This “softening” of the market represents a shift to more accurate home valuation, said Moshe Lander, an economics professor at Concordia University in Montreal. This landscape of lower home prices is likely to continue into Canada’s housing market in 2023, he said.
“Housing prices have been disconnected from reality for some time now,” Lander told CTVNews.ca in a telephone interview. “The rapid increase in interest rates is probably going to generate a rather quick fall in housing prices [and] a sudden correction.”
The Bank of Canada has implemented seven interest rate hikes in 2022 alone, taking its key interest rate from 0.25 per cent in February to 4.25 per cent in December. By increasing interest rates, the Bank of Canada’s goal is to reduce inflation, Lander said. While Canada’s annual inflation rate dropped slightly to 6.8 per cent in November, the central bank’s goal is to bring that number down to its target of about two per cent.
Higher interest rates aim to reduce demand, discouraging Canadians from opting for larger loans such as mortgages, Lander said. This is already being reflected in some of the latest data from the Canadian Real Estate Association (CREA), said Doug Porter, chief economist at the Bank of Montreal (BMO) and could pass through in Canada’s housing market in 2023.
According to the CREA, actual monthly sales activity in November 2022 was nearly 39 per cent below that of November 2021. There were 49,357 residential sales reported over the MLS systems of major Canadian cities in November 2021. Exactly one year later, there were 30,135 sales. Both figures are not seasonally adjusted.
“There was no significant change in the overall trend [since October],” Porter told CTVNews.ca in a telephone interview. “Sales are clearly below the 10-year average.”
A continuation of this slowdown in sales activity is something Porter said he expects to see in 2023. Elevated interest rates will also continue to put downward pressure on prices next year, he said.
Average home prices for residential properties in Canada have already fallen 12 per cent from November 2021 to November 2022, according to non-seasonally-adjusted data from the CREA. Based on BMO’s forecast, average home prices are expected to drop another 10 per cent within the next six to 12 months, Porter said.
“That would really just compensate for the backup in interest rates,” he said. “The market just got overcooked late last year into early this year, and it was due for at least a minor correction.”
As interest rates rise, economists from the Royal Bank of Canada (RBC) are predicting the country will enter a recession in the first quarter of 2023. This slowdown in economic activity will likely also put downward pressure on Canada’s housing market in 2023, said Porter.
Despite a projected drop in costs, this may not necessarily translate into greater housing affordability, Porter said, as homeowners will likely continue spending money, just on higher interest rates instead of home prices.
According to Bank of Canada deputy governor Sharon Kozicki, the central bank’s decision on whether to continue raising its key interest rate will rest on the latest economic data.
“We are moving from how much to raise interest rates to whether to raise interest rates,” Kozicki said during a speech in Montreal on Dec. 8.
However, the bank also remains ready to “act forcefully” with rates if necessary, she said.
BMO is forecasting an increase of 25 basis points in January before the central bank holds its rate steady until 2024.
It’s unlikely the Bank of Canada will reduce its key interest rate any time soon, Porter said. As a result, Canadians can probably say goodbye to the low interest rate environment witnessed throughout 2021.
“It’s highly unlikely we’re going back to that,” he said. “Those days are probably behind us. The kind of interest rates that we have now are closer to what we’re probably going to deal with in the years ahead.”
BUYERS AND SELLERS TO TAKE A ‘WAIT AND SEE’ APPROACH: EXPERTS
While average home prices may have dropped across Canada since February, not all cities have been impacted by rising interest rates in the same way, Porter said.
Sales in the Greater Toronto Area have slowed down significantly in recent months, said Nero Naveendran, a real estate agent based in Toronto. Residential sales activity over MLS systems dropped 49.6 per cent between November 2021 and November 2022 in Greater Toronto, according to data from the CREA that is not seasonally adjusted.
The reason behind this drop likely stems from a sense of uncertainty residents are feeling about future interest rate hikes, including whether they will take place and if so, by how much, Naveendran said.
“Nobody wants to get into a market where they expect [prices] to continue to go down,” he told CTVNews.ca in a telephone interview. “They are waiting on the sidelines until they know for sure that interest rates won’t go up anymore.
“If we know that the interest rates are going to stay the same, then I think sales will pick up.”
Sheila O’Brien, a real estate agent based in the Greater Vancouver Area, said she is also seeing clients take a “wait and see” approach as well, particularly those looking to sell their homes, as they assess the ongoing impact of rising interest rates on prices.
The city of Montreal has also seen fewer sales within its residential market since July, said real estate agent Jaclyn Rabin. Rising interest rates are having a significant impact on reducing buyer demand, she said, with those looking to purchase a home now being more cautious with their spending.
“We’re seeing a much less competitive market compared to where we were in 2020 and 2021, when inventory and interest rates were at an all-time low,” she told CTVNews.ca in a telephone interview. “Brace yourself for a more stabilized market.”
During the first couple of years of the COVID-19 pandemic, Montreal and several other real estate markets were characterized by overbidding and home offers with few terms and conditions, which may have led buyers to assume more risk, Rabin said. With interest rates driving down demand, there has been less competition, she said. If interest rates remain elevated, this trend is likely to continue throughout 2023, said Rabin.
