In what’s shaping up as a post-pandemic battle for talent, an Ontario company has a plan to harness the Canadian itch to get into the property market with a scheme to attract and keep young employees.
Friday’s jobs numbers will give us a better idea of whether the incentive is necessary, but Crozier Consulting Engineers says it is offering new employees $20,000 to make it easier to fight their way into an overheated real estate market that simply refuses to die.
We’ll get a reading on the state of the national market next week when the Canadian Real Estate Association comes out with its latest data on resale homes, but Crozier’s housing incentive is only one snippet of news this week that shows — to paraphrase Mark Twain — reports of the demise of the housing market have been greatly exaggerated.
“We have seen first-hand the increasing demand for residential development and the frustrating situations our employees find themselves in, such as extreme bidding wars, when trying to buy their first home in today’s market,” said Nick Mocan, president of the company based in Collingwood, Ont.
Stoking the market
Before you rush to put your name in, some conditions do apply — as such offers always say in the fine print — including that the scheme only works for first-time buyers.
Similar to the federal First Time Home Buyer Incentive program, announced in the 2019 budget, it kind of helps boost the down payment for people, most of them young, struggling to get into a dog-eat-dog real estate market. Latest data from that federal scheme shows that nearly 11,000 people applied for shared equity mortgages, which represents more than $200 million in homebuyer support.
Home prices in Collingwood, Ont., continue to rise as people from bigger cities look for affordable real estate — making it harder for local residents to break into the market. An engineering company in the town is offering new employees $20,000 to make it easier for them to buy a home. (Don Pittis/CBC)
But whether from an employer or from the government, while such incentives give individual recipients an advantage, overall they merely stoke an already hot market that just doesn’t seem to want to cool.
“It’s not really surprising because the cost of borrowing is still low,” said Samantha Brookes, CEO of Toronto brokerage firm Mortgages of Canada. “And as long as the cost of borrowing remains low, you’re always going to have a lot of activity in the market.”
And there is no question that interest rates are staying low. For those who fit the criteria, mortgage broker Ratehub.ca this week declared a new record low for a five-year variable rate mortgage of 0.98 percent. At that rate, a million-dollar house will cost you $10,000 a year in interest.
No wonder the Toronto Regional Real Estate Board (TRREB) upped its 2021 forecast for this year. Previously the board, which covers properties in the Greater Toronto Area, predicted there would be 105,000 transactions with an average selling price of $1.025 million. It has now increased that outlook to 115,000 sales at prices averaging $1.070 million.
‘Persistent lack of inventory’
However, that latest higher forecast is based on an exceptional run of sales at the beginning of the year — and sales are now expected to trend below those record levels, the group announced Tuesday. That said, TRREB market analyst Jason Mercer expects a shortage of houses on the market will keep prices high.
“A persistent lack of inventory across most segments of the market will keep competition between buyers strong, resulting in an average selling price well above $1 million through the end of 2021,” Mercer said in a news release announcing the latest data.
Just like statistics from the Real Estate Board of Greater Vancouver this week, sales were down month over month in Toronto. But Vancouver data shows they were still strong by other measures. Sales in Metro Vancouver were up more than 50 per cent from the depths of the pandemic, but more significantly they were 18 per cent higher than the 10-year average for the month of June.
According to statistics released by the Real Estate Board of Greater Vancouver this week, house sales in June were down 11.9 per cent from May. But they were 18 per cent higher than the 10-year average for the month of June. (Evan Mitsui/CBC)
The debate continues over whether the continued buying frenzy, driven by low interest rates, needs to be controlled by tighter regulations to prevent a bubble that would pop once interest rates begin to rise.
But if the Canada Mortgage and Housing Corporation (CMHC), traditionally the country’s largest mortgage insurer, had hoped to use its clout to bring the market under control, that was reversed this week — one more potential boost to the market.
For those who don’t know, mortgage insurance protects the lender, not you, the mortgage borrower. By lifting its standards, the CMHC hoped to concentrate the minds of banks and other lenders, forcing them to lend only to those least likely to default in a future recession.
Private-sector competition
But this week, the government agency announced it was reverting to the old lower standards after private insurers Canada Guaranty and Genworth, now operating under the name Sagen, failed to follow suit. So borrowers simply switched from CMHC to its private competitors, resulting in a plunge in the federal agency’s market share.
A debate continues over whether the cause of rising prices is a shortage of housing or whether — as Bank of Canada governor Tiff Macklem has warned — it is increasingly driven by a rush to buy properties to take advantage of their rising value as returns on other safe investments stagnate.
From her experience, Brookes of Mortgages of Canada is one of those who believe the market is at least partly driven by new Canadians getting on the property ladder, but she sees an end in sight to soaring prices.
“This will not continue, I can guarantee you that much,” she said. “Because at some point, markets have to level out, and that’s going to happen once rates start to increase.”
WATCH | Tougher stress test makes it harder to get a mortgage in Canada:
As of June 1, Canadian homebuyers will face a tougher mortgage stress test. The new rules will make it harder to get into the housing market now, but could make it easier for others down the road. 1:57
But at the Collingwood engineering firm, Nick Mocan said that the company’s real estate incentive is paying off, allowing employees to be able to find a place to live near town rather than making long commutes. So far, nine employee have received the benefit, and he is certain it inspires loyalty. Other companies looking to find and retain staff may be taking note.
“The interest is rather overwhelming,” Mocan 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.
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.
