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Toronto Real Estate Recovery Will Takes Years, Not Months: BMO – Better Dwelling

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One of Canada’s largest banks is telling investors Toronto real estate sales are back, but prices—not so much. Despite a huge jump in existing home sales across Greater Toronto in January, prices continued to slide lower. BMO explained to investors that the increased activity will prevent further declines, and even boost home prices in time. However, they also warned investors that home prices in the region will take years to return to the all-time high, not just a few months. 

Greater Toronto Real Estate Has Seen A Sudden Surge In Activity

Greater Toronto real estate shook off the cobwebs last month. TRREB reported seasonally adjusted sales showed a monthly increase of 10% in January. Unadjusted sales were a whopping 39% higher than the same month last year. Strength has been building after bond yields peaked in October, and slid lower delivering cheaper financing. 

“While we should keep in mind that winter real estate numbers can be swung by weather and few listings, there’s little doubt that buyers have been awoken by lower fixed mortgage rates,” explains Robert Kavcic, senior economist at BMO.  

Kavcic also sees falling prices observed despite the sales uptick as a temporary issue. Adding, “…we suspect that, if all goes as planned with rates and the economy, prices will find a more sustained bottom through the spring.” 

Toronto Real Estate Prices Will Take Years To Recover

BMO is quick to highlight that price support doesn’t mean the pre-rate hike frenzy is returning. “… it’s still a long way back to the 2022 high for this market—about 19% to be exact. Given that affordability is still stretched and the investment math is tough at current rates, it looks like a long slog back to those highs,” explains Kavcic. 

Toronto Real Estate Recovery Expected To Take Years

The indexed benchmark price of a typical home across Greater Toronto. 

Source: BMO; CREA. 

BMO’s point on financing is a salient one. Well qualified buyers have been sitting on the sidelines, and their pent up demand should be expected at the first sign things are clear. However, most experts are forecasting only two rate cuts this year. That only brings financing costs back to this time last year. With prices at a similar level too, market activity was significantly slower than people anticipate this time around.  

Historically, it’s taken a significant amount of time to return to the all-time high post-correction. Psychological hurdles remain, as speculators with fresh wounds are reminded they aren’t operating risk-free. At the same time, affordability challenges still remain for end-users, crowded out by investors.  

“Recall that even the scorching TO market went nowhere for more than three years after the froth of 2017; after 1990 it took almost 12 years to get back (though a lot went wrong during the 90s),” says Kavcic.  
“Either way, the trip back to the price highs of 2022 will be measured in years, not months or quarters.”

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Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

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TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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Homelessness: Tiny home village to open next week in Halifax suburb

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HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

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Here are some facts about British Columbia’s housing market

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Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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