Real estate markets in the country’s largest metro areas remained relatively strong in July despite the Bank of Canada’s most recent rate hikes.
Data from some of the key real estate boards show continued year-over-year growth in activity and continued upward momentum in prices.
In Toronto, sales posted a 7.8% year-over-year gain, while in Vancouver they were up nearly 29%.
However, Andrew Lis, the Real Estate Board of Greater Vancouver’s director of economics and data analytics, said part of the strength is due to weaker sales a year ago as interest rates were starting to rise.
“Last July marked the point when the Bank of Canada announced their ‘super-sized’ increase to the policy rate of one full per cent, catching buyers and sellers off guard, and putting a chill on market activity at that time,” he noted.
Still, Lis notes that the current strength is against the backdrop of borrowing rates that are much higher compared to a year ago. “Despite borrowing costs being even higher than last July, sales activity surpassed the levels we saw last year, which I think says a lot about the strength of demand in our market and buyers’ ability to adapt to and qualify for higher borrowing costs,” he continued.
Signs of cooling ahead
On a monthly basis, sales in most markets were down, including in Vancouver (-3%), Toronto (-8.8%), while price gains moderated.
Pressure eased on prices thanks in part to an increase in supply as sellers have started listing homes in greater numbers, particularly in Ontario and British Columbia.
“If sustained, we would expect price gains to continue moderating in the coming months,” noted RBC economists Robert Hogue and Rachel Battaglia.
“Signs of cooling activity in some of Canada’s largest markets are consistent with our view that the spring rebound was premature, and will taper off further amid high interest rates, ongoing affordability issues and a looming recession,” they added. “We think the path ahead is more likely to be slow and bumpy, with the recovery gaining momentum when interest rates come down—a 2024 story.”
Here’s a look at the July statistics from some of the country’s largest regional real estate boards:
QUICK LINKS:
*********
Greater Toronto Area
July 2023
YoY % Change
Sales
75,250
+7.8%
Benchmark price (all housing types)
$1,118,374
+4.2%
New listings
13,712
+11.5%
Active listings
15,371
+0.3%
“Home sales continued to be above last year’s levels in July, which suggests that many households have adjusted to higher borrowing costs. With that being said, it does appear that the sales momentum that we experienced earlier in the spring has stalled somewhat since the Bank of Canada restarted its rate tightening cycle in June,” said TRREB President Paul Baron.
“Compounding the impact of higher rates has been the persistent lack of listings for people to purchase compared to previous years,” he added.
Source: Toronto Regional Real Estate Board (TRREB)
Greater Vancouver Area
July 2023
YoY % Change
Sales
2,455
+28.9%
Benchmark price (all housing types)
$1,210,700
+0.5%
New listings
4,649
+17%
Active listings
10,301
-4%
“While sales remain about 15% below the 10-year average, they are also up about 30 per cent year-over-year, which is not insignificant,” said Andrew Lis, REBGV Director of Economics and Data Analytics.
“Looking under the hood of these figures, it’s easy to see why sales are posting such a large year-over-year percentage increase,” he added. “Last July marked the point when the Bank of Canada announced their ‘super-sized’ increase to the policy rate of one full per cent, catching buyers and sellers off guard, and putting a chill on market activity at that time.”
Source: Real Estate Board of Greater Vancouver (REBGV)
Montreal Census Metropolitan Area
July 2023
YoY % Change
Sales
3,098
+1%
Median Price (single-family detached)
$555,000
+1%
Median Price (condo)
$395,000
0%
New listings
4,354
-9%
Active listings
14,820
+20%
“After a disappointing month of June, transaction activity is picking up in the Montreal CMA. For the first time since the summer of 2021, it is the Island of Montreal that is pushing activity in the metropolis, driven by sales of small income properties and single-family homes,” said Charles Brant, Director of the QPAREB’s Market Analysis Department.
“Clearly, some buyers are less affected by the rise in interest rates. The majority of buyers currently in the market can count on income or equity from their real estate holdings, with values compared to last year,” he added. “The many newcomers with immigration status allowing them to buy a property in Quebec are also joining the ranks of this category of buyers with good purchasing power.”
Source: Quebec Professional Association of Real Estate Brokers (QPAREB)
Calgary
July 2023
YoY % Change
Sales
2,647
+17.7%
Benchmark price (all housing types)
$567,700
+5.7%
New listings
3,247
+2.2%
Active listings
3,488
-34.8%
“Continued migration to the province, along with our relative affordability, has supported the stronger demand for housing despite higher lending rates,” said CREB Chief Economist Ann-Marie Lurie.
“At the same time, we continue to struggle with supply in the resale, new home and rental markets resulting in further upward pressure on home prices,” she added.
“Both transactions and average prices are up from last July indicating consumers remain confident in the market notwithstanding the two recent quarter-percent interest rate hikes by the Bank of Canada,” said OREB President Ken Dekker.
“We’re only a month into the third quarter, but based on July’s positive indicators, we are likely to see solid year-over-year results in the second half,” he added.
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.
