Buyers are in the “driver’s seat” in almost all of Ontario’s real estate markets and the “sluggish” conditions are likely to persist into 2024, a recent report from RBC suggests.
In the report, released on Dec. 14, the bank said that the MLS home price index in Toronto was down 1.7 per cent in November and has now been declining since August amid “softening demand-supply conditions” brought about by the Bank of Canada’s aggressive interest rate hiking campaign.
RBC says that prices in the Toronto area, as measured by the index, are virtually unchanged from November 2022 (up 0.1 per cent) but have been declining on an “accelerating basis” in recent months.
The downturn, however, isn’t just limited to the costly GTA market.
RBC says that buyers are essentially in the “driver’s seat in almost all Ontario markets,” meaning that new listings are significantly outpacing sales.
A similar phenomenon is also being observed across parts of British Columbia, RBC said.
“Most markets are now in correction mode with high interest rates, the loss of affordability, and mounting economic uncertainty holding back homebuyer demand, and supply-demand conditions having significantly eased since spring,” the report states. “With interest rates likely to stay high in the near term, we expect elevated ownership costs to remain a deterrent for homebuyers. That should keep activity very soft in Ontario and B.C. – where affordability is most stretched.”
The average price of a home across all property types in the GTA peaked at $1,334,062 in February 2022, prior to the Bank of Canada’s first interest hike.
Average prices eventually dropped to a low of $1,037,542 but rebounded in the spring amid temporary declines in fixed-mortgage rates.
In its report, RBC said that home resales have now declined 13 per cent since June “reversing almost entirely the spring rebound.”
It said that it expects the downturn to linger in to 2024 as “elevated ownership costs remain a deterrent for homebuyers.”
“Property values are coming under increasing downward pressure across large parts of Canada. This is particularly the case in Ontario,” the bank said.
While the Bank of Canada’s overnight lending rate is at a 22-year-high, many economists are predicting that rate cuts could come as early as the second quarter of 2024.
It is, however, unlikely that the country will return to the emergency rates that were in place at the outset of the COVID-19 pandemic.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
