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Canadian Real Estate is Changing: What You Need to Know – RE/MAX News

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The Canadian real estate market is in a state of flux right now.

It is hard to fathom that Canada’s housing sector recorded unprecedented gains a year ago – from tremendous sales activity to enormous price growth – and now the industry is in the middle of a sharp correction. Every market analyst and financial institution has offered a forecast of how much more the country’s real estate market could fall. The Royal Bank of Canada (RBC) projects a 25-per-cent decline by the end of next year, while Desjardins economists anticipate a 20-per-cent drop over the next year.

Whatever the case may be, the Canadian real estate market – be it major urban centres or cottage country – is going through an exceptional transition. Nobody knows when the trend will turn and when the next expansionist cycle will begin.

So, what is going on exactly? Here is a list summarizing what you need to know about today’s market.

What You Need to Know About This Canadian Real Estate Market

Here are five things you need to know about what is unfolding in the Canadian housing market:

#1 Home Prices Have Started Falling

It is no secret that prices have decreased from their pandemic peak. According to the Canadian Real Estate Association (CREA), the national average home price stood at $629,971 in July, down five per cent from the same time a year ago. When the Greater Toronto Area (GTA) and the Greater Vancouver Area (GVA) are removed from calculations, the country’s average price would be trimmed to approximately $525,000.

In addition, most of the monthly declines have been situated in the Ontario real estate market and the British Columbia housing sector. The Prairies have been flat while Atlantic Canada posted gains.

#2 Housing Demand Has Eased

In response to rising interest rates from the Bank of Canada (BoC), which has impacted mortgage rates (see more below), housing demand has waned nationwide.

CREA data show that national home sales tumbled by 5.3 per cent in July, and monthly activity was 29.3 per cent below July of last year. Moreover, sales have been down in three-quarters of all local markets, led by the GTA, the GVA, Calgary, Edmonton and the Fraser Valley.

July saw a continuation of the trends we’ve been watching unfold for a few months now; sales winding down and prices easing in some relatively more expensive parts of the country as well as places where prices rose most over the past two years,” said Jill Oudil, Chair of CREA, in a news release.

#3 New Housing Construction Picking Up

Unfortunately, new housing construction activity has not returned to the level seen in early 2021. However, the numbers have been gradually increasing this year, according to Canada Mortgage and Housing Corporation (CMHC). In June, housing starts surged to 273,800, below the pandemic peak of 305,622. Urban starts totalled a little more than 257,000 units, while rural starts topped 16,000 units.

The monthly SAAR was lower in June compared to May; however, the level of housing starts activity in Canada remains historically high and well above 200,000 units since 2020,” said Bob Dugan, CMHC’s Chief Economist, in a statement. “The decrease in monthly SAAR housing starts in Canada’s urban areas was driven by lower single-detached starts in June. Vancouver, Toronto and Montreal all recorded higher total SAAR starts, driven by higher multi-unit starts except for Montreal where single-detached starts posted a higher increase.

#4 Interest Rates Are Rising

The central bank has lifted the benchmark interest rate to the highest it has been since the financial crisis more than a decade ago. The institution aims to fight three-decade high inflation with quantitative tightening – a blend of higher rates and balance sheet reduction. The hawkish tone at the BoC has impacted borrowing costs for prospective homebuyers.

Mortgage rates – both fixed- and variable-rate mortgages – are climbing higher. But the one trend flying under the radar is the challenge many borrowers experience in passing the mortgage stress test.

The mortgage stress test, which was raised last year, determines if homeowners can still pay their mortgage should interest rates go up. Lenders use this rule to determine if you qualify for a mortgage and how much you can borrow. In today’s rising-rate environment, homebuyers need to make an additional $18,000 to pass the mortgage stress test.

#5 Housing Supply is Still Low

CREA figures highlight that housing supply has yet to improve. In July, the number of new residential listings tumbled by 5.3 per cent on a month-over-month basis. CREA noted that the decline was broad-based, as 75 per cent of local markets witnessed a dip in supply.

This trend aligns with a new RE/MAX Canada report, which analyzed eight major Canadian housing markets from coast to coast, and found that seven of them had active inventory levels below the 10-year average.

In addition, CREA reported just 3.4 months of inventory in the Canadian real estate market in July, which is considered historically low. This figure measures the number of months it would take to exhaust current inventory levels at the present sales activity rate.

Will Other Trends Form?

The COVID-19 public health crisis took the world by surprise. In Canada, the subsequent housing boom, which occurred amid a collapsing economy and cratering employment levels, perhaps shocked most people. Currently, sales and prices in many markets are moderating, which could be an indicator of stabilizing conditions ahead. But the higher interest rates rise, the more pain will likely be felt among those engaging in the Canadian real estate market.

