After the American “Great Recession” a lot of people became worried about another financial crisis. They also fretted over what they can afford when purchasing a home, while banks were not as willing to give loans and mortgages to as many people as they once did. In other words, consumer (and lender) confidence became more cautious because they didn’t want to end up drowning in debt, or worse lose their homes.
However, north of the disaster, Canadians did not seem to be as affected by the recession. Instead, as we often do, we seemed to weather the storm, with less unemployment and a stable economy thanks to our natural resources. Although we tend to suffer when it comes to oil production compared to other oil-rich countries, other areas like lumber, fishing and minerals thrive. All of these things work together to help insulate us from recession.
Economic Considerations
In regards to Canadian housing, when looking at major cities like Toronto and Vancouver, there is a different focus when it comes to the economy. As well for the Canadian GDP, finance, insurance and real estate industry contribute 21% and construction contributes 6%. So, considering the majority of new construction homes are out in the suburbs the economy can fluctuate which in turn affects house prices, while in Toronto’s older neighbourhoods like Rosedale or Leaside homes tend to keep their value. They will at least stay within 10% of their value even as things are going up and down in the construction industry.
Green Construction
Another factor is Canadians are green obsessed. This is a good thing as it will affect demand on the construction of houses. Buyers will seek out eco-friendly houses that also tend to be available at lower home prices regardless of the housing market. Considering that most construction companies and developers rarely focus on eco-friendly options like geothermal heating or solar panels they are still making efforts to ensure the homes they build are energy efficient.
905 Neighbourhoods
You also have to consider Canada’s renovation industry. Because so many homeowners are striving to save money, many are targeting their gas and electricity bills. As a result, they are looking for ways to make their homes more energy-efficient. So, although we can pretend these people are green obsessed, the only green they are worried about are the $20 bills they can stash in their wallets. This is helping to generate business for the Geothermal industry as it offers a quick and affordable investment that will see some payback. It heats in the winter and cools in the winter, perfect for Canadian weather.
Energy-Efficient Renovations
So why does this affect the economy or even the real estate market in Toronto? Well, when looking at the longer term, homes should go up in value thanks to the money people are investing in these types of renovations. As a result, between green renovations and overall home upgrades, people can ask more when selling their newly revamped homes.
High demand areas like Lawrence Park or Davisville Village are prime examples of how renos are contributing to the local economy. Just drive down any street and you’ll see the telltale dump bins and service trucks that show the homeowner is undergoing renovations. They are making improvements that will make their homes more eco-friendly and cheaper to keep comfortable temperature-wise.
Spreading Metropolis
Meanwhile, there is a massive spreading of the GTA, with suburban regions getting further and further away from the core of the city. People seem to be putting their commute concerns aside in order to find affordable homeownership options. Not surprisingly, the local infrastructure is struggling to keep up with extensions to public transportation, but they are trying. As it becomes easier to commute, it has a duel effect by making these areas more appealing, which increases home values in these further out locations.
Despite the horrifying traffic jams people sit in every day, people still choose to buy in Toronto’s satellite regions. This means home sales in these areas bring opportunities for economic growth as more retailers can spread their wings to these faraway suburbs.
The Downtown Condo
So, we’ve got a willingness for people to head to the hills, mainly because there is a shortage of homes in downtown Toronto. They are also not affordable. However, there is also an endless column of construction cranes dotting the landscape of the downtown core. These condos are by no means family-friendly, which means builders will have to start looking at features that will appeal to this buyer. The trend for families to remain city-centric is forcing builders to look for new ideas to appeal to this group including the potential for onsite daycare services.
Pedestrian and Bike Friendly Toronto
As well, as the City of Toronto attempts to make it easier to get around with all kinds of things from bike lanes to bike-sharing, more people are attracted to the idea of staying in the city. As always, the young professionals and hip set will prefer this and will find it worthwhile to spend the extra dough on a condo when they can walk or bike to work in under 30 minutes. Therefore, the construction business will continue to thrive as old buildings are either renovated into lofts or torn down to make room for condos.
The Bubble Burst
If rumours of the imminent bursting of the proverbial housing bubble aren’t exaggerated, now could be a good time to buy. As sellers start to feel the fear, buyers can jump on opportunities and start low balling offers by as much as 10% to 20%. If the rumours prove to be true, sellers who take buyers up on their offers will sigh with relief when the bubble really does blow, and home prices drop by 20% to 30%.
In the U.S. when the bubble burst house prices dropped by 40 to 50% of their average prices in value. The truth is pricing won’t drop that far in Canada or Toronto as we enjoy a more stable economy. Despite this, we aren’t immune to a Canadian real estate collapse, just better poised to weather it if it happens. So, in answer to the question, if Toronto real estate is insulated from recession, the answer is really it depends as always on location. However, despite the threat of recession over the next couple of years, supply and demand in Toronto should help keep home values relatively stable.
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.
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.
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.
