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Toronto real estate market gears down, but those immune to rate hike still active – The Globe and Mail



Real estate agent Manu Singh says buyers know they are paying peak prices in the current market.Fred Lum/the Globe and Mail

The deceleration in the Toronto-area real estate market continues as buyers and sellers come to grips with the most recent interest rate hike by the Bank of Canada.

“I’m hearing a lot of ‘wait-and-see,’ ” says real estate agent Manu Singh of Right at Home Realty Inc. “They’re feeling a bit paralyzed.”

Amidst the confusion, some properties are seeing sluggish activity while some outliers are creating a frenzy.

“Every week it feels like it’s different with the market.”

Mr. Singh is working with clients who entered the contest for a four-bedroom detached house in the Baby Point neighbourhood in Toronto’s west end.

The house was listed with a below-market asking price around the $2.8-million mark and Mr. Singh estimated it would sell for $3.2-million or possibly $3.3-milllion.

“We were expecting six to eight offers,” he says.

He was shocked when 16 bidders entered the fray and the house sold for $3.975-million.

The house has been renovated within the past two or three years, he says, and it sits on a deep lot in a coveted school district. Supply of that type of house is still very limited, he says.

“They don’t know when the next one is going to come up.”

Buyers know they are paying peak prices in the current market, he says. Many are bypassing houses with a reno that’s more than five years old.

Not far away in the Sunnylea area, a raised three-bedroom bungalow was listed with an asking price of $2.89-million and sold for $4-million.

“My clients are flustered,” he says, after losing out to two bidders who each paid more than $1-million above asking.

Mr. Singh says that segment of the market is not held back by an increase in interest rates. For affluent move-up buyers, the challenge is the lack of supply.

Buyer fever abates west of Toronto amid signs of softening home prices

The Bank of Canada raised its key rate by half a percentage point in April to 1 per cent. That’s the largest move at one sitting since 2000.

First-time buyers are more sensitive to rising rates, he says, and many who were looking for semi-detached houses in the 416 area code while rates were at their lowest have now switched their search to a two- or three-bedroom condo.

Condos had fallen out of favour for a time but he’s seeing a return to high-rise living now that pandemic restrictions have been loosened and some workers are returning to the office.

Mr. Singh says the real estate market is not held back by an increase in interest rates.Fred Lum/the Globe and Mail

In early April, Mr. Singh listed a two-bedroom, two-bathroom unit at 628 Fleet St. with an asking price of $979,000. Unit 3007 had good views of the lake and the city.

Over the course of one week, the condo had 14 showings. The unit sold for $1.186-million when three competing buyers showed up on offer night.

“We had expected at least five or six,” he says. “I’m seeing ebbs and flows in the condo market, too.”

According to the Toronto Regional Real Estate Board, the condo slice of the market was more robust in March than the segment for single-family homes.

In the core 416, sales of condo units dropped 18.3 per cent in March from the same month last year. In the outer 905, condo sales fell 16.3 per cent in March from March, 2021.

Toronto real estate listings swell, taking the edge off buyers

In March, the average price for a condo stayed essentially flat at $831,351 compared with February, while in the suburbs, the average price also evened out at $760,410.

That compares with a steeper drop in sales of about 34 per cent for single-family homes in the GTA in March compared with March of last year.

Elli Davis, real estate agent with Sotheby’s International Realty Canada, says her inventory of houses and condo units is low.

“We sort of went into a little bit of a quiet time,” she says. “It’s not as hysterical and fast.”

Ms. Davis is listing a two-bedroom, two-bathroom unit in the Renaissance Plaza, 175 Cumberland St., Suite 2202, at Avenue Road and Bloor Street. The tower, built in the mid-1980s, has only one other unit currently for sale, she says.

Ms. Davis plans to list the unit, which needs a rejuvenation, with an asking price of $1.795-million.

Ms. Davis says some condo units are selling within a day or two of listing – especially if there’s no other inventory in the building. Others are not moving.

Investors who buy older condos and renovate them for resale can command a premium, but some of those are languishing longer than in the past, she says.

“I think there’s going to be a drop in their expectations.”

Ms. Davis expects the rising interest rate environment to further calm the market.

Paul Ashworth, chief North America economist at Capital Markets, says Canada’s overreliance on housing and household debt together make it the country most susceptible to the impact of higher interest rates.

Bank of Canada Governor Tiff Macklem embraced a new-found hawkishness, he notes, and Mr. Ashworth is predicting another hike of half a percentage point in June.

