James Warren, real estate agent with Chestnut Park Real Estate Ltd., says he is advising homeowners to hold off in areas with abundant inventory.Fred Lum/the Globe and Mail
A surfeit of listings in many Toronto neighbourhoods has prompted an increasing number of real estate agents to resort to an unfamiliar strategy: they are discouraging homeowners from listing their homes for sale.
In early July, some sellers who have failed to land a deal have recently taken their properties off the market while buyers vacillate.
James Warren, real estate agent with Chestnut Park Real Estate Ltd., says he is advising homeowners to hold off in areas with abundant inventory except in cases where they need to list because of a job transfer, an estate sale or another pressing reason.
“Unless I absolutely had to, I would wait until the fall,” says Mr. Warren. “The audience isn’t listening right now.”
Mr. Warren does much of his business in Rosedale, where one luxury property traded hands in November for $21-million.
“The gentleman bought it for full price, first showing,” says Mr. Warren.
The problem since, Mr. Warren says, is that other homeowners in the upscale enclave have been setting asking prices around the $20-million mark, aiming for a similar result without success.
“People are pricing their houses off this one sale.”
As inventory in Rosedale soared in recent weeks, a cluster of properties sat unsold at that level.
“You can’t have seven or eight houses in Rosedale at $20-million-plus. Where are the buyers?”
The $21-million property had some elements that neighbouring properties can’t match: The sale and closing took place quickly as 2023 wound down because hikes to the City of Toronto’s municipal land transfer tax rate for homes valued above $3-million were set to come into effect on Jan. 1.
Another draw was that the house was built about 10 years ago, which is unusual in an enclave of homes protected by heritage conservation rules.
Mr. Warren says that some sellers prefer to set an ambitious asking price at the start but that can backfire quickly. Agents with competing listings point to the value that their property offers by comparison.
“If you’re not well-priced you’re going to sit,” he says. “You’re going to be used to sell other houses that are better priced.”
Anita Springate-Renaud, broker with Engel & Volkers in central Toronto, believes buyer confidence is slowly building. She points to a home in her own neighbourhood of Lawrence Park, where inventory is tight.
“It was on for just over a week and sold for $9-million.”
But at the lower end, buyers who rely on a mortgage are waiting for interest rates to drop further.
She says some sellers are pulling their listings with a plan to relist in September.
Ms. Springate-Renaud recently took down the listing for a condo on Blue Jays Way with an asking price of $829,000.
“If you don’t need to sell, let’s wait for the inventory to come down,” was her advice to the owner.
Despite the more frequent recommendations from agents that homeowners hold tight, Ms. Springate-Renaud says the photographers and stagers she talks to remain busy prepping more properties.
“My stager was glad to get some of her stuff back. It was in a property forever and it didn’t sell.”
The positive news for thwarted would-be sellers, is that the outlook for the second half of the year is a little brighter.
Rishi Sondhi, economist with Toronto-Dominion Bank, is predicting that sales in Toronto, Vancouver and other cities across Canada will soon begin to gain traction after a sluggish spring.
Still, in his latest cross-country report on the housing market outlook, Mr. Sondhi cautions that the nascent recovery is likely to be only mediocre because cuts to interest rates on both sides of the border may take longer than economists had previously expected.
“You really need more meaningful rate relief,” Mr. Sondhi said in an interview.
TD is forecasting the next Bank of Canada cut will come in September after a pause at the July 24 meeting.
The U.S. Federal Reserve, meanwhile, recently signalled that a rate cut will likely be pushed off until late 2024. The delay will spill over onto Canadian bond yields, which will likely see more limited declines over the remainder of the year as a result, Mr. Sondhi says.
That in turn will keep fixed-term mortgage rates in Canada from falling as quickly as expected.
The strongest sales gains in the country should come in Ontario and British Columbia, Mr. Sondhi says, because buyers in those provinces have plenty of pent-up demand to unleash.
As for prices, Mr. Sondhi noted that the national average price managed to grind higher in the spring as more expensive homes took a larger share of the sales pie.
That trend is particularly notable in the Greater Toronto Area, where the swelling inventory in the condo market put downward pressure on prices at the lower end. Meanwhile, relatively fewer listings in the detached home segment put a floor under those prices, he says.
