Northwest B.C. is witnessing a dramatic real estate boom in the first half of 2021 as the COVID-19 pandemic-induced recession slowly begins to wane across the province.
While the number of properties sold in 2021 has doubled since 2020, the real estate prices have significantly increased too.
Realtors in the Terrace area sold 200 properties worth $84.2 million in the first six months of 2021, compared to 105 properties worth $34.1 million in the same period last year, according to a report released by BC Northern Real Estate Board (BCNREB) on July 9.
Half of the 112 single family homes that sold fetched less that $450,000. On average it took 60 days to sell those homes. In addition, 16 parcels of vacant land, 9 half-duplexes and 21 homes on acreages changed hands in the first six months of the year. At the end of June there were 231 properties available for purchase in the Terrace area.
The booming real estate trend is also an indicator that the steep pandemic-induced recession of 2020-21 is waning rapidly across the province and B.C. is on a trajectory to reach an economic growth rate of six per cent in 2021 – a 25-year high, based on BCNREB’s report.
Some of the high profile projects from northern B.C. such as the LNG Canada’s terminal and Rio Tinto’s tunnel-boring project near Kitimat are listed as contributors to this growth. Coastal Gaslink Pipeline, Trans Mountain pipeline, Site-C Dam near Fort St. John are other projects that employ thousands of workers and seem to be boosting employment growth and housing demand in northern BC, according to the report.
In the Kitimat area, 121 properties worth $43.8 million have sold in the first six months of 2021, compared to 48 properties worth $15 million at this time in 2020. Similarly in Prince Rupert, 164 properties worth $62.2 million was sold so far this year compared to 89 properties worth $29.9 million in 2020.
The report also shows a trend of “record low inventory,” meaning that not many properties are being listed for sale. This trend of low inventory of available homes, combined with heightened demand is further exacerbating a price growth in northern B.C.
According to British Columbia Real Estate Association’s forecast for the remaining half of 2021, real estate sales will surpass the previous record of 5,564 units sold in 2006. It also estimates home prices to rise by 20 per cent in 2021.
Currently BCNREB has already reported a sale of 3,565 properties with a total value of $1.2 billion sold so far in 2021, in northern B.C.
In Ontario, real estate buyers are holding out for a price cut – The Globe and Mail
The stalemate that is taking hold in the Ontario real estate market right now arises from a belief that is becoming more entrenched each month: buyers reckon prices have farther to fall.
House hunters see properties in some areas selling at 15 per cent or so below the high-water mark set in the first quarter and decide to hold off for an even steeper discount. Sellers either refuse to budge or feel the landscape shifting under them and rush to complete a transaction before more ground crumbles away.
The war in Ukraine, stubborn inflation and the rise in interest rates have precipitated a much more tumultuous real estate market than industry watchers were predicting even a few months ago, according to John Lusink, president of Right at Home Realty.
Mr. Lusink says sales for June are set to come in about 26-per-cent below even his conservative projections at the start of the year, continuing a trend that has been on a downward slope since February.
“We can throw that forecast out the window,” he says of his projections for 2022.
The landscape is the same across the Right at Home network, which spans 12 regions of Ontario.
The number of listings, meanwhile, is gradually increasing after a slow spring, he adds.
Mr. Lusink expects the final tally for Right at Home’s sales in June to show a 37-per-cent drop from the same month last year.
“It’s, needless to say, concerning.”
Rishi Sondhi, economist at Toronto-Dominion Bank, points out that sales and prices have fallen disproportionately in Ontario and British Columbia, where prices climbed the most during the pandemic. The retrenchment in activity is especially hard in the Greater Toronto Area, where investors have played a particularly large role in the past year.
The downturn is part of a worsening picture across Canada, as sales and prices continued to decline in May under the weight of higher interest rates, Mr. Sondhi points out. Some sales were likely pulled forward to late 2021 and early 2022 as people braced for higher rates, he adds.
The economist says some GTA buyers also likely purchased new homes before selling existing properties, expecting the market would remain hot, he adds. Those sellers may be forced to accept lower prices now in order to complete the new deal, but he expects that dynamic to run its course before too long.
Mr. Sondhi is forecasting a continuing decline in prices throughout the rest of the year as a reflection of sharply higher interest rates.
