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Potential homebuyers hold off on purchases, the Home of the Week and more top real estate stories

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Home of the Week, 130 Carlton St., Toronto.Anton Mardirossian/Anton Mardirossian/TRE Media

Here are The Globe and Mail’s top housing and real estate stories this week, with the lowest mortgage rates available in Canada today, commentary from our mortgage expert and one home worth a look.

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Banks seeing decline in borrowers adding unpaid interest to their mortgage balances

Lenders are seeing outstanding loans grow as borrowers’ monthly payments don’t cover the total amount of interest. These mortgages – that increase in size instead of reducing in size – are known as “negative amortization.” Three of Canada’s major banks offer mortgages that allow their borrowers to go into negative amortization – a product that the federal bank regulator is now calling “dangerous,” writes Rachelle Younglai. The billions of dollars that quickly accumulated in negative amortizations has been a clear sign of the stress borrowers are facing when they are required to increase their monthly payments to get back on track with paying down their mortgages.

Potential Canadian homebuyers stand pat, expecting prices to slide further

TD economist Rishi Sondhi is now forecasting that the average national home price will drop 10 per cent through the early part of next year from the third quarter of 2023, leading potential buyers throughout the market to hold off in case prices have farther to fall, writes Carolyn Ireland. New listings have recently flooded the market in Ontario, which Mr. Sondhi says appears to be due to some condo investors in Toronto and Hamilton exiting the market. The climb in condo units for sale in those and other cities suggests that over-leveraged investors are choosing not to hold on to their properties.

This week’s lowest available mortgage rates

Tens of thousands of Canadians are camping out for real estate discounts, waiting for the housing market to slap big red “On Sale” signs on front lawns this winter, or pull the trigger on buying their first home, writes Robert McLister in his weekly column. But consider this: If average mortgage rates fell merely one percentage point, all it would take to cancel out that nationwide affordability improvement would be a $63,000 bounce in the $656,625 price of an average home. That kind of gain can happen in two months, as it did last spring.

Ontario real estate law gets an update with open bidding option

The new rules, which took effect Friday, include improvements to broker and brokerage disclosures, and ways to avoid conflicts on multiple representation. But the biggest change is the option for sellers to use an open bidding process, which gives the seller the choice to disclose submitted bid prices to potential buyers, something they were previously banned from doing. Provincial and federal politicians have advocated for open bidding, saying it could help bring down skyrocketing home prices. However, some experts say there’s little research on how blind bidding affects prices, and a move to open bidding could lead to negative effects for sellers.

Home of the week: Gordon Pinsent’s Toronto condo still bears his mark

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Home of the Week, 130 Carlton St., Toronto.Anton Mardirossian/Anton Mardirossian/TRE Media

130 Carlton St., Penthouse 8, Toronto

This three-bedroom penthouse was formerly owned by the late Canadian actor Gordon Pinsent, and his impact on the space can still be felt – one of his original paintings is included in the sale, for starters. The open-concept space includes a dining and living area with a vaulted ceiling that soars to nearly 16 feet, and a modernized kitchen with stainless-steel appliances. A spiral staircase leads to the second-floor loft, which is open to the living room below. Doors open to a terrace with 1,086 square feet of outdoor space. The loft was used as Mr. Pinsent’s office and studio, which his daughter says inspired much of his creativity.

What do you think is the asking price for the property?

a. $1.2 million

b. $1.95 million

c. $4 million

d. $3.25 million

b. The asking price is $1.95 million.

 

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Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

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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.

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Homelessness: Tiny home village to open next week in Halifax suburb

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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.

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Here are some facts about British Columbia’s housing market

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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.

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