A Tale of Two Quarters for Canada's Luxury Real Estate – GlobeNewswire
- Canada’s luxury market is normalizing following its historically anomalous performance as rising mortgage rates, escalating inflation and global geo-economic headwinds progressively temper real estate consumer sentiment.
- Near-term hesitancy masks strong demand for housing and housing mobility, and consumer confidence in the long term fundamentals of top-tier real estate remains strong.
- The top-tier condominium market remains resilient in a rebalancing market, bolstered by multi-generational consumer demand, and housing affordability challenges that is channeling prospective buyers into high-density housing.
- Calgary led Canada’s major metropolitan markets in percentage sales gains across the $1 million-plus residential market as overall activity rose 40% year-over-year and $1 million-plus single family home, attached home and condominium sales posted annual gains of 36%, 85% and 89% respectively.
- Luxury Montreal sales over $4 million remained strong as sales increased 71% year-over-year in the first half of 2022, while $1 million-plus sales were on par with historic highs set in the first half of 2021 with a nominal 1% contraction.
- As the market normalized, Greater Toronto Area luxury residential sales over $4 million surpassed the historic highs achieved in the first half of 2021 with a 7% year-over-year increase in sales, while $4 million-plus transactions in the City of Toronto were up 16%. Condominium sales over $1 million in the GTA and City of Toronto saw annual gains of 53% and 26% respectively.
- Vancouver saw a sharp shift in luxury consumer sentiment in the second quarter of the year and transitioned from a fevered sellers’ market to one that is more balanced. Overall, $4 million-plus sales fell 18% year-over-year in the first half of 2022, however, condominium sales over $1 million and $4 million were up 20% and 32% year-over-year.
TORONTO, July 20, 2022 (GLOBE NEWSWIRE) — The performance of Canada’s major metropolitan real estate market remained an unprecedented economic anomaly from March 2020 through to the first quarter of 2022. Fuelled by pandemic-driven lifestyle needs, historically low interest rates and endemic shortages in housing supply, sales activity and prices across the country’s conventional and luxury market soared to historic highs across every major urban market, and across every housing type. Following this unforeseen and anomalous era, the Canadian real estate market normalized through the second quarter of 2022. In light of rising inflation, increasing mortgage rates and global geo-economic volatility, near-term consumer concerns helped normalize sales activity, despite the fact that underlying confidence in the fundamentals of the luxury and conventional housing markets remain strong – as is the demand for housing.
According to Sotheby’s International Realty Canada’s Top-Tier Real Estate: Mid-Year Report, residential sales in Canada’s largest luxury real estate market moderated through the first half of 2022. Even as the market gradually came into balance, Greater Toronto Area (Durham, Halton, Peel, Toronto and York) residential real estate sales (condominiums, attached and single family homes) over $4 million were up 7% year-over-year from previous records set in the first half of 2021. Sixteen properties sold over $10 million on MLS, one unit more than the record number of ultra-luxury properties sold above this price point in the first half of 2021. $4 million-plus condominium and attached home sales posted annual gains of 13% and 100% in the first half of 2022, surpassing previous record activity in the first six months of 2021, while single family home sales over $4 million were up a modest 6%. Overall, residential sales over $1 million were down 10% in the GTA in the first half of 2022.
Vancouver’s luxury residential real estate market experienced a sharp change in sales activity and consumer sentiment between the first and second quarter of 2022, as the city’s fevered sellers’ market calmed. In the first half of 2022, overall luxury residential sales over $4 million decreased 18% from the same period in 2021. Nine properties sold over $10 million on MLS during this time, compared to 16 sold in the first half of last year. While sales of $4 million-plus single family and attached homes fell 22% and 40% year-over-year from historic records from the first half of 2021, luxury condominium sales over $4 million were up 32% year-over-year. Residential sales over $1 million were down 18% year-over-year in the first half of 2022 as the city’s market shifted into more balanced conditions.
Even as Montreal’s residential sales activity normalized from its record-breaking highs of 2021, the city’s $4 million-plus residential real estate market saw sales volume increase 71% year-over-year in the first half of 2022, while sales over $1 million remained on par with the previous year with a nominal 1% annual decline. $1 million-plus condominium sales experienced the most significant year-over-year percentage gains of the residential housing types at 29%, while sales of single family and attached homes over $1 million fell 9% and 10% year-over-year respectively. In the spring of 2022, Liza Kaufman and Alfee Kaufman with Sotheby’s International Realty Quebec respectively listed and sold an extraordinary residential estate in a private and exclusive transaction that broke the record for the highest-priced residential sale in the province of Quebec, representing a strengthening trend for ultra-luxury residences to be sold exclusively, off-market.
