There appears to be a shift in the real estate landscape and you have to wonder: is there hope on the horizon for qualified first-time homebuyers?
This shift has only started to happen during the past couple of weeks. Our son, Dave, who went to see a home just outside of Toronto, had 25 registered offers and ultimately went $660,000 above the listing price five weeks ago. Recently, a home similar to that one, in the same area with the same price tag today, has had zero registered offers.
What has changed?
Interest rates have headed higher and in all likelihood, the Bank of Canada isn’t done yet. There are fewer buyers willing to dip their toe into this market. Prices have yet to come down and costs have risen. Surely this is a recipe to cool things off but it hasn’t happened yet.
WILL THE MARKET COOL?
Housing prices in Canada are still incredibly high and here is why — we are still dealing with a supply shortage in desirable locations, higher immigration levels have put pressure on demand, along with the strong desire for urban lifestyle living especially in Toronto, Vancouver and Montreal. The high concentration of buyers has driven demand and the knock-on effect has led to higher prices. Bidding wars have become the norm and successful bidders often found themselves stretched to the limits.
What was once considered a reasonable debt/service ratio where your monthly household income that covers your housing costs couldn’t exceed 39 per cent and where the percentage of your monthly household income that covers your housing costs and any other debts couldn’t exceed 44 per cent simply doesn’t cut it anymore. Lenders have been stretching the boundary on approval limits to get the deal done.
Now don’t get me wrong, it is still a challenge to find the right home, in the right location for the right price. Prices are still so high in Canada as there are simply too many people bidding on too few homes, in turn driving prices higher. The result is that the first-time buyer is getting squeezed out. The wealthy seem to have had the upper hand in bidding wars where lower rates and larger deposits have tilted the odds in favour of those with financial flexibility.
While the challenge in the real estate market may appear obvious – a market with supply and demand imbalances – it is too simplistic a statement without including the reasons for the imbalances.
During the pandemic, many came to realize their desire for more living space and shorter commutes, and found a better appreciation for how they wanted to work and where they wanted to live. The desire to move quickly became supported by an incredibly low interest rate environment that was designed to intentionally help stimulate demand and offer up certainty for potential home buyers. The policy became the lifeline for those looking to relocate or cash out of their homes. In fact, real estate became the pillar of strength for our struggling Canadian economy. The desired outcome was achieved.
That was then and this is now.
WILL IT BECOME A BUYERS’ MARKET?
The once-motivated seller who may have listed their home to simply cash in, now has to think about a realistic listing price in a rising interest rate environment if they hope to stimulate interest. That could be a game-changer for new home buyers who can handle higher rates.
Stay tuned, there are still people who want to sell and buyers who can handle higher rates. But there are fewer of them, so we will all be watching closely to see if the dynamics shift to a buyers’ market from the sellers’ market of the past few years.
However, a word of caution to first-time buyers: just because you can doesn’t mean you should. Homeownership is still very expensive. The impact to your lifestyle, when mortgaged to the hilt, is significant. Gone will be the disposable income you once enjoyed that allowed you to dine out, travel and frequent live entertainment. The economy is bouncing back so recognize that the fear of missing out on your dream home could soon be replaced with the fear of missing out on the lifestyle you once enjoyed.
Before you leap into a more expensive home than you can comfortably afford – just because you can afford higher rates – I think it still begs the question: should you?
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.
