It was inevitable that at some point the upward pressure on prices would butt up against the concrete wall of unaffordability and momentum would stall
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In Toronto real estate today, there’s a whole ecosystem that surrounds looking at the sales figures and extrapolating meaning in order to declare emerging trends.
Each month, the sales data is released by TRREB and the media then reports it breathlessly; after all, there are few subjects Torontonians love to discuss (bemoan?) more than our bonkers real estate market.
For those of us “on the ground,” however, the lag time between the shifting behaviours and trends we observe in our day-to-day and when we are able to actually see them borne out in the numbers can be lengthy. Quite simply, by the time the data supports what the canaries in the mine have been calling, it’s often past the point of prediction and well into the new reality.
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For several months now, it has been clear that the pandemic rally we’ve witnessed in the real estate market was starting to lose steam. At first it was a drop in the number of offer registrations; things were still selling, sure, but the number of buyers fighting for them was in decline. Then it was a sharp increase in the number of listings that were failing to sell on offer night only to be relisted the following day. We were starting to see more properties simply sitting when their pricing strategy was poorly received.
For a while there the market seemed to roll right over these little micro-shifts and we weren’t seeing much of an impact on average sale prices. Our insufficient supply absorbed the bumps. And then the investor mania in the condo market served to overshadow the moderation I was certain I was seeing elsewhere.
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Well, the March numbers are in and while we are up 18.5% from last year, the average sale price was in decline from last month.
What are we to make of that?
The. Market. Is. Shifting.
It was an inevitability that at some point the runaway train was bound to lose steam. It was inevitable that at some point the upward pressure on prices would butt up against the concrete wall of unaffordability and momentum would stall.
But why now?
Well, interest rates, of course.
If the market was driven to a frenzy with buyers empowered by rock-bottom interest rates, those borrowing costs rising were sure to stop the party. It might be hard to see, at first, the partygoers would simply drop-off slowly and offer nights would go from twelve to ten to four.
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But I am quite certain that we are now witnessing the impact of those record-low preapprovals turning into pumpkins. And with it the FOMO that has driven this market.
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We talk a lot about buyer sentiment. How time and time again new government policies, even those that will prove to have limited impact, can have an immediate and short-lived influence on the marketplace. Our capacity to gauge buyer sentiment has been questionable at times — none of us could have predicted that a global pandemic would make barely a blip in a market fuelled by cheap money.
Sure, people were reimagining their relationships with their homes. Some craved more space, others craved their hometowns, still others decided to realize their aspirations to become land barons with a portfolio of investment properties. Consistent among all of them is the reality that our record-low interest rates are what got them there.
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And now with inflation approaching a 30-year high and the Bank of Canada left with exactly zero tools to do much about it beyond jacking up the cost of borrowing, the shift in buyer sentiment is inescapable — we are on the precipice of a new reality, the only questions being how severe it will be and how long it will last.
For now, it’s a safe bet that the FOMO will shift to the sellers who have been waiting to time the top of the market.
And in a few month’s time when the government tries to claim ownership over the moderating forces in the marketplace, nodding to their still-to-be-implemented and, if you ask me, wholly questionable policies to address the big, bad boogeymen like foreign buyers and blind bidding and not the rampant speculation and lax fiscal policies that got us here, I sincerely hope we know better.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