In the first half of 2022, it was Calgary that led Canada’s major metropolitan markets in percentage sales gains across the $1 million-plus market. Strengthening local economic fundamentals, re-energized consumer and business confidence, and relatively affordable top-tier and luxury real estate prices attracted in-migration and investment from other Canadian markets. Overall, $1 million-plus residential sales saw a 40% year-over-year increase during this period, with five properties sold over $4 million where one had sold above this price point in the first half of 2021. Sales of single family homes, attached homes and condominium over $1 million posted annual gains of 36%, 85% and 89% respectively.
“The Canadian real estate market is winding down a prolonged era of extraordinary sales activity and price escalation that has been an economic anomaly in the history of the country. The frenetic pace of this extraordinary market was bound to rebalance,” says Don Kottick, President and CEO of Sotheby’s International Realty Canada. “In a normalizing market, it is very natural for buyers, sellers, and the market as a whole to undergo a period of hesitancy as all players watch for a new equilibrium, and this is exactly what we are seeing in the real estate market now. This hesitancy is not the same as lack of consumer demand or confidence in the housing market. In reality, there is an abundance of pent-up demand and a real need for conventional and luxury housing across every major Canadian market. Further, local and international confidence in the fundamentals of the Canadian housing market are strong. We have every expectation that as the market comes into balance, potential buyers and investors who have been discouraged by recent years’ market conditions, will re-engage to purchase a property to meet their needs.”
According to Kottick, there is a growing divide between the behaviour of the ultra-luxury and luxury real estate market, and the market for conventional homes. With greater financial resilience to adapt to rising interest rates, prospective high-end buyers are actively assessing emerging strategic investment opportunities as the market adjusts and are more prepared to engage even as the market normalizes. Conventional home buyers and households confronting still historically high housing costs, now compounded by inflation, rising mortgage lending costs and concerns of a recession, may require more time to adapt budgets to the new reality.
The City of Vancouver’s luxury residential real estate market saw a stark contrast in sales activity between the first and second quarter of 2022. In the first quarter of the year, cresting post-pandemic housing demand, soaring consumer confidence, and a growing sense of urgency to capture historically low lending rates spurred hyper-sales activity, bidding wars and record high prices across the city.
This mood shifted sharply in March. Against a global backdrop shadowed by darkening geo-political conditions, Vancouver real estate buyers and sellers confronted steadily rising mortgage rates, record real estate prices, and surging living costs with increasing unease. Despite steady consumer and industry confidence in the city’s long-term real estate market fundamentals, uncertainty over Vancouver’s swiftly evolving market conditions resulted in the temporary retreat of buyers and sellers from the frontlines of the conventional and luxury housing market through the spring. Ultra-luxury and luxury buyers, despite greater financial resilience to rising interest rates, paused to assess emerging strategic opportunities; meanwhile, conventional home buyers and investors paused to reassess rising lending costs and the impact of inflation on carrying costs.
As the market rebalanced from 2021’s historic highs, the first half of 2022 saw luxury residential real estate sales over $4 million (condominiums, attached and single family homes) fall 18% year-over-year to 203 properties sold. Ultra-luxury residential sales over $10 million, which had quadrupled year-over-year to a record 16 properties sold on MLS in the first half of 2021, saw nine properties sold in the first half of 2022, all single family homes. Overall, residential real estate sales over $1 million were down 18% year-over-year to 2,734 properties sold with 41% of these selling above list price. By the mid-year point, in a market that was swiftly coming into balance, luxury buyers were less likely to be compelled into bidding wars and subject-free offers, or to engage in offers on properties priced above immediate market conditions. Luxury home prices were seeing price adjustments in favour or buyers as the market calmed.
Following a frenzied first quarter of 2022 that pushed top-tier condominium prices and sales to record highs, Vancouver’s condominium market normalized through the second quarter of 2022. In spite of this, luxury condominium sales activity over $4 million saw annual gains of 32% in the first half of 2022, with 25 units sold. There were no ultra-luxury condominium sales over $10 million recorded on MLS during this time, as was the case in the first half of 2021. Condominium sales over $1 million were up 20% year-over-year to 1,030 properties sold between January 1– June 30, just short of the 1,110 $1 million-plus single family homes sold during this time.
