Home prices are falling in many parts of Canada, but there are important factors to consider before making an investment, according to experts. Knowing what the mortgage rate is and how much a family spends every month amid rising costs of living are some of the factors that need to be taken into account before purchasing real estate, they say.
The latest data from the Canadian Real Estate Association (CREA) showed prices hit $629,971 in July, down five per cent from $662,924 last July. On a seasonally-adjusted basis, it amounted to $650,760, a three per cent drop from June. When pandemic lockdowns began in March 2020, the average national price was $543,920.
The association forecast the national average home price will rise by 10.8 per cent on an annual basis to $762,386 by the end of 2022 and hit $786,252 in 2023.
So, is this the right time to invest in a property?
Even though such data can be helpful, a professor of Data Science and Real Estate Management at Toronto Metropolitan University, Murtaza Haider, says no one can predict if it’s too early or late, so Canadians need to take a more practical approach instead of a predictive one when it comes to purchasing a home.
“Affordability is not just the price of a property but what comes out of your pocket every month, then you realize that a lower price and higher mortgage could even mean more money going out of your pocket every month to support that mortgage,” said Haider, who also serves as the research director of the Urban Analytics Institute.
Right time is ‘when you’re ready’
“So the answer is not whether now is the right time to buy or not. The right time is when you’re ready to purchase based on your family and financial circumstances that necessitate a purchase,” he added.
2:15 As Canadian real estate prices fall, N.S. market slow to catch up
As Canadian real estate prices fall, N.S. market slow to catch up – Aug 19, 2022
Haider explains that when home prices fall, people who want it to happen don’t end up buying. As they complain about prices soaring and the housing market being unaffordable, tons of people are actually purchasing real estate.
“It’s a counterintuitive behavior … What happens to buyers is when they see an asset losing value, with housing prices going down — they become concerned and say, why should I buy now? even though they wanted the prices to fall, and the moment they start falling, they wait,” said Haider.
“And by doing that, they further contribute to lowering demand and hence lower prices. So that circle continues to unfold. Until such time that the demand comes back, prices start to rise,” he added.
“The fall is going to be interesting because we’re going to see probably more buyers jumping into the market and you don’t need a ton more buyers to provide a little bit more stability to prices,” John Pasalis, president of Realosophy Realty Inc. in Toronto, told The Canadian Press earlier this week.
“Just a little bit of a bump in demand could be the difference between homes selling in three, four weeks versus selling in two weeks or selling a lot faster.”
4:03 Transitioning Housing Market
Transitioning Housing Market – Aug 18, 2022
Regardless, Kelly Caldwell, a realtor based in Guelph, Ont., said if an individual has the financial means to purchase real estate despite rising interest rates, then now is a much better time to buy a property compared to the start of the year when it was way more competitive.
“Before … it was a time when prices were skyrocketing, there were bidding wars and no conditions on offers,” said Caldwell.
“People were just paying far, far too much for a property. So I think it’s much better in the sense that things have cooled off … at least in the one (market) I serve in, there’s a very strong buyer’s market. So technically, it’s a pretty good time to buy,” she added.
Caldwell says she’s seeing a return of good due diligence conditions in offers like home inspection and property financing.
“When the market’s really heated, competitive buyers really felt that they can’t get those conditions accepted for an offer,” she said.
Consider inflation, mortgage rates
Caldwell echoes Haider’s sentiment by saying that the real challenge now is the mortgage rate and the monthly expenses. She said there’s a lot of uncertainty when it comes to the economy.
“I think a lot of us are feeling the pinch of how expensive things are … our gas, our hydro bills, groceries. Everything. So it’s probably more important than ever for buyers to have a very tough conversation with themselves about how much they need,” she said. “There’s a lot of people I know who have recently downsized.”
2:05 GTA home sales fell 47% from same time last year, Toronto Real Estate Board data shows
GTA home sales fell 47% from same time last year, Toronto Real Estate Board data shows – Aug 4, 2022
She also said that people who are looking to purchase property should also be mindful of the increasing costs that come with renovations now. Due to the COVID-19 pandemic and the labour shortage, Caldwell said the cost of materials and labour has “skyrocketed.”
“Even finding people can be hard,” said Caldwell. “Look at the cost of lumber before you put on a new deck because it may cost you $10,000 just in lumber today.”
She says traditionally buying an old house that needs a bit of a renovation is a good way sometimes to get into homeownership, but amid rising costs, this is not the case anymore.
“I am still a believer in it, but I think you need to be very tuned in to the cost of building supplies,” Caldwell said.
1:53 New poll finds majority of Canadians are cutting back on spending
New poll finds majority of Canadians are cutting back on spending
As the housing market cools off, Canadians can take their time when purchasing real estate, according to Caldwell.
“Time is kind of on your side and to take the amount of time that you can to really look around and explore different neighbourhoods, explore different types of properties with an eye on for those that are pre-approved and have a mortgage rate locked in with their lender,” she said.
When it comes to sellers, however, Haider says it’s important to figure out the reason behind selling that property and to just go for it, depending on the need.
“Is it because you have to move for a new job or because of age? If your circumstances necessitate a sale, then sell. Don’t try to time the market. Who knows if the market starts to recover later this year, maybe next year or later,” he said.
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.
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.
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.
