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A turning point? More sellers enter Canada's housing market in February – RBC Thought Leadership –

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One month doesn’t make a trend but if February is any indication, more sellers may be (finally) making their way into Canada’s housing market. Early results from local real estate boards showed notable month-to-month increases in new listings across major markets. This was especially the case in Calgary and Edmonton where a wave of properties put up for sale set the stage for the strongest number of transactions ever recorded in a February. Elsewhere, the impact on activity was generally positive albeit more muted. Buyers still face a dearth of supply, maintaining intense upward pressure on prices. Local real estate boards reported further price acceleration, led by the Fraser Valley, Toronto and Vancouver where property values made big leaps (again) from already sky-high levels in January.

Sellers will play a central role in shaping up this year’s spring season. Should a critical mass of current homeowners see the coming months as an opportune window to list their property—now that interest rates are on the rise and ahead of potential policy actions targeting speculators—it would ease some of the supply restraints, both boosting near-term activity and reducing some of the pressure of prices. If instead the number of sellers doesn’t pick up materially, recent price trends are likely to persist (until interest rates increase sufficiently to curb demand). We expect the next few months to tell much about the future direction of the market and prices.

Toronto area—Prices continue to spike

Buyers dug still deeper into their purchasing budget to come up on top of bidding wars last month. Toronto’s composite MLS Home Price Index jumped a mind-blowing 6.4% from January. That’s an increase of more than $80,000 in a single month! What’s more, it came on the heels of a series of material gains over the past several months (including a $52,000 jump in January) that drove the index up $354,000 (or 35.9%) since February 2021. At $1.34 million, Toronto’s benchmark price is the priciest in Canada—having surpassed the Vancouver benchmark in January. Despite crushingly poor affordability, demand remains exceptionally brisk at this stage. Buyers pounced on a larger offering of homes for sale in February, causing resales to climb 5.9% from January (on a seasonally-adjusted basis). This made it the second-busiest February on record (behind only February 2021). We expect higher interest rates will cool down demand in the area over time. The Toronto area’s sky-high price points and strong presence of investors make the market especially sensitive to rising interest rates.

Montreal area—A slowing trend emerges

The last few months have seen activity moderate in the Montreal area. This partly reflected dwindling supply though demand may have softened as well in the face of deteriorating affordability. A small increase in new listings between January and February was met by a slight monthly decline in resales (on a seasonally-adjusted basis), suggesting some potential buyer fatigue. Demand-supply conditions have eased slightly as a result though remain extremely tight at this time. Significant upward pressure continues to drive up prices for both single-detached homes and condos. Some of the stronger gains are recorded in the suburbs where relatively more affordable properties are the subject of aggressive bidding on the part of buyers. Prices in Laval and the North Shore, in particular, are up significantly. With suburban prices still running at 16% to 30% discounts to Island prices, we expect these dynamics to continue in the near term.

Vancouver area—A step toward market balance

Activity slowed despite more homes being offered for sale last month. Our estimated 6% drop in resales and 12% rise in new listings from January (on a seasonally-adjusted basis) could represent a welcome first step toward more balanced demand-supply conditions in the Vancouver area. We’re still a long way from prices stabilizing though. Still-solid demand and historically low inventories for now keep the heat on property values and will likely continue to do so in the near term. Vancouver’s composite MLS HPI last month rose an outsized 4.6% (or more than $58,000) from January to $1.31 million. The gain over the past year is now an astounding $226,000, or 20.8%. Buyers clearly face an extremely challenging situation. Higher interest rates will make things even more difficult for many, further crushing affordability in the period ahead. We expect this will gradually suppress demand later this year and contribute to the market rebalancing.

Calgary—An upswing for the ages

Calgary (and Edmonton) really stood out in February among Canada’s major markets. Resales continued to boom, soaring another estimated 19% m/m on the heels of gains of 10%, 9% and 15% in the previous three months, respectively. The 3,300 transactions recorded last month were the strongest tally ever for a February in Calgary. A surge in new listings (up an estimated 69% m/m) made this possible. It provided many buyers the options they had been seeking for some time amid shrinking inventories. These new buying opportunities came at a steeper price though. Calgary’s composite MLS HPI soared 5.9% ($27,000) between January and February, pushing up the y/y rate of appreciation to a 15-year high of 16.1%. The wave of homes listed for sale helped temper the (severe) supply shortage but did not eliminate it. Calgary’s market is still very tight and upward price pressure remains intense. We expect further material appreciation in the near term, especially as a booming energy sector stokes buyer confidence.

Robert Hogue is a member of the Macroeconomic and Regional Analysis Group, with RBC Economics. He is responsible for providing analysis and forecasts for the Canadian housing market and for the provincial economies. His publications include Housing Trends and Affordability, Provincial Outlook and provincial budget commentaries.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

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Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

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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.

The Canadian Press. All rights reserved.

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Homelessness: Tiny home village to open next week in Halifax suburb

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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.

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Here are some facts about British Columbia’s housing market

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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.

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