City of Vancouver luxury single family home sales experienced a more dramatic adjustment through the first half of 2022, coming into balance following a year that had seen sales over $4 million surge 172% year-over-year in 2021. Between January 1– June 30, 175 single family homes sold over $4 million, down 22% from the first half of 2021. Of these, nine ultra-luxury single family homes sold over $10 million on MLS, down from 16 sold in the first half of 2021. Overall, $1 million-plus single family home sales were down 36% year-over-year, with 1,110 homes sold in the first half of 2022.
The shortage of top-tier attached home supply in the city continued to limit activity despite demand for comparatively affordable alternatives to single family homes. In the first half of 2022, three attached homes sold over $4 million, down from five homes sold during the same period in 2021. Overall, attached home sales over $1 million declined 18% year-over-year to 594 properties sold in the first half of 2022.
As the Vancouver real estate market comes into balance following its prolonged and unprecedented pandemic sprint, Sotheby’s International Realty Canada experts note that underlying local and international confidence in the city’s conventional and luxury real estate market remains high, as does unsatiated consumer demand for housing. Vancouver continues to battle housing scarcity and affordability as a city now ranked as the fifth most livable city of 173 cities studied worldwide by the Economist Intelligence Unit Liveability Ranking. As one of the most coveted destinations to live in the world, the normalization of the Vancouver housing market is expected to bring a temporary cycle of relief in a city where the upward trajectory in housing values is steady in the long term.
According to the Conference Board of Canada, Alberta is poised to lead the country in overall economic growth this year, at a forecasted growth rate of 6.6% in 2022, while Calgary’s real gross domestic product (GDP) is expected to rise 3.4%. This year, the city also cemented its global reputation as one of the world’s most desirable places to live with its 2022 ranking as the third most liveable city in the world, out of the 173 destinations studied by the Economist Intelligence Unit, sharing the position with Zurich. This positioned Calgary as the top-ranked city for Canada, surpassing Vancouver and Toronto on the top ten list of this esteemed Liveability Ranking. Buoyant business and consumer optimism and civic pride was reflected and further lifted during the city’s annual Calgary Stampede.
Energized by strong optimism in Calgary’s continued economic recovery and supported by a notable uptick in interprovincial migration and investment, particularly from Ontario, the city’s conventional and luxury real estate market was active through the first half of 2022, posting strong sales gains. The City of Calgary led Canada’s major metropolitan cities in percentage sales gains across the $1 million-plus residential market during this time, as overall activity rose 40% year-over-year to 863 residential properties (condominiums, attached and single family homes) sold over $1 million. 34% of $1 million-plus properties sold did so at above the list price. Of these properties sold, five did so over $4 million, compared to one property sold in this price range in the first half of 2021. Consistent with the year prior, no home sales were reported in the $10 million-plus price segment. According to Sotheby’s International Realty Canada experts, areas that saw some of the strongest gains in sales over $1 million included City Centre, North West, West, South and South East. Dwindling inventory placed upward pressure in premier luxury neighbourhoods, leading to price gains up until the second quarter of the year.
Despite strong sales gains across the city’s conventional and luxury market in the first half of the year, the seller’s market conditions that supported price escalation and bidding wars in the initial months of 2022 began to ease through the second quarter, particularly for homes priced below $600,000, but also in the luxury market. By mid-year, the Calgary luxury market was recalibrating to a healthy, active, but more balanced market. Sales velocity moderated, multiple offer scenarios became less frequent, and prices stabilized in many neighbourhoods.
Overall, single family home sales comprised 90% of Calgary’s $1 million-plus real estate transactions in the first half of 2022. Strong gains were posted in the luxury $4 million-plus market, with five single family homes sold in the first half of 2022 in comparison to no homes sold in this price range during the same period last year. Sales of single family homes over $1 million increased 36% year-over-year, with 774 homes sold from January 1– June 30.
Calgary’s luxury attached home market flourished in the first half of the year, with sales over $1 million posting significant year-over-year gains of 85% to 72 homes sold and inventory remaining relatively tight in relation to demand. Of these homes sold, all did so in the $1–2 million price range. Consistent with years prior, there were no attached home sales reported over $2 million in the first half of 2022. Demand for top-tier attached homes was largely led by local buyers upsizing from condominiums, many motivated by the strengthening economy and real estate market to trade up while interest rates were still competitive.
