It’s been a year of ups and downs for Canada’s housing markets, but, for the most part, they gained strength and posted increases in both prices and sales.
Though sales data for December is needed to paint a complete picture, housing market activity up until the end of November offers enough insights to reflect on the past and plan for the future.
If there was one development that defined Canadian real estate in 2019, it was the housing market’s resilience, especially since the slowdown that started in 2018, when the stress test was extended to uninsured mortgages, lasted longer than most had anticipated.
But the market’s turnaround since March has been fuelled by strong demand, despite the absence of regulatory relief, in most of the country, excepting Alberta, British Columbia and Saskatchewan. Perhaps unsurprisingly, the turnaround coincided with the federal budget in March 2019, which provided some clarity on how and when the government would address the housing market decline.
Early discernible signs of strength appeared in Toronto, where monthly sales in March outpaced those recorded a year earlier, and the average house price crossed the $800,000 benchmark for the first time since October 2018.
Year to date as of the end of November, non-seasonally adjusted residential sales in the Greater Toronto Area (GTA) were at 83,824, 12.2 per cent higher than in the same period a year ago, according to Canadian Real Estate Association data. The national figures are influenced by Canada’s largest housing market and reached 461,212 units, 5.6 per cent higher than last year.
Housing sales in the Greater Montreal area were up by 9.1 per cent and approaching almost 48,000 sales, while Ottawa, Hamilton-Burlington and Winnipeg also showed strength.
Out west, the urban housing markets in Greater Vancouver, the Fraser Valley and Edmonton reported fewer year-to-date sales in November than the previous year, while Victoria and Calgary reported modest increases of less than two per cent.
Non-seasonally adjusted housing prices in Canada reported a modest 2.1 per cent increase as of the end of November, with the upsurge in the east countered by a decline in some western markets and the Prairies.
Although sales and prices are climbing, year-to-date listings have declined 2.1 per cent to 790,263. The decline is much more pronounced in the struggling housing markets in Western Canada and the Prairies. For example, listings in Calgary were down 10.3 per cent.
A key metric to watch in the resale housing market is the sales-to-listing (SLR) ratio, which serves as a proxy for supply. A rising SLR indicates that sales are rising faster than new listings, which implies that the amount of available housing stock for purchase is not expanding as fast as the pool of homebuyers.
Such market conditions pitch potential buyers against each other, putting additional pressure on housing prices, which will escalate not just because of higher demand, but constrained supply as well. The year-to-date SLR in the GTA hit 56.2 per cent in November, which is a 7.2 per cent jump from the same period in 2018.
If the current trends persist next year, housing sales and prices are expected to rise across most of Canada, except for the Prairies. But 2020 could end up being a seller’s market if new listings fail to match the growth in sales.
Financial Post
Murtaza Haider is a professor of Real Estate Management at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached at www.hmbulletin.com.
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Toronto home prices rose in September, but sluggish sales and a surge of new listings could be tilting the market back in favour of buyers.
Monthly data released by the Toronto Regional Real Estate Board (TRREB) on Oct. 4 showed the average price was up roughly three per cent month-over-month to $1,119,428 in September. That was also about three per cent higher than the same month a year ago.
At the same time, new listings surged. In September, 16,258 new listings came on the market, a 32 per cent increase from August and 44.1 per cent higher than a year ago.
That left the sales to new listings ratio (SNLR) for September at 28.6 per cent, firmly in buyers’ market territory. The Canadian Real Estate Association (CREA) has said that an SNLR between 40 per cent and 60 per cent is indicative of a balanced market. Below 40 per cent suggests buyers have an advantage, while above 60 per cent points to a sellers’ market.
The SNLR for the Toronto region covered by TRREB had been above 60 per cent as recently as March and April of this year, but has been trending down since then. In August, it stood at approximately 43 per cent, according to calculations based on TRREB data.
TRREB’s chief market analyst, Jason Mercer, suggested buyers might see some increased leverage as a result of the shift.
TRREB president Paul Baron said the market outlooks in the short and medium terms were very different, and that lagging demand should turn around by the middle of next year.
“In the short term, the consensus view is that borrowing costs will remain elevated until mid-2024, after which they will start to trend lower,” Baron said. “This suggests that we should start to see a marked uptick in demand for ownership housing in the second half of next year, as lower rates and record population growth spur an increase in buyers.”
The belief that the Bank of Canada has concluded its rate hikes was echoed in an Oct. 4 report from Toronto-Dominion Bank economist Rishi Sondhi.
In the meantime, the bank’s projection indicates a more significant and prolonged decline in Canadian home sales and average prices than previously anticipated in their June forecast.
“Indeed, both home sales and prices are likely to record declines in the final quarter of this year and the early part of 2024,” Sondhi said in the report. “By 2024 Q1, we expect that sales and prices will have fallen by eight per cent and six per cent, respectively, from their 2023 Q2 levels. These projected pullbacks pale in comparison to the 40 per cent and 20 per cent declines in sales and prices that took place from 2022 Q1 to 2023 Q1 amid aggressive Bank of Canada rate hikes.”
Cameron Forbes, chief operating officer at Remax Realtron Realty Inc. in Thornhill, Ont., said that while an abundance of listings can reduce buyer competition, it doesn’t necessarily lead to large price adjustments or a significant decrease in prices.
But Toronto realtor Cailey Heaps believes the balance has indeed shifted in favour of buyers.
“Buyers definitely have more power than they’ve had in quite some time,” Heaps said. “However, it is dependent on price point and geography because in the market there’s little micro markets and micro economies within the Toronto real estate market.”
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TORONTO, Oct 4 (Reuters) – Greater Toronto Area (GTA) home prices rose in September for the first time in four months, as the Bank of Canada paused its interest rate hiking campaign, but the level of sales fell to the lowest since January.
The average price of a GTA home rose 3.4% in September from August to C$1,119,428 ($816,623.87), the first increase since May, Toronto Regional Real Estate Board (TRREB) data showed on Wednesday.
On a year-over-year basis, home prices were up 3%. Still, they have fallen 16.1% from a peak hit in February 2022.
The Canadian central bank left its benchmark rate on hold at a 22-year high of 5% last month after hiking in June and July.
“GTA home selling prices remain above the trough experienced early in the first quarter of 2023,” Jason Mercer, TRREB chief market analyst, said in a statement.
“However, we did experience a more balanced market in the summer and early fall, with listings increasing noticeably relative to sales. This suggests that some buyers may benefit from more negotiating power, at least in the short term.”
New listings jumped 44.1% year-over-year, while home sales were down 7.1%. On a month-over-month basis, sales fell 12.3% to 4,642 homes.
($1 = 1.3708 Canadian dollars)
Reporting by Fergal Smith, editing by Deepa Babington
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