Real eState

Real estate observers see rocky road ahead

Published

2 years ago

October 12, 2022

A person walks by a row of houses in Toronto on July 12.COLE BURSTON/The Canadian Press

Crumbling consumer confidence is dampening hopes for a rebound in Canada’s real estate market as economic signposts point to more strife ahead.

One industry executive who holds that view oversees a network of agents at 14 offices across Ontario.

John Lusink, president of Right at Home Realty Inc. and Property.ca, dives into statistics and forecasts, but he also relies on one proprietary yardstick: his firm’s trust account.

“That’s always a fantastic predictor,” he says. “Over 17 years, it has never let us down.”

When buyers have an offer accepted by the sellers, the buyers provide a deposit, which is held in trust by the real estate brokerage until the deal closes.

At the beginning of October, the amount held in trust by the firm had plunged 38 per cent from this time last year.

The sharp decline in funds held in trust is an accurate measure, Mr. Lusink says, and he sees no signs of a turnaround.

At Toronto-Dominion Bank, economist Rishi Sondhi raised his forecast for the Bank of Canada’s benchmark interest rate and downgraded his projections for Canadian home sales at the same time.

Mr. Sondhi predicts the central bank will lift interest rates by another 75 basis points to bring the policy rate to 4 per cent by the end of the year. That revised forecast comes with upside risk, given that inflation is still high, he warns.

Higher borrowing costs will further erode housing affordability and weigh on overall economic growth, according to Mr. Sondhi, which in turn will drag down demand for real estate. He believes sales will bottom out at about 20-per-cent below their pre-pandemic levels in the early part of 2023 and remain subdued.

Economist Carrie Freestone, who tracks consumer spending at Royal Bank of Canada, reports that home-related spending is trending lower as the housing market cools. Purchases of essential and discretionary items levelled off into the fall, with discretionary spending settling below post-lockdown highs, Ms. Freestone notes.

The most recent data from Statistics Canada on retail sales shows that consumers spent less than expected in July. The numbers indicate households are trimming spending in the face of high inflation and rising interest rates.

Mr. Lusink also points to the tally of rental agreements at Right at Home, which have swelled to 45 per cent of incoming transactions from the more typical level of 35 per cent at the start of the fall market.

The shift to renting comes as more buyers are priced out of owning, he believes.

Mr. Lusink recently met with one heavyweight developer that is taking steps to mitigate its own risk by ensuring that agents and financial institutions are educating prospective buyers about the amount of financing they can realistically obtain from a lender.

“They want people knowing from the get-go what they’re getting into,” he says. “They would rather know they’re working with qualified, approved buyers.”

Mr. Lusink notes that readings of consumer confidence have also been shaky as people worry about inflation, rising interest rates and the risk of recession, but he views sentiment as a lagging indicator.

He expects sales and listings this fall to remain depressed. Some homeowners who are in a position to trade up are deciding to stay where they are because there are few good listings to choose from. In turn, that prevents them from adding to the supply by listing their current home.

“The continuing decline in transactions is going to continue into the fall,” he says. “Based on the data, it’s going to be challenging for the next eight months.”

Across Ontario, some of the hottest markets in 2021 are now cooling rapidly: Prices soared in Barrie, Ottawa and Burlington during the pandemic but they are quickly adjusting now. The established markets of Moore Park and Rosedale in Toronto, for example, remain more resilient.

Mr. Lusink acknowledges that some of the firm’s own agents would prefer that he keep his pessimistic forecast quiet. But he adds there is no value in obfuscating the facts. Instead, he advises the managers and agents in the network to analyze and really understand the data.

“At the end of the day that’s what the customer wants us to help them interpret. Sometimes it comes down to what’s happening on that street as opposed to what’s going on around the corner.”

Having a strong grasp of the numbers will help with accurate pricing for sellers and accurate expectations for buyers, who need to understand what they can afford, he says.

“We end up in a lot less trouble.”

Mr. Lusink is referring to the potential for deals to fall apart if buyers stretch too far. Some have buyer’s remorse and try to walk, others have appraisals fall short of the sale price, and some run into problems with financing.

Mr. Lusink says agreements faltered when the market drastically shifted in the spring and prices began to slide. Some market participants were caught off guard.

Now buyers and sellers have mostly adjusted to the transition.

“If anything we’ve seen a slight decrease in transactions that didn’t close. It’s been less worrying than we thought.”

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Real eState

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

Published

14 hours ago

November 6, 2024

Anne Joseph

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

Published

2 weeks ago

October 24, 2024

Anne Joseph

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

Published

3 weeks ago

October 17, 2024

Anne Joseph

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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