Calgary’s luxury condominium market also posted strong gains in the first half of the year and saw the healthiest sales numbers since 2014. Conventional and luxury condo demand was bolstered by the revitalization of the city’s downtown core, diversification of the economy particularly in the technology sector, the addition of new corporate headquarters, and the attraction of professional talent from other parts of Canada. Overall, condominium sales over $1 million increased by 89% year-over-year in the first half of 2022, with 17 properties sold. While 13 of these sales were between $1–2 million, four were between $2 million–$4 million, where none had transacted in this price range in the same period in 2021. Consistent with the year prior, there were no sales over $4 million during this time. Calgary’s luxury condominium market continues to be well-supplied and balanced market conditions are anticipated for this small but strengthening housing segment in the coming months.
Despite headwinds posed by rising interest rates, as well as geo-political instability abroad, the outlook for Calgary’s local economy, and luxury real estate market is bright. Employment is forecast to grow by 5.1% in 2022, according to the Conference Board of Canada, furthermore, the province of Alberta is expected to benefit from elevated oil prices given the continued invasion of Ukraine by Russia. With a growing profile as one of the world’s most livable cities, Calgary’s luxury real estate market is well-positioned as “one to watch” on the global stage.
Greater Toronto Area
The performance of the Greater Toronto Area’s real estate market was an unprecedented economic anomaly from March 2020 to early 2022, as pandemic lifestyle changes propelled demand for conventional and luxury housing through one of the most significant surges in activity and prices in the region’s history. Following this extraordinary era, the Greater Toronto Area (Durham, Halton, Peel, Toronto and York) real estate market normalized through the first half of 2022. While consumer confidence in the long-term fundamentals of the housing market remains resilient, near-term concerns posed by inflation, volatile financial markets, rising interest rates and global instability have tempered shorter-term consumer certainty and activity, particularly in the conventional market for properties under $4 million. In fact, according to Sotheby’s International Realty Canada experts, the gap is widening between consumer sentiment in the market for homes below $4 million, where rising living and mortgage-carrying costs is evoking some near-term uncertainty, and the $4-milllion-plus market, where luxury consumers remain watchful, but are more ready and better able to pursue emerging opportunities for strategic investment.
In the first half of 2022, residential real estate sales over $4 million (condominiums, attached and single family homes) increased 7% year-over-year to 437 properties sold in the GTA, as bidding wars and price escalation tapered off, particularly in regions outside the City of Toronto. Ultra-luxury sales over $10 million on Multiple Listings Service (MLS) increased to 16 properties sold compared to 15 sold during this period in 2021. Overall, top-tier real estate sales over $1 million were down 10% year-over-year to 26,396 properties sold in the GTA between January 1– June 30, with 73% of these $1 million-plus sales taking place above list price.
With the desire for urban living rebounding post-pandemic, the City of Toronto’s $4 million-plus luxury transactions increased a more significant 16% year-over-year to 268 properties sold in the first half of 2022. Seven properties sold over $10 million on MLS compared to eight units sold in this ultra-luxury price range during the same period of 2021. Sales over $1 million in the City of Toronto saw a modest 10% year-over-year decrease to 8,067 properties sold in the first half of 2022, with 71% of these selling above list price. Given evolving market trends and consumer uncertainty in the Greater Toronto Area’s housing outlook in the short term, Sotheby’s International Realty Canada experts have noted a shift in regional interest towards City of Toronto real estate, where some prospective buyers and investors perceive greater market resilience.
The GTA luxury condominium market saw robust gains as the demand for urban living rebounded post-pandemic. In the first half of 2022, annual percentage gains in GTA luxury condominium sales on the residential resale market surpassed that of the region’s luxury single family home market, as condominium sales over $4 million increased 13% year-over-year to 17 units sold. There were no condominiums sold over $10 million during this time, compared to one unit sold in the first half of 2021. Overall condominium sales over $1 million were up 53% year-over-year to 2,465 units sold in the first half of 2022. Within the City of Toronto, condominium sales over $4 million increased a significant 31% year-over-year to 17 properties sold between January 1– June 30. As was the case in the first half of last year, no sales were yet recorded over $10 million. Overall, $1 million-plus condominium sales were up 26% year-over-year to 1,658 units sold in the City of Toronto. Sotheby’s International Realty Canada experts noted that while consumer demand for luxury condominiums on the resale market remains healthy, pre-sale condominium inventory is captivating an increasing share of consumer attention, and the luxury market overall. As cosmopolitan, ultra-high-net-worth buyers continue to elevate their standards for high-end luxury condominiums, presale developments that offer generous floorplates, bespoke customization of residences, as well as international-standard ultra-luxury amenity and services such as 24/7 valet and concierge, personal trainers, massage therapists, private wine collections and sommeliers, and in-suite cleaning and grocery delivery, have become increasingly appealing.