Mr. Sondhi is forecasting that the average price in Ontario will edge down 0.2 per cent in 2024 because of the relatively loose supply compared with muted demand.
Across Canada, new listings are roughly in line with the long-term average, Mr. Sondhi notes, but in Ontario, that figure is about 5 per cent higher than the long-term average.
In May, the sales-to-new-listings ratio stood at about 40 per cent in the GTA, which puts the market in balanced territory.
Mr. Sondhi says he hears anecdotally from agents about properties sitting for a longer time.
As more agents caution sellers against launching a property on the market now if they don’t have to, Mr. Sondhi says a delay may make sense.
“You don’t necessarily want to be listing your home in that environment.”
Looking farther out to 2025, Mr. Sondhi lifted his growth forecasts for sales and prices as more of those buyers on the sidelines move into the market and relief from high interest rates is more apparent.
In Ontario, Mr. Sondhi predicts the average price will jump four per cent next year.
There may be an upside surprise if bond yields fall more sharply, Mr. Sondhi says, while the downside risk to his forecast includes federal government policies which could rein in population growth in the coming quarters.
He’s also cautiously watching the condo market in the GTA and beyond to see if listings rise more significantly than he expects, which could in turn drag down the average price.
Mr. Warren points out that buyers in the various tiers of the market may be affected by different economic forces, but the dynamic in one segment cascades into another.
Buyers in the upper echelons often hold a portfolio of assets and can buy a home without a mortgage, but they are usually moving up from an existing property.
Mr. Warren says gridlock appears to be starting around the $5-million mark because buyers purchasing a house for less than that tend to need financing and many are waiting for a drop in mortgage rates.
“If someone buys for $20-million, and sells an existing house for $10-million, the person who is buying that house may be thinking about interest rates. The person who buys their house is definitely going to be sensitive to interest rates,” he explains.
And while inventory was shooting up in Rosedale and other high-end pockets during the spring, he says, many buyers on the fence were in no rush to pull their money out of stocks with equity markets climbing.
Mr. Warren believes some sellers with asking prices above $5-million need to reduce that amount by 10 to 15 per cent.
In his opinion, the old adage that the three most important factors in real estate are ‘location, location, location’ is outdated.
Price is paramount for attracting buyers in today’s market, he says, followed by a good renovation. Location has fallen to third on the list, he says.
Learning the reason one house sells while another languishes is key to setting a price, he says.
He points to the recent sale of one Rosedale property that drew three offers and sold in the $15-million range after it was listed with an asking price of $11-million. Competition erupted because the house was recently renovated, he says.
One of the couples that bid on that property then paid the full asking price of $18.5-million for a nearby house because they didn’t want to lose another one, Mr. Warren says.
Many people selling luxury properties in Forest Hill and Rosedale are downsizers who want to buy a townhouse or condo, he says. They learn about transactions at full price and resist reducing their own asking price, he adds.
“They don’t need to sell. They have the financial capability to stay in the house.”
But Mr. Warren says homeowners who set an asking price that’s too rich to start with do themselves a disservice because the house soon appears stale and the buyers have more leverage.
“Then if you are going to reduce, hold your breath,” warns Mr. Warren. “Now you’ve brought it down 15 per cent and you’re going to have to sell 5 to 10 per cent below that.”
Many of the houses that have been sitting in Toronto’s more exclusive areas belong to empty nesters who last renovated when their kids were young, he says, and family lifestyles have changed.
Some potential buyers are willing to take on a renovation, but they must factor in the cost and duration of the project, and they have to worry that their existing house in a lower price range may not sell.
In addition, higher prices, higher interest rates and the higher land transfer tax are all adding up to a market that is struggling above $5-million, he says.
A reno may take two-and-a-half years, and many families choose to find a rental property for between $8,000 and $20,000 a month, Mr. Warren says, to avoid having their kids change schools.
In addition to mounting costs, a reno brings upheaval, Mr. Warren says.
“The other thing to consider is, how strong is my marriage and tolerance for doing this? Somebody’s got to go over there every day at 7:30 a.m. to see if they showed up, and say, ‘I didn’t order that tile.’”
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.