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This Week's Top Stories: Canadian Real Estate Braces For Impact As Bay Street Warns of A Hard Landing – Better Dwelling

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This Week’s Top Stories: Canadian Real Estate Braces For Impact As Bay Street Warns of A Hard Landing  Better Dwelling



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Hong Kong Billionaire’s K. Wah Wins Shanghai Real Estate Bid, Sees “Excellent” Opportunity – Forbes

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Hong Kong billionaire Lui Che-woo has been making successful investments in Shanghai real estate since the 1980s, such as K. Wah Center set along the city’s swank Huai Hai Road. A new project coming amid the country’s economically painful zero-Covid policies took a big step forward on Friday when his flagship K. Wah International Holdings said it had won a joint tender bid for HK$4.18 billion, or $532 million, to develop land on the city’s western side.

K. Wah, though a subsidiary, will hold 60% of a joint venture in partnership with two state-owned companies to develop residential and commercial property in an area planned for artificial intelligence and healthcare-related businesses, the announcement said.

K. Wah said the project “represents an excellent investment opportunity for the group to be engaged in a transit-oriented development to expand its presence in the Shanghai property market, replenish the group’s land bank and is in line with the group’s business development strategy and planning.”

The announcement comes after China’s overall GDP growth fell to 0.4% in the second quarter from a year earlier. In Shanghai, where millions experienced lockdowns of varying duration in the April-June period, GDP shrank by 5.7%. China’s relations with the United States and Europe have been strained by Beijing’s close ties with Russia and recent military exercises near Taiwan.

Mainland-born Lui, worth $12.1 billion on the Forbes Real-Time Billionaires list today, moved to Hong Kong at age four. Possessing only an elementary school education, he helped his grandmother run a retail outfit that sold food staples in Hong Kong as a teenager. In the late 1940s he re-exported army surplus, and by 1950 was buying construction equipment from Japan and selling it to Southeast Asia. In 1964 his was the first private company to obtain quarrying rights in Hong Kong, thanks to a record bid.

After that, Lui started building undistinguished residential housing there. Lui was also an early investor in China, buying into a quarry in Shenzhen in 1980 and later acquiring a land bank in Guangzhou. K. Wah Center opened in Shanghai in April 2005; beside real estate, part of his fortune also comes from the Macau casino operator Galaxy Entertainment Group.

Another long-term Hong Kong success story in Shanghai property development, Shui On Land, led by billionaire Vincent Lo, noted in a filing last month China’s short-term business outlook faces uncertainties. “The Chinese economy faces considerable headwinds amid a highly uncertain geopolitical environment, tense U.S.-China relations, and tightening monetary policy in the advanced economies,” it said. “The property sector debt issue will take time to resolve. Still, the government has the policy means and experience to handle the developers’ debt restructuring process and address the suspended project issue.”

And yet Shui On, whose Shanghai projects include city’s iconic Xintiandi nightlife and shopping area, was nevertheless upbeat about the longer-term investment prospects there. “Although the immediate outlook is less than favorable, the impending market correction should enable us to acquire assets in prime locations at attractive prices during what could be a golden era for new investment,” it said.

See related posts:

World Will Have Nearly 40% More Millionaires By 2026: Credit Suisse

The 10 Richest Chinese Billionaires

Taxes, Inequality and Unemployment Will Weigh On China After Party Congress

U.S. Business Optimism About China Drops To Record Low

Pandemic’s Impact On China’s Economy Only Short Term, U.S. Ambassador Says

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Real estate markets slow in most nearby communities – Calgary Herald

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Slowing demand and rising supply in outlying communities like Airdrie have set in along with cooler temperatures of late summer, recent data shows.

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Calgary Real Estate Board statistics from last month show sales falling year over year in most communities while supply is rising.

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“In all those markets, we’ve seen improvements in inventory,” says Ann-Marie Lurie, chief economist with CREB.
“Still these markets remain quite tight, but we are seeing some price adjustments and that’s because they came up so high during the pandemic.”

Airdrie is the largest and most in-demand market with the highest sales last month, 169 transactions, down almost eight per cent year over year. Still, the community saw inventory rise more than 10 per cent with now more than 1.69 months of supply, an increase of nearly 20 per cent from last year.

Other communities have also seen sales fall and supply rise. These include Cochrane, which had 75 sales, down about 17 per cent from August last year. Its supply is now more than two months, up about 26 per cent year over year.
Okotoks had 53 sales in August, down about 19 per cent year over year while supply grew to more than 1.8 months.

Despite falling demand and growing supply, prices still grew year over year in these communities. The benchmark price in Airdrie increased almost 19 per cent to $493,500. In Cochrane, the benchmark price grew by more than 16 per cent to $517,400 while the benchmark reached $549,300 in Okotoks, also an increase of more than 16 per cent.

Chestermere saw the biggest drop in sales year over year at more than 48 per cent.

Only High River experienced a slight increase in activity with sales last month up 2.5 per cent versus the same span last year.

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