Sales activity across the GTA’s top-tier attached home market also remained healthy in the first half of 2022, as sales over $1 million increased 35% year-over-year to 6,225 properties sold. $4 million-plus attached home sales doubled to ten properties sold during this period, all in the City of Toronto, compared to the five units sold in the first half 2021. In the City of Toronto, $1 million-plus attached home sales were down a 15% overall to 1,809 homes sold between January 1– June 30.
Following an anomalous 2021 that saw GTA luxury single family home sales and prices surge to untenable highs, activity calmed over the course of the spring market, particularly in regions outside the City of Toronto. In the first half of 2022, GTA single family home sales over $4 million increased 6% year-over-year to 410 homes sold. Of these, 15 homes sold over $10 million on MLS, compared to 14 sold in this ultra-luxury prince range in the first half of 2021. Overall, $1 million-plus single family home sales saw a 23% decline to 17,706 units sold in the GTA between January 1–June 30. In the City of Toronto, luxury single family home sales over $4 million saw a more robust 13% year-over-year gain to 241 homes sold. Of these, seven ultra-luxury homes sold over $10 million on MLS compared to eight sold in the first half of 2021. $1 million-plus single family home sales in the City of Toronto were down 17% overall to 4,600 homes sold between January 1– June 30.
As the luxury market normalizes, Sotheby’s International Realty Canada experts note that underlying local and international confidence in the enduring value of top-tier GTA real estate remains solid, and that local need for housing and housing mobility remains strong. Furthermore, despite risks, there is optimism in Ontario’s economy, as the Conference Board of Canada has forecast GDP gains of 4% for the province in 2022, and 3.2% 2023. While the current phase of consumer hesitancy is a natural product of a market that is rebalancing and entering its cyclical summer slowdown, the expectation is that activity will be restored once the market, and prices, have undergone their natural evolution to a more balanced market.
Easing COVID-19 public health restrictions, the revival of the province’s economy and solid job gains supported underlying confidence in Montreal’s economy, and its luxury market even as sales activity calmed from historic highs. According to the Conference Board of Canada, Montreal regained all the jobs it lost in 2020 by early 2022, and its GDP expected to increase 3.9% in 2022 with additional employment growth forecast.
Despite confidence in the city’s long term housing market fundamentals, the City of Montreal’s heated luxury real estate market normalized through the first half of 2022, albeit to healthy levels of activity. Although the luxury market is more resilient in face of rising mortgage rates, fatigue from previous years’ heated sellers’ market, as well as evolving real estate and financial market conditions, prompted some buyers, sellers and investors to re-evaluate their strategic approach.
Between January 1 – June 30, Montreal’s top-tier market saw 970 residential sales million (condominiums, attached and single family homes) over $1 million, nearly on par with the historic high sales activity seen in the first half of 2021 with a nominal 1% year-over-year shortfall. 39% of $1 million-plus residential sales took place above the list price. Luxury residential sales (condominiums, attached and single-family homes) above $4 million, increased 71% year-over-year, with 24 total homes sold in the first half of 2022. There were no ultra-luxury $10 million–plus property sales recorded on MLS in the first half of the year, compared to one sale in this price range during this time in 2021. Notably however, Liza Kaufman and Alfee Kaufman with Sotheby’s International Realty Quebec respectively listed and sold an extraordinary residential estate in a private and exclusive transaction that broke the record for the highest-priced residential sale in the province of Quebec’s history, representing a trend in the ultra-luxury market for properties to be sold exclusively, off-market.
Boosted by robust population growth in the city’s downtown core, and the proliferation of new luxury condominium development in recent years, top-tier condominium sales saw the greatest percentage gains of the housing types, as sales over $1 million increased by 29% year-over-year to 269 properties sold in the first half of 2022. Of these sales, eight took place in the $4 million-plus price range, compared to only one home sold in this price range the year prior. There were no condominium sales in the ultra-luxury $10 million-plus price range on MLS during this time, compared to one sale in the first half of 2021.
Montreal’s top-tier attached home market normalized as sales over $1 million decreased 10% year-over-year to 307 homes sold between January 1– June 30. Similarly, luxury $4 million-plus attached home sales saw a marginal uptick, with one home sold during this time, while none had sold during the same period in 2021. Consistent with the year prior, no sales took place in the ultra-luxury $10 million-plus attached home segment on MLS during this time.