Household debt hit 170 per cent of disposable income in Canada at the end of 2021, up from 164 per cent immediately before the pandemic and 135 per cent at the time of the 2008 financial crisis.

On a comparable basis, U.S. household debt is currently only 139 per cent of disposable income, unchanged from the prepandemic level and down markedly from the peak of 172 per cent in 2009.

Canada has finally matched the household leverage that preceded the housing collapse in the United States, he notes.

“Canada’s economy is also much more dependent on residential investment than any other advanced country and, at this stage, it isn’t even close,” he says in a note to clients.

The conundrum the central bank faces is that residential investment is the most rate-sensitive part of any economy, the economist says.

With signs that housing is already slowing in response to the rise in mortgage rates over the past few months, Mr. Ashworth doubts that the central bank will be able to raise interest rates much beyond 2 per cent.

“If we’re wrong and it rushes to do so, the resulting downturn in housing will be much worse.”

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Early signs point to a slight cooling of Grey-Bruce real estate market – Owen Sound Sun Times



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The head of the local real estate board says the Grey-Bruce market is showing signs of leveling off from the frenzied buying that had been taking place over the past couple of years.

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Steve Dickie, president of the Realtors Association of Grey Bruce Owen Sound, said Tuesday that local agents are starting to again see conditions put on sales, some price reductions on listed properties and even a decrease in the number of offers on homes.

“The conversation around offices is that it is not as frenzied as it was last year,” Dickie said. “There are still lots of situations where you have multiple offers, but if you are watching the board on a daily basis every once in a while you will see a price reduction, which we haven’t seen in a long time.”

And Dickie said they are again seeing conditions attached to sales, even the condition on the sale of a buyer’s property, something that was non-existent in 2021.

“There are still lots of offers that are straight cash offers, but we are starting to see some conditions in there,” Dickie said.

“We are even seeing the odd home inspection. That has been one of the side effects of this whole thing is that there have been a lot of home inspectors that have gone out of business because they just had no work.”

Dickie said it is hard to say what has caused the slight cooling of the market, but rising interest rates could be a factor. Last month the Bank of Canada raised rates half a per cent, and indicated future rate hikes could be possible to try to help tame surging inflation. An easing of pandemic fear and even the War in Ukraine could be having an impact on the housing market locally, Dickie said.

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“Any time there is a world event going on it makes people somewhat uncomfortable,” said Dickie. “It makes people a little less comfortable with the stability of things and you kind of see a bit of slowdown or a cooling I guess and then people say, I guess it is OK, the world is not coming to an end, and off they go and continue down the path.”

The number of homes sold through the MLS System in Grey-Bruce totaled 283 units in April, which was down more than 25 per cent from April 2021.

Over the first four months of 2022, home sales have totaled 937 units, which is a decrease of 13 per cent from the same period of 2021.

Dickie said it will take a bit of time to see if the slight cooling of the market is a trend.

“There is not enough to make a call yet, but if we see a few more months of this we can be more sure in our predictions,” he said.

Meanwhile, home prices have remained elevated in Grey-Bruce, with the average price of the homes sold in April coming in at just under $744,500, which is up 19.4 per cent from April 2021.

The average price of homes sold in Grey-Bruce in March was $759,427, while year-to-date in 2022 the average sale price has been just under $755,000, an increase of 22 per cent from the first four months of 2021.

“Prices are still high for sure,” said Dickie. “Normally in these situations when we start to see a slowdown we will see it in the very expensive properties first. We are just going to be monitoring that as the next couple of months go on.”

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Dickie said larger centres like Toronto experience much more dramatic moves in the housing market than an area like Grey-Bruce.

In Toronto, the average price of homes declined 6.4 per cent in April from the month before on a seasonally adjusted basis. It was the biggest monthly drop in that market in two years. Toronto home sale totals also declined 26 per cent from the month before.

Typically in Grey-Bruce, Dickie said they see prices level off for a while before they start to go up again.

“I am trying to tell people locally to stay calm,” Dickie said. “Nothing is going to crash.”

RAGBOS, which represents approximately 450 realtors, also provides MLS Home Price Index benchmark prices, which it says tracks prices far more accurately than is possible using average or median price measures. The benchmark price is based on the value home buyers assign to various housing attributes, according to the Canadian Real Estate Association.