VANCOUVER – Voters along the south coast of British Columbia who have not cast their ballots yet will have to contend with heavy rain and high winds from an incoming atmospheric river weather system on election day.
Environment Canada says the weather system will bring prolonged heavy rain to Metro Vancouver, the Sunshine Coast, Fraser Valley, Howe Sound, Whistler and Vancouver Island starting Friday.
The agency says strong winds with gusts up to 80 kilometres an hour will also develop on Saturday — the day thousands are expected to go to the polls across B.C. — in parts of Vancouver Island and Metro Vancouver.
Wednesday was the last day for advance voting, which started on Oct. 10.
More than 180,000 voters cast their votes Wednesday — the most ever on an advance voting day in B.C., beating the record set just days earlier on Oct. 10 of more than 170,000 votes.
Environment Canada says voters in the area of the atmospheric river can expect around 70 millimetres of precipitation generally and up to 100 millimetres along the coastal mountains, while parts of Vancouver Island could see as much as 200 millimetres of rainfall for the weekend.
An atmospheric river system in November 2021 created severe flooding and landslides that at one point severed most rail links between Vancouver’s port and the rest of Canada while inundating communities in the Fraser Valley and B.C. Interior.
This report by The Canadian Press was first published Oct. 17, 2024.
British Columbia voters face no shortage of policies when it comes to tackling the province’s housing woes in the run-up to Saturday’s election, with a clear choice for the next government’s approach.
David Eby’s New Democrats say the housing market on its own will not deliver the homes people need, while B.C. Conservative Leader John Rustad saysgovernment is part of the problem and B.C. needs to “unleash” the potential of the private sector.
But Andy Yan, director of the City Program at Simon Fraser University, said the “punchline” was that neither would have a hand in regulating interest rates, the “giant X-factor” in housing affordability.
“The one policy that controls it all just happens to be a policy that the province, whoever wins, has absolutely no control over,” said Yan, who made a name for himself scrutinizing B.C.’s chronic affordability problems.
Some metrics have shown those problems easing, with Eby pointing to what he said was a seven per cent drop in rent prices in Vancouver.
But Statistics Canada says 2021 census data shows that 25.5 per cent of B.C. households were paying at least 30 per cent of their income on shelter costs, the worst for any province or territory.
Yan said government had “access to a few levers” aimed at boosting housing affordability, and Eby has been pulling several.
Yet a host of other factors are at play, rates in particular, Yan said.
“This is what makes housing so frustrating, right? It takes time. It takes decades through which solutions and policies play out,” Yan said.
Rustad, meanwhile, is running on a “deregulation” platform.
He has pledged to scrap key NDP housing initiatives, including the speculation and vacancy tax, restrictions on short-term rentals,and legislation aimed at boosting small-scale density in single-family neighbourhoods.
Green Leader Sonia Furstenau, meanwhile, says “commodification” of housing by large investors is a major factor driving up costs, and her party would prioritize people most vulnerable in the housing market.
Yan said it was too soon to fully assess the impact of the NDP government’s housing measures, but there was a risk housing challenges could get worse if certain safeguards were removed, such as policies that preserve existing rental homes.
If interest rates were to drop, spurring a surge of redevelopment, Yan said the new homes with higher rents could wipe the older, cheaper units off the map.
“There is this element of change and redevelopment that needs to occur as a city grows, yet the loss of that stock is part of really, the ongoing challenges,” Yan said.
Given the external forces buffeting the housing market, Yan said the question before voters this month was more about “narrative” than numbers.
“Who do you believe will deliver a better tomorrow?”
Yan said the market has limits, and governments play an important role in providing safeguards for those most vulnerable.
The market “won’t by itself deal with their housing needs,” Yan said, especially given what he described as B.C.’s “30-year deficit of non-market housing.”
IS HOUSING THE ‘GOVERNMENT’S JOB’?
Craig Jones, associate director of the Housing Research Collaborative at the University of British Columbia, echoed Yan, saying people are in “housing distress” and in urgent need of help in the form of social or non-market housing.
“The amount of housing that it’s going to take through straight-up supply to arrive at affordability, it’s more than the system can actually produce,” he said.
Among the three leaders, Yan said it was Furstenau who had focused on the role of the “financialization” of housing, or large investors using housing for profit.
