The moderation of the Greater Toronto Area’s housing market intensified last month as the region’s real estate board found July sales fell 47 per cent from the same time last year and 24 per cent from this past June.
The Toronto Regional Real Estate Board revealed Thursday that last month’s 4,912 sales were almost half of the 9,339 homes that changed hands the July before and are an indication that the market is easing from the frenzied pace seen in the first half of the year and at the end of 2021.
The board and real estate agents have attributed much of the moderation to the increased cost of carrying a mortgage after Canada’s key interest rate was increased by one percentage point in mid-July, making it the largest hike the country has seen in 24 years.
The hike has encouraged people to rethink their housing intentions. Prospective buyers are holding out for further drops they and brokers anticipate could materialize in the fall, while sellers are debating making what they can from their home now or waiting for the market to turn in their favour again.
Some sellers are even terminating their listings to take advantage of the hot rental market, where vacancies are dropping and prices are up.
While January’s hot market saw 380 terminated condo listings in the GTA, real estate company Strata said June brought 2,822 — a 643 per cent increase.
The moderation taking shape within sales is taking longer to appear in home prices.
TRREB found the average home price was $1,074,754 last month, a one per cent hike from $1,061,724 in July 2021, but a six per cent drop from $1,145,994 in June 2022.
The composite benchmark price was more than $1.1 million, up by 12.9 per cent year-over-year.
Detached home prices were down three per cent on a year-over-year basis to $1,362,598 last month, while their sales dropped by 46 per cent to 2,203.
Prices of semi-detached homes were up by nearly five per cent from last July to $1,077,750, while sales fell 45 per cent to 474.
Townhouse prices crept up by six per cent to $903,899 as their sales fell by 52 per cent to 816, and condo apartment prices saw a seven per cent leap to $719,273 and a 48 per cent fall in sales to 1,365.
The market also saw a drop in new listings, which amounted to 12,046 last month, down four per cent from a year ago.
TRREB felt the numbers necessitate government intervention, including boosting housing supply and reviewing mortgage policies.
Data firm Urbanation Inc. said Tuesday that it expects almost 10,000 GTA condo units to be delayed this year as increasing mortgage rates weigh on home sales.
“Many GTA households intend on purchasing a home in the future, but there is currently uncertainty about where the market is headed,” said TRREB CEO John DiMichele, in a release.
“Policymakers could help allay some of this uncertainty.”
He recommended the government review the Office of the Superintendent of Financial Institutions’ stress test. The mandatory test set the qualifying rate on uninsured mortgages at either two percentage points above the contract rate, or 5.25 per cent, whichever is greater.
Kevin Crigger, TRREB’s president, echoed DiMichele’s plea, saying longer mortgage amortization periods of up to 40 years on renewals and switches should be explored.
“With significant increases to lending rates in a short period, there has been a shift in consumer sentiment, not market fundamentals,” he said, in a release.
“The federal government has a responsibility to not only maintain confidence in the financial system, but to instill confidence in homeowners that they will be able to stay in their homes despite rising mortgage costs.”
Podcast: Real estate marketing strategy with Publish Partners | RENX – Real Estate News EXchange
Podcast: Real World of Real Estate with Gerald Tostowaryk
Max Jakubke, principal and founder of Publish Partners, and the firm’s digital marketing director Bianca Elliot discuss numerous strategies for effective online real estate marketing with host Gerald Tostowaryk.
One of the focuses for the episode, the second in a series on real estate marketing, is using data effectively to improve your storytelling ability about a project or development.
As part of the discussion, Jakubke and Elliot share some examples of successful campaigns.
Publish Partners is an international firm based in Vancouver.
Perfect time for sellers in Saskatchewan real estate market – Global News
For people who analyze statistics for a living, interpreting numbers is often about perspective.
For example, take home sales in Saskatchewan last month.
The province saw a 10-per cent reduction in home sales from 2021. However, last year was a record year for home sales in Saskatchewan.
“Overall, most regional markets are starting to shift away from the exceptionally tight market conditions seen earlier in the year,” the Saskatchewan Realtors Association said in a press release.
“However, most regional markets still face conditions that are tighter this July then they were last year.”
One of the reasons for the reduction is the spending issues many people are facing as inflation has drove prices of everyday items up. Another reason the market has slowed is the simple fact it’s summer and people aren’t home.
“People are on holidays, they’re out farming and so typically we see a slower market and people are maybe not used to that because during the pandemic we had a market that was very busy throughout the year,” said Chris Guérette, the CEO of Saskatchewan Realtors Association.
