Many prospective homebuyers in Canada’s priciest markets are wondering whether the economic crisis triggered by the COVID-19 pandemic comes with a silver lining for them.
Will this, perhaps, be their chance to finally step on the property ladder?
The answer, according to housing-market watchers, is both complicated and shrouded in uncertainty.
If you look at them from a bird’s eye view, Canada’s residential real estate prices currently seem frozen in time.
The national average home price edged down just 1.3 per cent in April compared to the same month last year, the Canadian Real Estate Association (CREA) said Friday.
CREA’s home price index, which adjusts for changes in the mix of homes sold, declined just 0.6 per cent between March and April and was up 6.4 per cent compared with April 2019, reflecting hefty pre-coronavirus price gains.
Story continues below advertisement
1:31 Coronavirus outbreak: Pandemic could shrink office space as more people move to work from home
Coronavirus outbreak: Pandemic could shrink office space as more people move to work from home
Generally speaking, home prices aren’t budging much, because both the supply and the demand for homes have collapsed roughly in tandem, economists say.
Canada-wide sales of existing homes fell 58 per cent last month compared with the same time last year, but the number of properties newly listed on the market was down 59 per cent from a year ago. As a result, the sales-to-listings ratio — a key metric used to assess whether market conditions favour buyers or sellers — is currently sitting at 62 per cent compared to 64 per cent in March and 65 per cent in February.
In normal times, it takes a sales-to-listing ratio of 35 per cent or less to have what insiders call a buyers’ market. When there are plenty of homes available for sale and comparatively few buyers, goes the reasoning, house-shoppers can be choosy and have more bargaining power.
By that metric, Canada’s housing market would seem to be firmly in sellers’ territory.
3:04 Money 123: Renting vs. owning
Money 123: Renting vs. owning
On the other hand, CREA also said, nationally, it would currently take roughly nine months to clear up the current inventory of homes on the market at the current sales pace. That was up from around four months in March.
Story continues below advertisement
This means “lingering listings are not getting taken up,” said BMO economist Robert Kavcic in a note to clients.
“Note that the months’ supply peaked at 9.7 during the financial crisis in late-2008, and these levels ordinarily suggest some pullback in prices,” he added.
But, he warned, with the majority of buyers and sellers waiting on the sidelines, “these metrics become a bit less reliable.”
As everyone knows, however, all real estate is local. And when you zoom in at the level of specific neighbourhoods and market segments, you may find buying opportunities, says Zoocasa CEO Lauren Haw.
“There are absolutely supply-side opportunities, especially in the urban cores, where we’re seeing a bit higher inventory in the condo market,” Haw told Global News.
In some downtown Toronto neighbourhoods, for example, median condo prices have dropped by more than 10 per cent, falling by over $50,000, according to a recent analysis by Zoocasa.
2:15 Money123: The advantages of co-owning your home
Money123: The advantages of co-owning your home
On the other hand, the supply for other market segments has virtually dried up, Haw added.
“The family homes in great school neighbourhoods — they’re not really listing right now,” Haw said.
Story continues below advertisement
With kids at home from school, it’s a difficult time for families to put a home on the market, she added. Prospective home sellers who can afford to stay put are doing just that, she noted.
That’s even in the condo market, according to Pauline Lierman of research firm Urbanation. In Toronto, it is only bachelor units and one-bedroom condos valued under $500,000 that have seen their share of sales volumes increase between March and April, with the share of pricier units either staying flat or declining.
Wealthier condo owners who can afford to wait out the current slump are sitting on the sidelines, Lierman said. And that, in turn, can affect median property values, with average price drops reflecting at least in part the relatively larger number of cheaper condos up for sale.
Haw’s advice to homebuyers is to figure out where they’d like to live and in which kinds of property for at least the next five years. Then, she said, keep an eye out to see whether something that fits their needs becomes available.
2:51 Money 123: Understanding rent-to-own
Money 123: Understanding rent-to-own
“Interest rates are really low and you can get into a market where some of the sellers are quite motivated,” she said.
Story continues below advertisement
Some sellers may be under pressure to offload a property because they’ve already bought a new house, she said. Some real estate investors may also be trying to sell short-term rentals they can no longer afford after bookings dried up.
It’s possible there will soon be many more motivated sellers on the market, according to Robert McLister, founder of rates-comparison site RateSpy.com.
“There could be more people who have to set sail in coming months,” he said.
Canadians whose jobs aren’t coming back or who run out of mortgage deferrals may be forced to put their properties on the market, which could put pressure on prices, he said.
The sales-to-listings ratio, he added, will be a key gauge to watch to see where the market is headed.
For now, there’s significant disagreement among economists about where that might be.
Lierman’s advice for buyers is to rely on an experienced real estate agent who knows the area where they want to buy to keep them up to read the market signals.
“Look for a specialist in your neighbourhood and do your due diligence.”
TORONTO – Restaurant Brands International Inc. reported net income of US$357 million for its third quarter, down from US$364 million in the same quarter last year.
The company, which keeps its books in U.S. dollars, says its profit amounted to 79 cents US per diluted share for the quarter ended Sept. 30 compared with 79 cents US per diluted share a year earlier.
Revenue for the parent company of Tim Hortons, Burger King, Popeyes and Firehouse Subs, totalled US$2.29 billion, up from US$1.84 billion in the same quarter last year.
Consolidated comparable sales were up 0.3 per cent.
On an adjusted basis, Restaurant Brands says it earned 93 cents US per diluted share in its latest quarter, up from an adjusted profit of 90 cents US per diluted share a year earlier.
The average analyst estimate had been for a profit of 95 cents US per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
ST. JOHN’S, N.L. – Fortis Inc. reported a third-quarter profit of $420 million, up from $394 million in the same quarter last year.
The electric and gas utility says the profit amounted to 85 cents per share for the quarter ended Sept. 30, up from 81 cents per share a year earlier.
Fortis says the increase was driven by rate base growth across its utilities, and strong earnings in Arizona largely reflecting new customer rates at Tucson Electric Power.
Revenue in the quarter totalled $2.77 billion, up from $2.72 billion in the same quarter last year.
On an adjusted basis, Fortis says it earned 85 cents per share in its latest quarter, up from an adjusted profit of 84 cents per share in the third quarter of 2023.
The average analyst estimate had been for a profit of 82 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
TORONTO – Thomson Reuters reported its third-quarter profit fell compared with a year ago as its revenue rose eight per cent.
The company, which keeps its books in U.S. dollars, says it earned US$301 million or 67 cents US per diluted share for the quarter ended Sept. 30. The result compared with a profit of US$367 million or 80 cents US per diluted share in the same quarter a year earlier.
Revenue for the quarter totalled US$1.72 billion, up from US$1.59 billion a year earlier.
In its outlook, Thomson Reuters says it now expects organic revenue growth of 7.0 per cent for its full year, up from earlier expectations for growth of 6.5 per cent.
On an adjusted basis, Thomson Reuters says it earned 80 cents US per share in its latest quarter, down from an adjusted profit of 82 cents US per share in the same quarter last year.
The average analyst estimate had been for a profit of 76 cents US per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