“It really squeezes renters,” he said of the trend. “It captures those units that would ordinarily become affordable and moves (them) into an investment product.”
The Greens’ platform includes a pledge to advocate for federal legislation banning the sale of residential units toreal estate investment trusts, known as REITs.
The party has also proposed a two per cent tax on homes valued at $3 million or higher, while committing $1.5 billion to build 26,000 non-market units each year.
Eby’s NDP government has enacted a suite of policies aimed at speeding up the development and availability of middle-income housing and affordable rentals.
They include the Rental Protection Fund, which Jones described as a “cutting-edge” policy. The $500-million fund enables non-profit organizations to purchase and manage existing rental buildings with the goal of preserving their affordability.
Another flagship NDP housing initiative, dubbed BC Builds, uses $2 billion in government financingto offer low-interest loans for the development of rental buildings on low-cost, underutilized land. Under the program, operators must offer at least 20 per cent of their units at 20 per cent below the market value.
Ravi Kahlon, the NDP candidate for Delta North who serves as Eby’s housing minister,said BC Builds was designed to navigate “huge headwinds” in housing development, including high interest rates, global inflation and the cost of land.
Boosting supply is one piece of the larger housing puzzle, Kahlon said in an interview before the start of the election campaign.
“We also need governments to invest and … come up with innovative programs to be able to get more affordability than the market can deliver,” he said.
The NDP is also pledging to help more middle-class, first-time buyers into the housing market with a plan to finance 40 per cent of the price on certain projects, with the money repayable as a loan and carrying an interest rate of 1.5 per cent. The government’s contribution would have to be repaid upon resale, plus 40 per cent of any increase in value.
The Canadian Press reached out several times requesting a housing-focused interview with Rustad or another Conservative representative, but received no followup.
At a press conference officially launching the Conservatives’ campaign, Rustad said Eby “seems to think that (housing) is government’s job.”
A key element of the Conservatives’ housing plans is a provincial tax exemption dubbed the “Rustad Rebate.” It would start in 2026 with residents able to deduct up to $1,500 per month for rent and mortgage costs, increasing to $3,000 in 2029.
Rustad also wants Ottawa to reintroduce a 1970s federal program that offered tax incentives to spur multi-unit residential building construction.
“It’s critical to bring that back and get the rental stock that we need built,” Rustad said of the so-called MURB program during the recent televised leaders’ debate.
Rustad also wants to axe B.C.’s speculation and vacancy tax, which Eby says has added 20,000 units to the long-term rental market, and repeal rules restricting short-term rentals on platforms such as Airbnb and Vrbo to an operator’s principal residence or one secondary suite.
“(First) of all it was foreigners, and then it was speculators, and then it was vacant properties, and then it was Airbnbs, instead of pointing at the real problem, which is government, and government is getting in the way,” Rustad said during the televised leaders’ debate.
Rustad has also promised to speed up approvals for rezoning and development applications, and to step in if a city fails to meet the six-month target.
Eby’s approach to clearing zoning and regulatory hurdles includes legislation passed last fall that requires municipalities with more than 5,000 residents to allow small-scale, multi-unit housing on lots previously zoned for single family homes.
The New Democrats have also recently announced a series of free, standardized building designs and a plan to fast-track prefabricated homes in the province.
A statement from B.C.’s Housing Ministry said more than 90 per cent of 188 local governments had adopted the New Democrats’ small-scale, multi-unit housing legislation as of last month, while 21 had received extensions allowing more time.
Rustad has pledged to repeal that law too, describing Eby’s approach as “authoritarian.”
The Greens are meanwhile pledging to spend $650 million in annual infrastructure funding for communities, increase subsidies for elderly renters, and bring in vacancy control measures to prevent landlords from drastically raising rents for new tenants.
Yan likened the Oct. 19 election to a “referendum about the course that David Eby has set” for housing, with Rustad “offering a completely different direction.”
Regardless of which party and leader emerges victorious, Yan said B.C.’s next government will be working against the clock, as well as cost pressures.
Yan said failing to deliver affordable homes for everyone, particularly people living on B.C. streets and young, working families, came at a cost to the whole province.
“It diminishes us as a society, but then also as an economy.”
This report by The Canadian Press was first published Oct. 17, 2024.