Activity in Montreal’s luxury single family home market normalized in the first half of the year, as sales over $1 million contracted 9% year-over-year to 394 homes sold. Sales of luxury $4 million-plus single family homes posted stronger annual gains of 15%, with 15 homes sold in the first half of 2022. Consistent with the year prior, there were no single family home sales reported in the $10 million–plus price range on MLS, however, a new record was set for the province by Sotheby’s International Realty Quebec in a private and exclusive transaction.
According to leading Sotheby’s International Realty Canada experts, consumer confidence in the Montreal luxury real estate market is solid, even in light of balancing market conditions. Despite an anticipated and cyclical summer slowdown, the city’s top-tier market is expected to resume healthy, normalized activity this fall.
About Sotheby’s International Realty Canada
Combining the world’s most prestigious real estate brand with local market knowledge and specialized marketing expertise, Sotheby’s International Realty Canada is the leading real estate sales and marketing company for the country’s most exceptional properties. With offices in over 30 residential and resort markets nationwide, our professional associates provide the highest caliber of real estate service, unrivalled local and international marketing solutions and a global affiliate sales network of approximately 1,000 offices in 74+ countries and territories to manage the real estate portfolios of discerning clients from around the world. For further information, visit www.sothebysrealty.ca.
The information contained in this report references market data from MLS boards across Canada. Sotheby’s International Realty Canada cautions that MLS market data can be useful in establishing trends over time but does not indicate actual prices in widely divergent neighborhoods or account for price differentials within local markets. This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information and analysis presented in this report, no responsibility or liability whatsoever can be accepted by Sotheby’s International Realty Canada or Sotheby’s International Realty Affiliates for any loss or damage resulting from any use of, reliance on, or reference to the contents of this document.
For more information on Sotheby’s International Realty Canada and the 2022 Top-Tier Mid-Year Real Estate Report contact:
Talk Shop Media
Real estate giant makes prediction over housing affordability squeeze
As U.S. home prices show signs of cooling and the Fed continues its aggressive rate hike campaign, one of America’s largest real estate groups is signaling market affordability will continue to put pressure on homebuyers this year.
“Affordability has certainly been a hot topic,” RE/MAX President and CEO Nick Bailey said in an exclusive interview on “The Claman Countdown” Tuesday. “If people are going to have a chance at better affordability, we need more product out there, and we’re not going to see that any time soon with new construction.”
Even though U.S. home prices fell for the seventh month in a row by 0.6% from December to January, mortgage rates have dampened consumer demand. The Federal Reserve has remained focused on its inflation reduction goals, lifting the benchmark federal funds rate nine consecutive times.
Interest and mortgage rates are likely to continue “bouncing up and down” as the Fed tries to tame decades-high inflation, Bailey noted.
“We always have to keep in mind that mortgage rates are based on the 10-year Treasury, and that can fluctuate at a different rate than the short term. So what it means to buyers is, rates are going to bounce around, we believe. They have been over the last couple of quarters and we believe they will continue as the year progresses,” the CEO explained.
Bailey detailed other affordability solutions for homebuyers, such as considering a 15-year fixed mortgage or lower down payment and loan opportunities.
“The average homeowner in the U.S. lives in their home eight years and the median is 12.3,” he pointed out. “So in many cases, people are choosing this long-term, three-decade mortgage, but they may not need it. They can have an option at a lower rate.”
“Ninety percent of homeowners out there have an interest rate less than 5%. And of that, 50% of them are under 3.5% percent,” he continued to note. “And so until a life event like getting married, having another child, really has a forcing function on a different property, it’s going to be first-time homebuyers that stay at the forefront of these lower interest rate, more affordable-type products.”
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While market factors play an important role in housing affordability, Bailey again put the onus on new home construction. According to the Census Bureau, housing starts in February 2023 were down 18.4% year-over-year.
National Association of Home Builders CEO Jerry Howard affirmed this trend, telling FOX Business’ Neil Cavuto on Thursday that construction companies aren’t seeing the “uptick in demand” that the industry was expecting this spring.
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“What we’re really seeing right now, I think, is a very cautious housing market because no one knows what’s going on in the banking sector,” Howard said. “And until that gets clarified, I think you’re going to see builders being a little bit leery about going forward.”
“New construction can’t come out of the ground fast enough. We have less than a million homes on the market, and so it really comes down to supply,” the RE/MAX CEO said. “And because of the move up, buyers being comfortable with their rates, inventory is going to continue to be tight and affordability is going to continue to be an issue this year.”
