As some COVID-era mortgages approach their renewal dates, many homeowners and potential homebuyers may be curious about whether the country is on the cusp of a buyer’s market.
From interest rate trends to our changing economy, I’ll explain some of the key factors affecting the current real estate landscape and discuss how buyers might soon hold the reins in many Canadian markets.
WHAT IS A HOMEBUYER’S MARKET?
Let’s start by defining exactly what a homebuyer’s market is.
Essentially, it’s the real estate version of a shopper’s paradise, where “For Sale” signs tend to linger a bit longer on front lawns, and prices are less likely to be inflated, leaning in favour of the buyer.
In this case, many homes have outstayed their welcome on the market, and sellers are more inclined to negotiate their prices, which may result in better deals for buyers.
A buyer’s market doesn’t just pop up overnight – it’s a direct result of the imbalance between the number of homes for sale and the number of buyers willing to purchase them. When supply outweighs demand, buyers can afford to be more choosy and take their time when buying a home.
Major cities such as Toronto and Vancouver in particular appear to be on the cusp of a buyer’s market, as real estate supply begins to outpace demand, leading to more favourable buying conditions for prospective homeowners.
Additionally, new data published by the Canadian Real Estate Association (CREA) on Wednesday shows Canada’s sales-to-new-listings ratio dropped to 49.5 per cent in October, a 10-year low. This ratio is used by real estate experts to analyze the relationship between the number of homes sold over a specific period of time, and how many new listings were added to the market. According to the association, a lower percentage points to a buyer’s market.
Don’t get your hopes up without doing your due diligence, though. Just because the tables are turning in one region, this doesn’t mean the rest of the country will follow suit.
To really understand if Canada is shifting towards a buyer’s market, prospective homebuyers and those expecting to renew their existing mortgages need to watch for telltale signs, such as:
Higher inventory levels
A drop in median sale prices
An increase in the average number of days homes spend on the market
These key indicators often reveal whether the housing market is turning in favour of homebuyers rather than sellers. One of the best ways to stay updated on this information is by reviewing the monthly housing market statistics provided for free by the CREA around the middle of each month.
About one in three borrowers have seen their monthly mortgage rates increase since interest rate hikes began in March 2022, according to data released by the Canada Mortgage and Housing Corporation (CMHC) on Nov. 9. This has particularly been the case for those with variable-rate mortgages, where interest rates fluctuate based on the Bank of Canada’s policy rate.
The CMHC report also showed that during the first half of 2023, more than 290,000 mortgage holders renewed their agreement at a higher rate than they previously held, possibly indicating the beginning of a trend. These renewals would have taken place after a number of years, depending on the length of each mortgage holder’s agreement. In Canada, most mortgage terms are five years or less, according to the federal government.
Fast forward to 2024 and 2025, and we’re looking at a staggering 2.2 million mortgages due for renewal – that’s nearly half of all Canadian mortgages, many of which were signed with rock-bottom rates.
CAN MORTGAGE RENEWALS AFFECT THE HOUSING MARKET?
But this isn’t just about higher monthly payments – this will likely produce a ripple effect that could jostle the entire housing market.
The CMHC estimates that average monthly mortgage payments could increase by an estimated 30 to 40 per cent as mortgages come up for renewal over the next few years. This means that Canadians, as a whole, would need to find an additional $15 billion within their household budgets to afford housing costs.
In September 2021, five-year fixed mortgage rates fell to a historical low of 1.44 per cent, leading to lower monthly payments for many homeowners. Fast forward to this year, however, and the average five-year fixed mortgage rate sits at 6.49 per cent, according to real estate company WOWA.
Homeowners who benefitted from the incredibly low mortgage rates during the early part of the pandemic, particularly those who locked in fixed rates, may be in for a major shock as their agreements come up for renewal. Facing the highest average mortgage rates in more than a decade, these homeowners can expect their monthly payments to increase.
Ultimately, higher mortgage payments could lead distressed homeowners to sell their property in order to find more affordable housing. This, in turn, could cause housing inventory to increase, and tip the scales in favour of a buyer’s market with increased competition among sellers.
ARE YOU A PROSPECTIVE HOMEBUYER?
In these uncertain times, potential homebuyers should approach the market with both caution and patience. Ultimately, it’s a waiting game as we’ll have to see how the housing market unfolds with the impending renewal of COVID-era mortgages.
Stay informed by tracking indicators such as inventory levels, average sale prices, and the amount of time homes spend on the market, which will allow you to see any shifts in conditions.
During this time, don’t rush. Instead, budget wisely, consider the possibility for potential interest rate hikes, and understand your financial limits.
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.
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.
VANCOUVER – Voters along the south coast of British Columbia who have not cast their ballots yet will have to contend with heavy rain and high winds from an incoming atmospheric river weather system on election day.
Environment Canada says the weather system will bring prolonged heavy rain to Metro Vancouver, the Sunshine Coast, Fraser Valley, Howe Sound, Whistler and Vancouver Island starting Friday.
The agency says strong winds with gusts up to 80 kilometres an hour will also develop on Saturday — the day thousands are expected to go to the polls across B.C. — in parts of Vancouver Island and Metro Vancouver.
Wednesday was the last day for advance voting, which started on Oct. 10.
More than 180,000 voters cast their votes Wednesday — the most ever on an advance voting day in B.C., beating the record set just days earlier on Oct. 10 of more than 170,000 votes.
Environment Canada says voters in the area of the atmospheric river can expect around 70 millimetres of precipitation generally and up to 100 millimetres along the coastal mountains, while parts of Vancouver Island could see as much as 200 millimetres of rainfall for the weekend.
An atmospheric river system in November 2021 created severe flooding and landslides that at one point severed most rail links between Vancouver’s port and the rest of Canada while inundating communities in the Fraser Valley and B.C. Interior.
This report by The Canadian Press was first published Oct. 17, 2024.