A new report from RBC says short of a housing crash that would “destroy property values” in Canada, it will take years and concerted efforts to restore affordability.
The second-quarter report on housing affordability lays out some dire conditions across the country and warns “any progress in restoring housing affordability is likely to be slow.”
According to RBC, in order to see any sort of difference in the current housing situation, supply needs to increase by giant leaps.
But the bank says that doing that will take a long time and even if new homes are built, the rising construction costs could still result in Canadians being priced out of the market.
The dream of home ownership remains out of reach for many
As Canadians across the country deal with high interest rates and real estate prices, the report suggests buyers will continue to deal with “extremely difficult affordability conditions.”
“We believe those pressures are behind the notable cooling in home resale activity we saw this summer in Ontario and British Columbia. They are poised to weigh on demand for months to come in both regions, with many buyers entirely priced out in Vancouver and Toronto,” reads the report.
RBC says we are still seeing the effects of the sharp erosion of affordability from the pandemic playing a role.
Vancouver
Any hopes for any improvement in affordability were dashed as the market rebound in the second quarter sent home prices climbing at a rapid clip again after soaring interest rates saw prices drop the previous year.
Calgary
According to RBC, Calgary is apparently the hottest housing market in the country right now. The bank says inventory is at a 15-year low and that “home resales [are] running at the pre-pandemic peak” and as buyers compete fiercely for the little inventory Edmonton
We’re not in Calgary… The situation is Edmonton is quite different as there seems to be “plentiful inventory” that is resulting in a “calming effect” on price negotiations.
Toronto
RBC says Toronto has more in common with the situation in BC than Alberta right now. There is “no material relief” in sight in Toronto and RBC says “the dream of owning a home remains far out of reach for ordinary folks.”
Interest rates seem to have ignited resale activity in the spring, but RBC is predicting “a more subdued tone” in the months ahead.
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.
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.
