Top markets for Canada real estate are in Ontario (Getty)
Homebuyers are used to Canada’s real estate prices being led higher by big cities like Toronto, but few anticipated what would unfold in smaller cities and towns when COVID-19 hit.
The pandemic made many rethink their living situation. Working from home while being cooped up in a small condo wasn’t working, and big-city living was expensive.
So, buyers sought out more space and decided to drive until they qualify, especially in Ontario where prices have risen the most since the start of the pandemic. Low interest rates also helped drive people into ownership.
Many ended up hours away from Toronto in places like Bancroft, the country’s leader in year-over-year average price gains of an astonishing 48 per cent.
Bancroft mayor Paul Jenkins says he’s not surprised. “Our prices here for a long time were very very undervalued, even compared to adjacent districts like Halliburton,” Jenkins told Yahoo Finance Canada.
“As prices started to escalate in other regions and people became aware of what we had here, we had a lot of migration coming.”
Jenkins says people who visit are surprised to learn Bancroft’s population is 4,000 when they see some of the same chain stores downtown that they would see in bigger cities.
Like other parts of the province, supply was not ready to keep up with the surging demand. In Bancroft’s case, low prices for so long meant builders weren’t clamouring to build homes there.
“It really stunted new development because developers would come in and look and say, your housing prices are too low and we cannot build here because the gap between a new build and a resale is just too great,” he said.
Canada’s home price growth leaders year over year (The Habistat)
Jenkins says it will take time for supply to catch up, and approval for subdivisions can take five to seven years. Meanwhile, he says there’s no sense of ill will towards out-of-town buyers coming in and bidding up prices in his town.
“This is a free country and you’re allowed to do that. We’ve had people who have owned vacation homes up here for years, who have been a very important part of our economy,” he said.
North Bay wants you to move there
North Bay, Ontario is home to Canada’s second-largest real estate price run-up. Even though prices are up 42 per cent year-over-year, its mayor wants big-city buyers to keep coming.
North Bay has promoted itself in the Greater Toronto Area, trying to get people to move there. Mayor Al McDonald says it had the infrastructure in place and greenlit approvals for more supply. So when the pandemic hit, its housing market was ready, albeit not for the outsized onslaught that followed.
McDonald campaigned on growth in 2018 and says he doesn’t want to slow the flow of buyers coming into North Bay. Instead, he prefers builders be able to build more homes.
“Here in the north, we need growth where maybe in the GTA and larger centres you’re running into gridlock, long commutes, high density builds to get as many people on a plot of land as possible because your land costs are so high,” McDonald told Yahoo Finance Canada.
“Here we have the land and the ability to put people here. So no, my preference is that people continue to look at North Bay and move here to fill the jobs that we have vacant.”
McDonald says bringing in more skilled workers and sorting out supply chain problems would help builders add supply.
Even though prices have shot up in North Bay, McDonald says it’s still much more affordable than Toronto.
“In one of our really nice neighbourhoods, Airport Hill, you can buy like a 3,500 to 4,000 square-foot home for $600,000,” he said.
“Where in Toronto, you’re paying like $2.5 million.”
Like Bancroft and North Bay, prices have shot up in Barrie (38 per cent). But a commute into Toronto takes less than half the time.
Barrie home prices were already rising steadily in recent years, but the pandemic accelerated it. Mayor Jeff Lehman says he isn’t surprised by how much prices have gone up, but he is surprised how fast it happened.
“It never surprises me that people want to live here. It’s an incredible place to live and the combination of the central Ontario Muskoka lifestyle and close proximity to the GTA,” Lehman told Yahoo Finance Canada.
“So there’s all kinds of stuff here that you never need to leave the community for, you know, culture and shopping and sports and all those things.”
Lehman says he wasn’t expecting so much energy in the economy during a pandemic.
“I kind of would have figured that the impact of all the uncertainty of COVID would make people put off moving house, they would sort of hunker down instead of taking the risk of buying a new home and getting in the market,” he said.
Barrie has grown quickly over the years. Much of that growth has been from people moving there from other parts of the province. So locals are used to the arrival of out-of-towners. Lehman says people are more frustrated by the sudden lack of supply.
“I don’t think it’s so much anger that there are all these people coming in. There may be to some extent because they’re snapping up with few homes available,” said Lehman.
“I think the frustration for people is they go shopping for a house, and there’s literally nothing available.”
“If we want to substantively change the price of housing in Canada, both rent and purchase, then you’re going to need bolder steps that use economic levers and not just planning policy or things like that,” he said.
“It’s got to be how the federal and provincial government treat investment in rental housing, how they subsidize public housing, how they target subsidies. That’s where you make a substantial difference in the math.”
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
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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.