“So we are returning to sort of pre-pandemic activity during this time of the year.”
Buyers are more leaning towards more homes priced under $400,000, which as a result means less are available and slowing down sales.
“Inventory levels trended up in July over previous months, but every region still faced inventory levels that were lower than the previous year and long-term averages,” the press release read.
“Overall, most regional markets are starting to shift away from the exceptionally tight market conditions seen earlier in the year. However, most regional markets still face conditions that are tighter this July then they were last year.
Guérette said overall, the provinces market it a lot more stable than other places.
“We know that we won’t have the drastic ups & downs that other large municipalities are facing & other provinces are facing at the time right now. So that means places like Ontario and B.C are seeing some really large dips and some swings.”
Guérette said it is a sellers’ market right now, with the average price of a home in Saskatchewan going up to $335,000.
How to send your kids off and prepare for university housing.
© 2022 Global News, a division of Corus Entertainment Inc.
Real estate as a wealth creator – Ottawa Business Journal
Who is the wealthiest person you know? Almost without a doubt they will tell you that they have substantial real estate holdings inside their portfolio.
If you’ve been toying with the idea of purchasing an income property, now is the perfect time to jump in. You might be asking yourself, “Why now?” Well, because there is an opportunity in the marketplace that I have never seen in my 20+ year career and will likely never see again.
Over the last two years, the value of your home has increased, on average, 40 per cent. The market has peaked and we are having a bit of a soft landing thanks in large part to the Bank of Canada raising the overnight rate four times already this year.
How is this an opportunity?
First, we have a cohort of first-time buyers with solid incomes and the best of intentions that simply cannot break into this market. They are your new tenants. The average home in Ottawa purchased today would require a household income of $137,050, assuming you had 20 per cent down. A six-figure income is now needed to buy the average home in Ottawa!
Secondly, the new found equity in your current home could be your ticket to getting into investment real estate. You may be eligible for an up to 80 per cent loan on the current market value of your home; equaling the down payment for your first investment property.
There are so many reasons why real estate is a wealth creator, but let’s start with this: Say you buy a $1 million property with 20 per cent down—in other words you invest $200,000 to buy a $1 million investment—but which number do you earn your return on? You earn a rate of return on the value of the building, not on the value of your down payment. Your tenants pay the mortgage and expenses, and you reap the rewards!
Ottawa has an average 5.6 per cent rate of return over the past 50 years. With 20 per cent down, you have a 5x multiplier on the market rate of return on your initial investment. Your down payment has earned a 28 per cent rate of return over the last 50 years! Do you know anyone in the stock market that can say the same?
Now, this is an oversimplification. To determine your actual rate of return you have to subtract the interest cost on the mortgage you are carrying and utilities, taxes, and maintenance. Individual results will vary, but real estate is a solid winner in any case.
Reason number two that real estate is a winner: Real estate values in Ottawa rarely go down on a year-over-year basis, and when they do the losses are quite small. In fact, Ottawa has recorded a contraction in average sale price only three times in the last 50 years.* The biggest one-year drop was 2.9 per cent. The second biggest was 1.9 per cent, and the third was 0.4 per cent.
American business magnate, investor, and philanthropist, Warren Buffet has famously said, “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.” Why is this so important? It’s important because it is very difficult to recover from losses.
If we return to the $1 million purchase example above: Imagine you had $1 million worth of stock and the market crashed… You probably owned Nortel stock around the 2000’s or bought Shopify at its peak recently. Your million dollars becomes $500,000 overnight. But what happens when there is a corresponding increase of 50 per cent in the marketplace? Are you back to $1 million? Unfortunately, you are not… Your $1 million crashed to 50 per cent, and when the market rebounds by 50 per cent you are left with $750,000 and a $250,000 loss. Ouch…. Now do you see the wisdom in Warren’s words?
This is merely the tip of the iceberg here, and a deeper dive into your particulars would be recommended. Reach out to a professional to help guide you through the process of starting your real estate empire one door at a time.
*According to Ottawa Real Estate Board historical trends stats.
About Sean McCann
It’s not about me. It’s about you and how your home tells your story. Far too often real estate can feel transactional. I’m not interested in transacting. My singular interest is in guiding you and your family to your best possible outcome. It’s about building meaningful connections, in an increasingly disposable world, and understanding how your home is the epicentre of your world. Let’s be honest, my family’s well-being and future success lies in the experiences I create and the advocacy that I earn with you today. I appreciate you and I intend to honour the trust that you place in our relationship. Let’s have some fun and do something special together!
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