Alongside the buyers betting that prices will slide, Mr. Lusink says, stands another cohort ready to buy – but the task has become much harder with the rise in rates. One buyer Mr. Lusink spoke with recently had obtained a fixed-rate mortgage at 4.3 per cent, which is almost double the rates buyers were able to lock in just a couple of years ago.
The mortgage “stress test” requires borrowers to show they can handle mortgage rates approaching seven per cent and above, he points out.
A recent survey commissioned by Right at Home also shows a shift in attitudes: Only 19 per cent of potential first-time homebuyers in Ontario plan to buy in the next two to three years, compared with 30 per cent who planned to buy in 2021, according to the study.
The percentage of homeowners planning to sell who are doing so to take advantage of current market conditions increased to 23 per cent this year from 11 per cent last year, the data shows.
The Maru Public Opinion Survey polled 813 Ontario adults in May and has an estimated margin of error of plus or minus three per cent 19 times out of 20.
In Burlington, Ont., real estate agent Tanya Rocca is already seeing homeowners preparing properties for sale before the fall market arrives.
“It’s very busy right now,” says the agent with Royal LePage Burloak Real Estate Services. “People are panicked.”
Ms. Rocca says prices in the area which have dropped between 12 and 15 per cent from the February peak.
The average price of a freehold property dropped to $1.431-million in May in Burlington, she says, compared with the $1.51-million buyers were paying in April and the $1.6-million in February and March.
The affluent city, which sits on Lake Ontario west of Toronto, was one of the many communities that saw a large influx of buyers during the pandemic as people sought more space. Burlington’s historic downtown core and large selection of detached houses with pool-sized lots have made it very popular with families.
Ms. Rocca says many buyers didn’t even have a chance at a house in the midst of ferocious bidding wars; now people have their choice of properties.
Some current sellers have been caught in the market transition, Ms. Rocca adds, because they bought a new property before selling an existing one.
“Buyers, in fairness, are getting the power back – which they love,” she says. “There are great opportunities out there because people need to sell.”
Ms. Rocca was shocked at some homeowners earlier this spring who were disappointed on offer night when they received bids that came in $300,000 or $400,000 above the asking price.
“People were debating whether they should take it.”
She recalls one pair of homeowners with a home backing onto a golf course who listed their property with an asking price of $2.5-million. The sellers were disappointed they didn’t receive a hefty amount above asking.
“They got their asking price literally the week things started to shift,” Ms. Rocca says. “They were so close to not taking it.”
As the summer begins, it’s not uncommon to see listings sitting with 30 to 50 days on market, she adds.
In the current environment, Ms. Rocca recommends setting a price near the realistic market value. She often “sharpens” it a little bit to make it more attractive compared with other competing properties in the area.
To help homeowners come to terms with the new reality, she stresses that first-quarter prices were the result of an overheated market – not an accurate reflection of value.
“This is not money they’ve lost – they never had it.”
Ms. Rocca says some people who purchased properties in Burlington at the beginning of the pandemic are now being called back to offices in Toronto. With more cars on the road and the price of gas skyrocketing, many are reluctant to commute.
“People were making such rash decisions during COVID,” she says, adding that some of those folks are now selling and moving back to the GTA.
With such an extended run-up in real estate prices while rates were low for years, the market in Ontario saw a few blips but no real correction, she points out. A move to restore balance is healthy, in her opinion.
“I think we’re going through a cycle right now which is very much needed.”
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Is Summer the Right Time to Sell Luxury Real Estate in the GTA? – Storeys
Some of the Greater Toronto Area’s (GTA) most exclusive luxury neighbourhoods shine brightest in the summertime, in all of their tree-lined, manicured lawn, and swimming pool-filled glory.
From Forest Hill and Rosedale, to The Kingsway, the warmer weather makes these breezy neighbourhoods even more picture-perfect, adding to the curb appeal of their sprawling homes.
But is the summertime the right time to list your home on the luxury market in the GTA? It can be — but there are a few important considerations to take into account.
“Summer is always a slower time for luxury real estate in the city,” says Andy Taylor, Senior Vice President of Sales at Sotheby’s International Realty Canada. “For many, this is the season to get away to the cottage. Especially after the pandemic, more and more people have cottages that they’re escaping to on the weekends, instead of staying in the city to list their home.”
