A Vancouver real estate and property tax expert believes Vancouver’s real estate market is seeing the start of a downturn that could last up to two years.
The comments come after a prediction from the Royal Bank of Canada that the country, B.C. and Ontario in particular, will see big price drops next year.
“We expect downward price pressure to be more intense in Vancouver, Toronto and other pricey markets,” assistant chief economist Robert Hogue wrote in RBC’s latest housing outlook.
“By comparison, we expect activity and prices to be more resilient in Alberta, where local markets have more catching up to do following a prolonged slump before the pandemic.”
British Columbia’s aggregate price is expected to dip 3.8 per cent in 2023, down to about $1.02 million. That’s the biggest drop forecast across the country, ahead of the 2.3 per cent decrease anticipated in Ontario.
Paul Sullivan is a B.C. property tax expert and Ryan LLC principal who leads the Business Tax Alliance, a partnership with B.C. Business Improvement Associations. He said the market is changing in an almost perfect storm of circumstances.
“You couldn’t have much worse going on in the world – you got war, we got interest rates, we have a supply chain crisis,” Sullivan said. “It’s kind of set up for a pretty bad scenario.”
Sullivan said even though the price of housing is coming down, it won’t help affordability. Record high inflation and interest rate increases mean buyers can afford less, and it’s getting harder to build.
“We have incredibly high pricing on materials with all the transportation issues and we have a labor shortage,” he said. “The price of delivering new homes to the market is going through the roof right now.”
The RBC forecast predicts “prices peaking this spring as market sentiment sours” then coming down.
“I would disagree with that comment,” Sullivan said. “I think prices spiked already in the last quarter or even end of last year. The demand level has already come down and interest rates are going to exacerbate that.”
As for how long the downturn will last, Sullivan said Vancouver typically has short real estate cycles but believes this time, it will last longer.
“I think values are going to go down for longer than 6 or 12 months this time – we’re going to be in a downtick for maybe as long as two years,” he said.
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.
