Less than a year after purchasing their four-bedroom townhouse in Surrey, B.C. for $870,000, Aneesh Bhandari and his wife decided to sell their home in early May.
They were both were looking forward to their first open house, Bhandari said, making bets on how many showings the home would get. They later discovered only one person came to view the property.
“It was an eye-opener,” Bhandari told CTVNews.ca in a telephone interview on Thursday. “My realtor didn’t expect that, nobody expected that.”
Bhandari and his wife are planning to move from British Columbia to Ontario to be closer to his employer’s office in Mississauga. But the process of selling their current home and purchasing a new one has been a struggle, the 36-year-old said.
After 30 days on the market, the 167-square-metre home listed for $1.15 million still had not sold, despite being listed for $50,000 below similar homes in the area, said Bhandari. In mid-June, he took the home off the market.
“At that point in time, the sellers were expecting yesterday’s price and buyers were wanting tomorrow’s price,” said Bhandari.
After getting an extension from his employer to work from home until December, Bhandari now plans to re-list his home in October in an effort to sell before the end of the year.
Bhandari is one of several Canadians who wrote to CTVNews.ca about the impact Canada’s housing correction is having on their decisions to buy or sell a home. After a series of interest rate hikes implemented by the Bank of Canada, housing markets are now facing a correction that “runs far and wide” across the country, according to a new report by the Royal Bank of Canada (RBC).
A drop in house prices, combined with less resale activity, shows that housing markets Canada-wide are now cooling down. According to RBC’s forecast, average home prices in Canada are expected to fall throughout the rest of 2022, eventually dropping 12 per cent by the middle of 2023 compared to their peak in February.
“[This] would rank as a very significant correction,” Robert Hogue, assistant chief economist at RBC, told CTVNews.ca in a telephone interview on Wednesday. “We rarely see this type of double-digit price decline on a national basis.”
Rising interest rates have played a key role in correcting some of the extraordinary gains in house prices Canadians saw during the pandemic, said James Laird, co-CEO of Ratehub.ca.
“The last few years were irrational and some rationality in correcting that exuberance is happening at the moment,” Laird told CTVNews.ca in a telephone interview on Wednesday. “Given the red-hot pace of the last two and a half years, it feels logical now that we should be taking a breather.”
After hitting a record high of $816,720 in February, national average home prices have been on a steady decline, data from the Canadian Real Estate Association (CREA) shows. The average price of a home in Canada for the month of June was $665,849, not seasonally adjusted.
The lack of certainty in terms of what to expect from the Bank of Canada regarding further interest hikes may also be encouraging some Canadians to sit on the market sidelines, Laird said.
“With the central bank still in a transition period from the pandemic rate policy … to the post-pandemic inflation rate policy, we don’t know exactly where the bank wants to get to,” Laird said.
In the face of a changing market driven by shrinking house prices, Hogue said current sellers must be pragmatic and recognize the market is much different than it was just a few months ago.
“Prices are likely to continue to decline in the coming months, so the market is unlikely to become friendlier to sellers in the short term,” Hogue said. “Buyers are coming into the market with less of a budget … They have stricter limitations as far as [how much they can afford].”
TORONTO, VANCOUVER AREAS MORE BALANCED
According to the RBC report, large housing markets across Ontario and British Columbia are expected to see some of the heaviest corrections compared to other regions in Canada. The reason for this lies in the sky-high house prices that have characterized these areas during most of the COVID-19 pandemic. Hogue said these areas are therefore more sensitive to interest rate hikes.
According to data compiled by the CREA, average home prices in Ontario and British Columbia peaked in February at $1,086,493 and $1,104,098, respectively. Both figures are not seasonally adjusted.
Since then, activity has plunged to its slowest pace in more than 13 years — excluding pandemic lockdowns. This leaves room for more negotiations between buyers and sellers as the market balances out, said Frank Clayton, an economist and senior research fellow at Toronto Metropolitan University.
“[Buyers] should keep their eye open because … there’s always people that have to sell,” he told CTVNews.ca in a telephone interview on Wednesday. “Some people aren’t going to want to wait six or eight weeks and hope their house is going to sell, they may want the cash right away.”
While it may not be a buyer’s market in parts of Southern Ontario just yet, Clayton said, markets are appearing more balanced. This is also the case in the Greater Vancouver area, according to RBC’s report. Housing activity in the region has decreased 40 per cent over the last four months, and home prices for all home types have also dropped 4.5 per cent since April.
It’s also important to understand some areas of these regions will feel the effects of a correction differently than others, Laird said.
“[Prices in] the suburbs and more rural properties went up the most during the two years of pandemic exuberance … and those are the places [where] the prices are correcting the most,” said Laird. “[But] the urban cores did not go up nearly as much as the surrounding suburbs [so] they’re also not correcting as much.”
HOUSES STILL ‘LESS AFFORABLE,’ SAYS REAL ESTATE EXPERT
A real estate outlook from Desjardins also points to New Brunswick, Nova Scotia and Prince Edward Island as facing significant corrections, after home prices ballooned during the pandemic.
Parts of Alberta, however, are expected to be more resilient. Despite seeing price declines, the correction in this part of Canada is expected to be milder in comparison to others, Hogue said.
While average home prices may have been dropping on a national basis, this doesn’t mean houses have become more affordable for Canadians, Laird said.
Lower house prices have been driven by higher interest rates, which force homeowners to pay more interest on their mortgages. With a higher borrowing cost, those looking to buy a home are likely to qualify for less of a mortgage as a result, Hogue said. This makes it especially tough for homebuyers looking to get into the housing market for the first time.
Taylor Wright and her fiancé are currently renting a one-bedroom apartment as they search for a new home. Looking to purchase in either Ajax, Ont. or Whitby, Ont., with a budget of $800,000, Wright said she and her fiancé remain priced out of the market.
“Every house we go look at is still going for close to $100,000 over the asking price, and we are not willing to get into a bidding war and overpaying for a home,” Wright wrote in an email to CTVNews.ca on Thursday.
Having kept an eye on the province’s housing market since the beginning of the pandemic, Wright said she saw home prices “climb further and further out of reach.” Still, she said rising interest rates and cooling prices are giving her hope that in six months’ time, she may be able to buy a home.
Diordan Svelander and his wife are looking to purchase a home in the Greater Vancouver area. With sky-high house prices, he said they could not afford a down payment on a home despite working two full-time jobs.
Svelander said he and his family tried looking north of the city, in the municipality of Chetwynd, B.C. The couple had their eyes on one house, but as interest rates climbed throughout the year, they could no longer afford it.
“The money we had saved was not enough to withstand the stress tests, and we had exhausted all of our options trying to buy,” Svelander wrote in an email to CTVNews.ca on Wednesday.
As a result, the couple is now renting a two-bedroom unit with their two young children and pets, Svelander said.
A recent report by Ratehub.ca assessed the income required to purchase an average home in different Canadian cities. So far, financial losses from higher interest rates have not been offset by gains from lower home prices, Laird said. In all Canadian cities included in the report, residents required more income, on average, to afford a typical home.
“You had a better chance of buying a home a year ago with those elevated prices but with lower mortgage rates … than you do with the more modest home prices but higher mortgage rates,” Laird said. “It actually means that everything is less affordable than it’s ever been.”
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