A lot of the higher-end luxury inventory has been kept off the market during the summer months, says Taylor. “Instead of posting it to the Multiple Listing Service (MLS), agents are selling luxury homes as exclusives,” he says. “Although there are transactions happening in the luxury market, they’re not being captured by MLS. This summer in particular, we will continue to see transactions, but the volume of transactions will slow down.”
Sotheby’s currently has a handful of multi-million-dollar properties — including The Residences at the Ritz Carlton, 125 Cumberland, and a $10.75 million property in Rosedale — that are all exclusive listings.
When it comes to buyer trends, Taylor says that those in the market for a luxury listing are seeking specialty properties that are finished and require little planning or work. “Homebuyers don’t want to work on renovations, especially in the summer, as they’re looking to travel or go to the cottage,” says Taylor. “Recently, there have been a lot of delays when working with contractors, so buyers aren’t able to get their finishings done as quickly as anticipated. Properties that require a lot of work are sitting, whereas homes that show exceptionally well are getting offers and are selling a decent price point.”
In addition to completed properties, the GTA’s luxury home seekers have their eyes out for amenities. “For the luxury homebuyer, they want a unique property that has already been completed and comes with high-level amenities,” says Jodi Allen, Senior Vice President of Sales at Sotheby’s International Realty Canada. “For instance, high-quality finishes, nice layouts, room for an office, a gym, and high ceilings are all on the luxury buyer’s wish list. Right now, a lot of buyers have also been asking about pools. Travel has been hectic lately and buyers are looking to stay in Toronto or travel to the cottage, so having a pool is key for the summertime staycation.”
Taylor and Allen highlight how the spring weather brought a shift in the Canadian real estate market. After a red-hot and often record-breaking run, GTA home prices finally started to soften as of late and the market has dialled back the drama.
“The media has been focusing on the slowdown of the market, which has impacted buyers as they’re taking their time to make decisions and there’s much less urgency than what was seen from March to May,” says Taylor. “Properties aren’t being offered with an offer date, instead they’re being marketed with what the agents are feeling is the true value of the property. For sellers, their expectations of price haven’t changed, whereas buyers are expecting a price decrease.”
Sellers are starting to realize that properties have to be priced properly in order to sell, according to Taylor. “If sellers are planning to test the market with a high price point, they shouldn’t bother listing,” says Taylor. “For buyers, under-pricing and holding back on an offer is also not working well, so the majority of agents are no longer taking this approach. Currently, pricing properties accurately is very important to both parties.”
Allen agrees that the biggest mistake sellers are making right now is in the price department. “Right now, you can’t play aggressive and throw a high price on a property just to test the market,” she says, driving the point home. “Instead, sellers need to price their property where it shows value.”
For those looking for a luxury Toronto property, the pickings are slim in some of the most coveted neighbourhoods.
“We’re actually seeing a lack of inventory in neighbourhoods like Rosedale, The Annex, and Yorkville, but in Lawrence Park there’s been an increase,” says Allen. “The downtown area — which mostly consists of luxury condos — had also been quiet recently, but is now just starting to pick up again. As the shock and awe of interest rate hikes begin to cool down, we should see the showings come back to reflect a traditional summer market in these key neighbourhoods.”
For those considering selling their luxury property in the summer months, Allen says that the most important thing to remember is that you don’t want the listing to go stale.
“In the summer, sometimes it’s best to keep a listing exclusive which puts pressure on the agents to work harder, make calls, and build the awareness of property,” says Allen. “We’re still not sure what the fall market will look like, so some would say that it’s best to list a home during the summer, even though it’s slower. For most of our GTA listings, we’re keeping them exclusive before putting them on MLS in September.”
Allen also advises sellers to ensure that the listing looks like a model showroom and reflects the amenities that are important in the summertime. “For example, sellers should make sure that the outside of their home is staged, the gardens have been taken care of, the barbeque has been cleaned, and the deck furniture is set up,” she says. “People tend to visit the outside of a home first before going outside, so it’s important that the exterior is a good representation of the property.”
Finally, Allen says that it’s important that the pictures of the listing reflect the season. “At Sotheby’s International Realty Canada, we make sure that all photos and videos of our listings are up-to-date, which gives the buyer a real insight into what the property currently looks like,” says Allen.
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