Redfin's chief economist on the real estate market; mortgage rates; climate risk; housing affordability | Canada News Media
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Redfin’s chief economist on the real estate market; mortgage rates; climate risk; housing affordability

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Redfin chief economist Daryl Fairweather. (GeekWire Photo / Taylor Soper)

With mortgage rates at 20-year highs and and inventory at record lows, it’s slim pickings for U.S. homebuyers.

“It’s dry out there,” said Redfin chief economist Daryl Fairweather.

Many would-be buyers are getting priced out due to higher mortgage rates. Meanwhile, homeowners who locked in low rates over the past several years may be wary of moving.

“It’s a lack of affordability for buyers, and buyers have very few choices,” Fairweather said in an interview with GeekWire.

The slow market is hurting companies like Redfin. The Seattle-based online brokerage and real estate data hub has seen its stock fall by more than 40% this month.

The total number of homes for sale is down 18% year-over-year, and new listings are down 16%, according to the latest Redfin data.

“We’ve already hit rock bottom in terms of sales. There’s really no room to go but up,” said Fairweather. “But when we go up is the big question.”

Before joining Redfin in 2018, Fairweather worked at Amazon, studying behavioral economics related to employee engagement.

Her first economics job was at the Federal Reserve Bank of Boston during the foreclosure crisis. She would call people on the verge of foreclosure and survey them on how they got to that point.

We sat down with Fairweather this week in Seattle to chat about the housing market, when mortgage rates will come down (if ever), housing affordability, the impact of climate risk on home-purchasing decisions, and how AI could change real estate.

Her answers below were edited for brevity and clarity.

On the housing market

“We’ve been bouncing around at a low level of sales all year. We thought rates would go down by now, but they haven’t. They’re still going up. So it’s hard to say how likely it is that rates will fall. We think they will fall, but we’ve been saying that, and it might get delayed another year. There’s no way of really knowing that.”

On what impacts mortgage rates

“When you have inflation, you get higher interest rates because the Fed has to raise interest rates to fight inflation. That’s been the main story for most of this year. Now, it seems like inflation is kind of getting under control. The reason that interest rates are still saying high, though, is that it’s starting to look like government spending is not going to get reined in.”

On what she would advise homebuyers

“I think interest rates will be lower next year and they’ll be lower the year after that. How much lower is an open question. When it comes to somebody deciding if they want to buy now versus later, it really just comes down to affordability. Can you afford the monthly payment that you have to pay for the next year? If you can’t, then you probably shouldn’t buy.”

On housing affordability

“I’m not optimistic about lower-wage workers and affordability improving in a place like Seattle. We’re going to need more government intervention like low-income housing or purposeful investment to make sure people have a place to live. It’s probably not going to come about through market forces.”

On how to improve affordability beyond increasing supply

“There are places not that far from Seattle that are a lot less expensive. If we had rail lines going out there, then people could afford to work in Seattle and live in the greater metro area. But if you have people commuting in by car, then you have all this traffic and it becomes an extra cost for people. Focusing on transit is just as important as increasing supply.”

On climate risk and real estate

“The number one thing that motivates somebody to move somewhere is affordability. That’s always top of the list. Climate is on the list. But it’s not the top.”

“We are seeing insurers starting to pull out of places like California and Florida because of climate risk. And I think that’s probably going to spread to more parts of the country or be a larger consideration in terms of the premiums people are able to get. It’s not going to be some abstract cost in the future.”

On Redfin and ChatGPT integration

“With ChatGPT, there’s this extra element that people can personalize or convey what they’re looking for in a way that’s not really possible with the search filters or maps right now. And when people have abstract questions, ChatGPT can handle that better than search filters.”

On AI replacing real estate agents

“Agents still play a very big role. They can guide people through their personal decisions. ChatGPT could replace a bit of that, but not enough to the point that you wouldn’t need the agent. But one question is, if agents are playing less of a role, should their fees come down?”

On AI replacing her job

“Humans are good at judgment. AI is good at prediction. But somebody has to be there and look at what the AI did and say, is this reasonable or not? Did the AI make a mistake? I don’t see like my judgment role going away. But maybe we won’t need as many analysts to do the data work or to write the code.”

 

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

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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.

The Canadian Press. All rights reserved.

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Homelessness: Tiny home village to open next week in Halifax suburb

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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

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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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