2 real estate agents fired over their ‘you could do worse’ ad campaign double down on their brand
A pair of real estate agents in London, Ont., who were fired from a realty firm for taking their advertising campaign, “You could do worse,” to billboards and social media have doubled down on their mantra.
Tristan Squire-Smith, 42, and Johnny Hewerdine, 43, were fired in December from a real estate business they don’t want to publicly name, but were quickly snapped up by the Realty Firm. CBC News has seen a copy of their termination letter, which cites “professional differences.”
We might not be for everybody, but the people who like us, really love us.– Tristan Squire-Smith, real estate agent
“They fired us for excessively using the phrase, ‘You could do worse,'” said Hewerdine, a Realty Firm broker who previously worked as an electrician. ‘We just stuck with it and actually doubled down on it, and now it’s just completely taken off.”
The mantra is polarizing, Hewerdine admitted.
But the two say they’re working to humanize the industry.
“It’s a great sort of self-deprecating phrase that means you’re actually not doing too bad,” said Squire-Smith, a registered nurse who retrained as a real estate agent during the pandemic and still works part time in long-term care.
“We might not be for everybody, but the people who like us really love us,” he said.
Randy Pawlowski, past president of the London St. Thomas Association of Realtors, wouldn’t comment directly on the billboard or the slogan, but told CBC that he stands for professionalism in the industry.
‘Zero awards won’
The latest billboard by Squire-Smith and Hewerdine is up on Wharncliffe Road, a busy thoroughfare in London, and features photographs of them as teenagers. Squire-Smith has long curly blond hair and Hewerdine is wearing his graduation robes from his Grade 8 portrait. Another one of their billboards proudly proclaims, “Zero awards won! (No fine print required).”
The two men met two decades ago and were on the varsity swim team together at Western University.
“These photos are taken at our most awkward moment of our lives,” said Hewerdine. “I’m a 13-year-old Grade 8 graduate in this photo and I believe Tristan is 15 years old.”
Both say they’re trying to humanize the industry.
“We’re just really focusing on the consumer, opposed to us standing up on a billboard with arms crossed, trying to make us look perfect,” said Hewerdine.
“They’re total professionals,” said Pete Greenwood, who hired Hewerdine to sell his condo earlier this month. It was listed for $389,900 and sold for $400,000 in five days.
“He’s just a good guy to work with, and so’s Tristan,” said Greenwood. “They did a 30-second video of my house and turns out we’re all big Seinfeld fans, so we actually did a Seinfeld-themed video of my house.
“I never laughed so hard in my life,” he said.
London Morning7:11What’s behind the billboard with the slogan ‘you could do worse’?
For resort town workers, housing scarcity is worsening
For more than seven decades, housing availability in the mountain town of Jasper, Alta., has been a challenge.
Although the total number of dwellings is slowly growing, in the past 10 years, the rental units in the primary market – units built specifically as rental – has declined as some units have transitioned into condo ownership. The shortfall in the number of dwellings needed to meet demand in Jasper has gone from 235 units in 2002 to roughly 700 in 2022.
“In Jasper, housing has always been in short supply,” says the town’s mayor, Richard Ireland. “Over the years, efforts have been made to correct that, but the problem seems to just continue regardless of all the steps that have been taken.”
These steps have consisted in asking Parks Canada to release land for the construction of both market and non-market, or subsidized and co-op housing.
Located on a national park, Jasper’s town boundary is constrained by Parks Canada’s regulations to limit the townsite’s physical expansion and protect the environment.
To ensure the town’s population remains in balance with the 118,222 square metres of developable land allocated to Jasper, Parks Canada requires that only those who work or run a business are eligible to live there – and releases parcels as needed.
“We’ve been able to get housing that’s more affordable and stays that way,” Mr. Ireland says. “But even with all the units that have been built, the pressure continues.”
In the face of skyrocketing visitor numbers, the need for more staff in Jasper is growing, and the availability of well-maintained, affordable housing for workers in Canada’s second most popular national park seems to be reaching a breaking point.
Since 2014, vacancy rates in Jasper’s primary rental market have remained close to zero, driving rents up by 30 per cent over the same period.
Christine Reyes (whose name has been changed to protect her identity) and her boyfriend share a one-bedroom apartment in Cavell Apartments, the town’s first purpose-built rental complex developed to provide staff accommodation in the 1970s.
Originally from the Philippines, Ms. Reyes moved to Cavell Apartments in the fall of 2021. Since then, the couple’s rent has gone up by 20 per cent – from $1,075 to $1,270 – and further increases are expected in 2023.
