 13.35% in 1990, which would give borrowers far less breathing room in the case of financial disruption. And lest we forget, the recession triggered by COVID-19, deemed “the deepest but shortest recession in history”, is technically already over.
Even taking into account the inflated prices homeowners are paying now compared to 1990, few experts see a wave of delinquencies, defaults, or foreclosures hitting the Canadian market in 2021.
“Generally speaking, we’ve seen a flat pattern coming out of [mortgage] deferrals in terms of consumer delinquency overall,” Matt Fabian of TransUnion told MBN. “Certainly, with mortgages, we’re actually seeing a little bit of a drop in delinquency rates.”
But Coxon and Chiwanza argue that the end of programs like mortgage deferrals and government wage subsidies leave the market at risk. They turn to Hilliard MacBeth’s, author of When the Bubble Bursts: Surviving the Canadian Real Estate Crash, comments on the condo market for confirmation that trouble is already brewing.
“‘It’s showing up in the condo market first,” it is stated. “There’s a huge surplus in the condo market, both on condos for rent and condos for sale. And then related to that, there’s a huge number of new purpose-built rentals either on the market or are about to hit the market.’”
Here is where theories of a market crash typically start breaking down, in this author’s opinion. They assume, possibly because Canada’s population is as modest as it is, that the Canadian real estate market is a tiny, self-contained ecosystem where a single pollutant can contaminate the entire thing. That’s not the case. There is no “Canadian real estate market.”
The condo market and the detached market are entirely separate entities. The price of one does not directly impact the price of the other. Sure, if home prices grow too quickly buyers will be forced to start purchasing condos, a trend that will drive condo prices up; but the phenomenon doesn’t work the other way. If condo prices fall, that has no impact on the prices of other housing types. Has anyone reading this article seen evidence that Canada’s falling condo prices slowed the growth of townhouse, detached, or semi-detached prices in 2020?
It’s also important to keep in mind that local real estate markets in Canada are insulated by geography. Falling home prices in Alberta, for instance, will not affect prices in any other province. Why would they?
A nationwide housing crash would require a financial calamity – think 2008 in the US – that threatens the livelihoods (and mortgages) of many of the country’s homeowners, forcing tens of thousands of them spread across every major Canadian real estate market to sell their homes simultaneously, thereby dragging home values down in each one. Those values would then have to be brought low enough that homeowners holding on to their properties would see the entirety of their equity wiped out and be forced to sell into a tanking market. That’s not likely to happen in communities where home values have risen by 5-10% annually over the last several years, and there is no shortage of those.
To be fair, MacBeth isn’t the only person expecting prices to drop. The Real Estate Investment Network recently released a report encouraging investors to prepare for a rise in delinquencies and foreclosures in the third quarter of 2021.
“Housing prices are the last to be affected,” by factors such as decreased economic growth, higher unemployment, and falling immigration numbers, REIN’s Jennifer Hunt said. “They’re lagging indicators. So yes, you’re seeing in many cities in Canada these frothy markets. But that’s exactly the behaviour we look for in a market that is entering a slump.”
A more probable outcome
Even LowestRates.ca CEO Justin Thouin isn’t expecting anything resembling a crash to hit Canadian real estate in 2021.
“Personally, I don’t think we’re going to see a crash,” Thouin told MBN, but added that the amount of debt being carried by Canadians does pose a threat to their ability to pay their mortgages.
“If I were to be most concerned, it would be in the prairies, specifically in Alberta, where the economy is far worse off than the rest of Canada,” he said.
In Thouin’s opinion, low interest rates will continue protecting homeowners from delinquency, while the rebound in immigration and employment expected by many in 2021 should help the economy recover from what has already been almost a full year of COVID-19-related nausea.
This more optimistic view is the predominant theme in LowestRates.ca’s report, which includes Moody’s Analytics economist Abhilasha Singh’s view that home prices in Canada could fall this year, but only by 5% or so.
“‘We expect home prices to fall,’ said Singh. ‘But the recovery is going to be very quick, especially after looking at the results of the vaccines.’”
She told LowestRates that a crash isn’t on the cards.
“We are expecting a modest correction,” she said. “But not a crash.”
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.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
