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Expert Explains Ontario’s Struggling Real Estate Market

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Last month, I talked about the real estate market slowdown predicted by Desjardins. But a recent TD Economics report says it has been delayed: record immigration and a resilient real estate market have kept things ticking along. But the downturn is still on its way.

The short-term global economic outlook remains weak. Inflation has been slow to decline, and with recession concerns, stricter lending standards, and weaker consumer and business confidence, experts predict it will stay above Central Bank targets for most of 2023. They do expect “mild” recovery in 2024, and they’re saying Ontario’s inflation rate will “moderate gradually” over the next two years. But in the short term, interest rates will stay high while economic growth and the job market slow.


Soaring Population Growth Is Also Impacting The Economy

While expanding our skilled labor force and pool of taxpayers is certainly a good thing, the massive influx of new Canadians is putting huge pressure on housing and infrastructure. The impact of bringing in 500,000 immigrants a year – over 40% of whom will settle in Ontario – will ultimately depend on how effectively the government can address challenges through planning, integration programs and collaboration.

How Is Ontario’s Real Estate Market Faring?

There are fewer buyers out there.

Some are in wait-and-see mode, and buyers who were qualified earlier this year have been taken out of the running with the last couple of rate hikes.

Prices have been adjusted. There’s still some competition in resale, but we’re not really seeing properties go for too much over asking, as a rule. Properties are sitting on the market longer and there’s more inventory out there.

There’s also less availability from the bank of mom and dad. Fewer parents are able to help their kids buy these days. With portfolios cut in half, they’re hanging on to their funds. Plus, this demographic isn’t moving – not even downsizing – because right now it’s cheaper just to stay put. Everyone’s in a holding pattern.

There’s major competition for rentals. It’s very difficult to find places for clients, especially in highly desirable neighbourhoods. With fewer people able to buy and more immigrants coming in, there’s huge pressure on an already under-supplied rental market.

Why Is Ontario So Heavily Impacted?

Housing plays a prominent role in driving our economic activity and growth. And that affects everything from employment to consumer spending, from wealth accumulation to the industries that surround real estate. So, unbalanced economic growth and policy challenges have a big impact. Governments can’t seem to find that “magic” housing policy recipe that addresses affordability and manages supply and demand. They’ve made a mess of it from the top down, from federal to provincial levels. Nothing has worked.

It’s Hard To Predict What Will Happen Next

There are so many unique elements that have contributed to where we are right now. And while we can look at historical trends to guide us to a certain extent, we’re really in uncharted territory here. But here’s what we do know (at least until September 6, when the Bank of Canada makes its next announcement):

  • Sellers who put their homes on the market can still get a fair price, but need to be patient since properties are taking longer to sell.
  • Buyers who can afford higher monthly payments, or those who don’t need to get a mortgage, can find nice properties, but again, patience is key.
  • While we do have more supply than we’ve had in the recent past, historically, inventory is still very low.
  • Buyers who face affordability issues are going to have a hard time over the next couple of years, I’m sorry to say, as rates stay high and day-to-day life gets more expensive.

Whether you’re a buyer or a seller, it’s important to stay on top of what’s happening in the market. That means working with the right agent – one who can really interpret the data and tell you what’s happening. Using tools like those on condos.ca and property.ca can also help you understand the market.

The Current Market Is Impacting Agents, Too

I’m seeing more exits from the industry, and the agents who want to succeed will need to work harder than ever. Going back to basics, honing their skills, trimming expenses, bumping up their marketing, and watching, learning, and really taking the time to connect with consumers to understand their needs — these are all more important than ever.

From a RealServus point of view, having two very different real estate models under one umbrella is helping us manage the ups and downs of the market really well. The Right At Home scale model and the Property.ca Inc. focused lead generation model are allowing us to tackle two different markets – and helping us cater to all manner of agents and their clients in many different segments of the market.

Visit RightAtHomeRealty.com | Visit Property.ca | Visit RealServus.com

 

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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.

The Canadian Press. All rights reserved.

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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.

The Canadian Press. All rights reserved.

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