Cooling home sales in recent months have changed the dynamic in markets across the country.
Gone are the bidding wars previously seen in many communities, as higher interest rates cause buyers to take a step back and housing inventories build.
Bank of Canada rate hikes may have ended, but their effects have not, says Desjardins principal economist Marc Desormeaux in his housing outlook.
“Listings have also climbed nearly across the board in a sign that homeowners may be struggling with higher mortgage rates,” said Desormeaux.
“So while supply–demand balances are still tighter in Alberta than in Ontario and BC, all major markets are loosening.”
A recent study by online realtor Zoocasa aimed to find out by how much. The study analyzes market competition across 23 cities in Canada to determine their sales-to-new-listings ratios (SNLR). A ratio under 40 per cent where new listings overtake sales suggests a buyer’s market, between 40 and 60 per cent is a balanced market and over 60 per cent, where demand exceeds supply, is a seller’s market.
When Zoocasa did this same analysis last spring, there were no buyer’s markets in Canada, but that has changed.
Greater Toronto, Niagara Region, Hamilton-Burlington and Victoria have since flipped to buyer’s markets. The SNLR is lowest in Toronto and Niagara Region at 32 per cent, suggesting that buyers in these regions have more bargaining power.
Eight of the markets Zoocasa analyzed are now balanced, but some are close to the edge. London and St Thomas in Ontario have an SNLR of 40 per cent, right on the line between balanced and buyer’s markets. Fraser Valley and Ottawa are also close with SNLRs of 41 per cent and 43 per cent, respectively. Greater Vancouver is at 44 per cent.
“With many of Ontario’s most in-demand markets favouring buyers or currently in a balanced state, sideline buyers who have been apprehensive about entering the market may find that now is actually the right time,” said Scibetta. “Less competition and more inventory often lead to greater negotiating power.”
It’s another story out west, where competition is still running hot. The most competitive market in Canada, according to the study, is Regina, where the SNLR is 80 per cent. That’s up from last year’s SNLR of 73 per cent.
In Regina, the average home price in October was $308,500 – compared to the national average of $731,100, said the study.
Calgary also has one of the highest SNLRs in the country at 79 per cent, but that is down from 84 per cent last year, suggesting some of the heat is seeping out of this market. Unlike other major centres in the country, Calgary home prices have continued to climb, with the average hitting $555,400 in October, a record high.
Most of the markets Zoocasa studied are less competitive than they were a year ago. Only two, Saguenay CMA and Edmonton, have moved from a balanced market to a seller’s market this year.
Looking ahead, economists say to expect more of the same as higher borrowing costs continue to take a toll.
The Bank of Canada’s pause is not expected to spark the rally it did last spring, and the economic downturn forecast for 2024 will further dampen activity, said Desjardins’ Desormeaux.
But while the outlook for the spring season is downbeat, economists expect that as the Bank begins to cut rates and the economy bounces back later in the year, sales and prices will pick up again.
Rents have shot up more than 8 per cent in the past 12 months at the fastest pace since 1983 and 7 percentage points faster than the average annual increase in the 20 years before COVID, says BMO chief economist Douglas Porter.
The gains have been so steep they have now outstripped growth in personal income, he said. Disposable income per person has risen at a pace of 3.9 per cent annualized over the past five years — slightly higher than the average overall inflation for that period. But the recent spike in rents has left income in the dust.
“This is the first time in 60 years of records that income growth has trailed behind rents — and it’s not even close,” said Porter.
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TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
The Canadian Press. All rights reserved.
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.
The Canadian Press. All rights reserved.
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.
The Canadian Press. All rights reserved.
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