“What we’re paying now is just enough for us to make [ends meet],” Ms. Reyes says, noting she pays an additional $185 a month in parking, storage and pet fees. “I have family back home that I’m sending money to. I don’t think I could send money if rent [goes] up.”
In February, some tenants of Cavell Apartments received a letter from property management, informing them rents would be rising by about 40 per cent this year. The notice cites inflation, interest rates, as well as supply and demand as the drivers of such an increase.
While the proposed hike for existing tenants has been reconsidered, a bachelor suite in the complex was listed in March for a monthly rent of $1,604.50 – a rate akin to downtown Vancouver’s average rent for the same type of unit.
The property management company did not respond to requests for comment.
In a town where a significant share of renters are employed in the tourism industry, and whose hourly wage averages $18.36 (roughly $1.80 less than in B.C.), spending more than $900 a month in rent isn’t a viable option.
For local businesses, this challenge means they have to step in and absorb some of the cost of housing on behalf of their staff.
To ensure she can hire full-time staff year-round, Lynn Wannop, owner of Coco’s Café, has rented a two-bedroom unit in Cavell Apartments for nearly a decade. “That apartment makes it so that I can hold on to staff in the winter, when it’s really slow,” she explains.
Currently, she pays $1,225 a month in rent for the unit, and charges her staff $500 to live there. But in the face of the proposed increases, she wouldn’t have a choice but to continue to pay whatever rate the landlords ask. “As a business owner I have to suck it up and pay,” Ms. Wannop says. “I can’t operate my business without it.”
But spending more in staff housing costs means Ms. Wannop can’t raise wages either.
“I want my staff to be able to afford to live,” she says. “But I can’t afford to pay them any more.”
Moreover, Jasper’s housing shortfall doesn’t only drive rents up – it also creates challenges for tenants who end up living in sub-par accommodations for a lack of alternatives within their budget.
Since November, Max Martin and four friends have shared a five-bedroom, two-bathroom bungalow in the middle of town. While the group pay what they consider a reasonable amount in rent, the condition of the home is precarious.
“We have mould that [the landlords] have refused to come help fix,” Mr. Martin says, adding that “we went without heating for almost seven weeks.”
According to recent inspection reports from Alberta Health Services and the Jasper Fire Department, the dwelling presents critical safety issues, including windows that don’t open, exterior doors that can’t be locked for a lack of keys, faulty heating, and no smoke alarms.
In Mr. Martin’s view, Jasper’s tight rental market allows landlords to take advantage of young workers who, like him, come from overseas attracted by the natural beauty of the Rocky Mountains.
“People should be held accountable for their actions and the choices they make,” Mr. Martin says. “Especially when it comes to other people’s lives. As a landlord you’re in a privileged position where you can have a house that provides you passive income to let live and do what you want.”
But more supply is on the way.
Last December, a new purpose-built rental complex finally received a development permit, six years after the project was first announced. However, a building permit application is yet to be received by Parks Canada (the developer has until Dec. 13 to apply for this permit).
Featuring 144,822 square feet of apartments spread between two buildings, this development is expected to make a dent on Jasper’s housing gap when completed – but it’s unlikely that new market units can support the affordability levels required by tourism and hospitality staff.
Because market housing is subject to speculation and financialization, providing rental housing at rates commensurate to the wages of workers isn’t always possible, as returns for shareholders take priority.
“This model prays on power imbalances and problems that were already in place,” says Laura Murphy, research coordinator at the University of Alberta’s Affordable Housing Solutions Lab. “Especially in Alberta, where tenants are really dependent on landlords … because we don’t have lot of protections for tenants.”
In Alberta there are no limits to how much landlords can hike rents, as long as these increase only once a year.
To address this, Ms. Murphy suggests governments invest in non-market housing, as this “has proven to work time and time and again.”
Currently, there are about 155 non-market units in Jasper, but only 21 of them are rentals – and the landlord’s agreement with the municipality to provide housing at below market rates in the latter ends in 2029.
Like anywhere else in Canada, to boost the supply of suitable housing that remains affordable in perpetuity, Jasper requires support from senior levels of government.
“[In] 2023, council has budgeted a $5-million debenture to assist housing, but we will need some other partners to do that,” Mr. Ireland says. “We now need matching funds from either the province or the feds. We’ve gone to the province and made that application, so we will see what comes of that.”
On March 22, the municipality announced it would receive $6.5-million from the provincial and federal governments.
Combined with private investment, this new funding is expected to create 40 affordable units.
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