Lower interest rates might be the only thing that could revive Canada’s housing market as supply outpaces demand in the country’s largest real estate markets, experts say.
For example, Toronto home sales plummeted as new listings surged in September. Sales were down 12 per cent from August and 7.1 per cent year over year, according to Toronto Regional Real Estate Board (TRREB) data. There were also 16,258 new listings, a 32 per cent increase from August and 44.1 per cent higher than a year ago.
“Sales are really weak, technically up year over year, but that’s comparing to a horrible September of 2022,” Steve Saretsky, a realtor at Oakwyn Realty Ltd. in Vancouver, said in an interview with the Financial Post’s Larysa Harapyn.
Prices are up in both Vancouver and Toronto from the same time last year, but weak sales combined with high inventory are starting to put downward pressure on prices.
The average price in Toronto was up roughly three per cent month over month and year over year at about $1.1 million. The composite benchmark home price in Metro Vancouver was $1.2 million, a 4.4 per cent increase from the same month last year, but a 0.4 per cent decrease from August.
“Interest rates are going to be the main factor driving the trends in house prices” in the next 12 months, John Pasalis, president of Realosophy Realty Inc. Brokerage in Toronto, said in the same interview.
He believes longer-term factors such as immigration won’t impact the market until the economy is past its current high-rate environment.
“These are not going to help the housing market in the short term,” Pasalis said. “The only thing that matters right now are interest rates, quite frankly, and the impact that’s having on the number of people who are buying homes, which is unbelievably low, and the number of people who are forced to sell because they’re over-leveraged.”
Saretsky agreed: “In the near term, a 6.5 per cent mortgage rate is going to trump what’s happening on the immigration side. Structurally, I still think we’re going to be talking about housing affordability or lack thereof over the next five to 10 years.
He added that the rapid changes in interest rates will also affect new housing supply.
“The huge move in interest rates is going to slow new construction and, I think, ultimately, it’s going to hit housing demand and developers are going to pull back,” he said.
Looking ahead, Pasalis isn’t banking on the federal government’s spring budget to revive the housing market.
“The big driver right now is interest rates and there’s not much the Feds can do to get around that,” he said.
In the meantime, Saretsky is hoping Ottawa revises its “ambitious” immigration targets.
“A million is a tad on the aggressive side because I think our housing market hasn’t been able to keep up to sustain that level of growth,” he said.
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.
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.
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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