The overall MLS HPI composite benchmark price for Grey-Bruce was $619,800 in April, which was an increase of 25.8 per cent from April 2021. For single-family homes the benchmark price was $623,500, up 25.7 per cent from a year ago, for townhouses and row units it was $506,300, up 26.5 per cent, and for apartments it was $382,000, up 40.7 per cent from April 2021.

Meanwhile, Dickie said agents are starting to see more listings coming onto the market, which is welcome as the region had been experiencing an extended period of record-low supply.

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While the 447 new residential listings in April was down 4.3 per cent from a strong April 2021, they were close to 14 per cent above the five-year average.

At the end of April, the number of active residential listings totaled 461 units, which was up more than 10 per cent from the end of April 2021, but still 28.7 per cent below the five-year average.

The months of inventory numbered 1.6 months at the end of April, which was up from the 1.1 months recorded at the end of April 2021, but still below the long-run average for the time of year of 4.7 months.

“Even this morning I was talking to several agents and they were talking about how they had more and more listings coming up, and there are more and more listings on the real estate board on a daily basis than we had seen earlier in the year,” Dickie said. “That is positive that people are getting their houses listed, which helps the whole situation out.”

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Canmore real estate developments back on after tribunal ruling | CTV News – CTV News Calgary



A contentious proposed real estate development in Canmore got new life Tuesday.

One year ago, Canmore town council rejected the Smith Creek development and decided the Three Sisters Village proposal needed significant changes.

Three Sisters Mountain Village Properties Ltd., the project developer, appealed the decision to a municipal tribunal, and Tuesday the town was ordered to allow the projects to proceed.

Conservation groups fought the proposal, saying it didn’t provide enough space for wildlife to travel through the valley.

“Unless overturned, this decision will cause harm to the lands, and wildlife movement and habitat of an important part of the Yellowstone to Yukon region,” said a statement issued by Yellowstone to Yukon Conservation Initiative on Twitter. “Keeping these lands connected and intact is in the best interest of Albertans now and into the future. Connectivity provides the best chance for some of our most cherished and threatened wildlife to thrive.”

There was no word from the Town of Canmore on whether it will appeal the decision.

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Greater Toronto Area real estate approaching ‘buyer’s market’: BMO – Global News



In the midst of the COVID-19 pandemic, Canadians hoping to buy homes have had to brave a sizzling seller’s market where waiving inspections, blind bidding, and dozens of competing offers are the norm.

Now, BMO’s chief economist says what many potential house-hunters are hoping for — a balanced or, better yet, buyer’s market — may finally be arriving.

Read more:

Canada needs new homes built, but construction industry headed for retirement wall

In a new data snapshot issued by the bank on Tuesday morning, Doug Porter said there’s been a “quick fall” in the sales-to-new-listing ratio which is a key part of assessing who holds more power in the Canadian real estate market.

That ratio dropped from 76 per cent to 66 per cent last month, a level not seen since June 2020.

The Canadian Real Estate Association (CREA) said Monday that level is “right on the border between what would constitute a seller’s and a balanced market.”

As a result, CREA noted home prices have just seen their first monthly decline in two years.

When it comes to the Greater Toronto Area (GTA) specifically, Porter raised the possibility of a buyer’s market.

“The GTA sales-listing ratio plunged to just 45 per cent in April, which is suddenly getting into buyers market terrain,” Porter wrote in the BMO snapshot data assessment.

In contrast, he said that number has been around 70 per cent over the past year, making for a “firmly seller’s market.”

“And what the ratio is now telling us is that prices are about to go from 20%+ gains to a sudden stall. And that’s assuming the sales/listings ratio doesn’t fall further in the coming months.”

Read more:

Bidding war no more: How to make an offer in Canada’s cooling housing market

The decision by the Bank of Canada to keep interest rates at rock-bottom levels during the pandemic has been attributed as one significant factor fuelling Canada’s surging home prices over recent years.

But the shift in market sentiment comes as the central bank is in the midst of a series of rate hikes taking aim at rampant inflation, which has hit 30-year highs as a result of reopening economies, supply chain problems and Russia’s invasion of Ukraine.

A lack of housing supply has also prompted growing political pressure on governments of all levels to increase construction — a challenge, given a wave of retirements poised to hit the construction sector.

Right now, though, BMO economist Shelly Kaushik said in a separate data snapshot on Tuesday that new home construction is increasing, with the industry “firing on all cylinders.”

Whether and for how long that will continue remains to be seen.

© 2022 Global News, a division of Corus Entertainment Inc.

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