Toronto’s real estate market may have “woke up from its slumber” as 2023 drew to a close but the trend of higher resale activity will have to persist for several more months before it leads to a rebound in prices, a new report from RBC suggests.
The report from economists Robert Hogue and Rachel Battaglia was released this week. It shows that home sales in the GTA were up 21 per cent in December, rising from a near 15-year low in November.
But Hogue and Battaglia point out that the “end-of-year sparks did little to alter softening price trends” with a further 1.3 per cent decline in the GTA’s home price index from the previous month.
Over the last year home prices in the GTA have remained virtually unchanged with its home price index only down 0.4 per cent from this time last year, RBC says.
“We expect this softness will persist through the first half of this year with a market recovery gaining strength thereafter as interest rate cuts accumulate,” the report states. “Our view is the Bank of Canada will pivot around mid-year and slash its policy rate by 100 basis points over the second half of this year, followed by further 100 basis points in 2025. We see prices firming up after activity has turned and demand-supply conditions have tightened sufficiently—possibly sometime in the third quarter. That said, any price recovery will be restrained by lingering affordability issues.”
The average selling price of a Toronto home across all property types peaked at $1,334,062 in February 2022 before dropping to a low of $1,037,542 later that year, according to Toronto Region Real Estate Board data.
Since then prices have largely held steady other than a burst of activity last spring.
In their report, Hogue and Battaglia said that while “a combination of price concessions from sellers and modest mortgage rate declines spurred more buyers into action” into December it wasn’t enough to lift prices materially.
They also warned against “reading too much into a single month’s burst of activity.”
“The tightening in demand-supply conditions in December would need to be sustained for several more months in order for prices to change course,” they say.
Last month real estate brokerage Royal LePage released a forecast suggesting that Toronto home prices would increase by six per cent by the end of 2024.
At the time the time Royal LePage President and CEO Phil Sopher told CP24 that he believed there was a lot of “pent-up demand” in the market that could be unleased with interest rate cuts.
“I think a very small rate cut by the central bank, by the Bank of Canada, will unleash a lot of that pent-up demand that we’ve had a lot of that over the last couple of years, which, by the way, is the longest slow-down in Canadian and Ontario real estate in 25-years. Even the great recession was only 9-months, we’re going to be two-years here,” he said at the time.
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.