“There’s less bidding wars and people are able to go through all their conditions … I think that’s a good thing,” she said. “It’s a rebalancing of the market.”
WILL MAJOR CITIES LIKE TORONTO AND VANCOUVER SEE PRICES DROP?
If the amount of inventory in Montreal increases, particularly among single-family homes, this may place additional downward pressure on home prices in 2023, said Rabin.
“Are we going to see a five to 10 per cent decrease?” she said, referring to single-family homes. “We could … It’s entirely possible.”
So far, sellers appear to be standing firm on their prices, Rabin said. Without an urgency to move, many may be unlikely to bend on asking prices. As a result, some properties may take longer to sell, she said.
Sellers are also being stubborn with their prices in Toronto, Naveendran said. Additionally, homes that are nicely staged and well-marketed not only continue to sell, but are also receiving multiple offers. These are trends Naveendran expects to continue in 2023, he said.
“The homes that are not presented [or] cleaned well are sitting on the market for months, it’s not like last year where everything was selling,” he said. “Now, people are looking for a home to live in, not an investment.”
Although the average price of a home sold in Toronto has dropped between February and July of 2022, prices have remained fairly steady throughout the rest of 2022, Naveendran said. If interest rates continue to rise, it’s likely home prices will continue to plateau or drop slightly in 2023, he said.
Elevated interest rates have also resulted in relatively stable home prices in the city of Vancouver throughout the fall, said O’Brien. The average sale price of a residential property in Greater Vancouver went from $1,232,213 in September 2022 to $1,201,186 in November 2022, according to the CREA. Both numbers are not seasonally adjusted.
Home prices in Vancouver will likely continue to soften throughout the spring and stabilize by the middle of 2023, she said.
“It’s a return to somewhat of a normal market,” O’Brien said. “People will have an opportunity to make logical decisions with timelines that allow for due diligence and probably a bit of negotiation.”
According to a new report from Re/Max Canada, 60 per cent of the country’s housing markets will be considered balanced in 2023.
PRAIRIES TO REMAIN RESILIENT AS ATLANTIC AFFORDABILITY ATTRACTS DEMAND
While larger real estate markets are expected to see prices continue to drop in 2023, the more significant corrections in average home prices will be among properties in smaller markets, said Robert Hogue, assistant chief economist for RBC.
This is particularly the case for markets located just outside of major urban centres, such as London and Kitchener in Ontario, or Fraser Valley in British Columbia. These regions saw some of the largest price increases in Canada during the pandemic, thanks to an influx of new residents moving from nearby hubs, Hogue said.
But with more Canadians physically returning to work, this trend has largely tapered off. As a result, these same markets are likely to see prices decline the most throughout the current correction period, Hogue said.
“Now that the frenzy is over, valuations are coming down to reflect the local realities,” Hogue told CTVNews.ca in a telephone interview.
According to Re/Max, average home prices in Kelowna, B.C., and Nanaimo, B.C., are likely to fall 10 per cent next year. Additionally, average prices in Barrie, Ont., are forecasted to drop 15 per cent.
Meanwhile, markets across the Prairie provinces have largely been resilient throughout the housing market correction so far, Hogue said. Although the region has seen some decline in average home prices and residential sales activity over the last year, these drops have been modest compared to other parts of Canada. This will likely continue to be the case in 2023, Hogue said.
Cities such as Calgary are even reporting an increase in average prices year-over-year. According to the CREA, the average sale price of a residential property in November 2022 was $504,518, not seasonally adjusted. This represents a 1.3 per cent increase compared to one year before.
Additionally, sales activity remains above pre-pandemic levels in Alberta and Saskatchewan, based on data from RBC, reflecting the region’s strong economy.
Housing markets in Atlantic Canada are not immune to the impact of rising interest rates either. However, they continue to be more affordable than those in larger urban areas, Hogue said. Because of this, demand will likely remain strong in the region thanks to interprovincial migration.
“If the correction [in Atlantic Canada] continues in Canada’s housing market in 2023, it will be more limited and end a little bit before other markets in Canada,” he said. “Those types of [migration] flows should provide some support for prices.”
Halifax in particular is beginning to stand out as a city where affordability is stretched, Hogue said. The market has seen tremendous demand throughout the pandemic, which has driven prices up significantly, he said.
According to Re/Max, Halifax will likely see average home prices increase by eight per cent in Canada’s housing market in 2023.
With files from CTV National News’ Jordan Gowling and The Canadian Press
TORONTO – Will Taylor Swift bring chaos or do we all need to calm down?
It’s a question many Torontonians are asking this week as the city braces for the arrival of Swifties, the massive fan base of one of the world’s biggest pop stars.
Hundreds of thousands are expected to descend on the downtown core for the singer’s six concerts which kick off Thursday at the Rogers Centre and run until Nov. 23.
And while their arrival will be a boon to tourism dollars — the city estimates more than $282 million in economic impact — some worry it could worsen Toronto’s gridlock by clogging streets that already come to a standstill during rush hour.
Swift’s shows are set to collide with sports events at the nearby Scotiabank Arena, including a Raptors game on Friday and a Leafs game on Saturday.
Some residents and local businesses have already adjusted their plans to avoid the area and its planned road closures.
Aahil Dayani says he and some friends intended to throw a birthday bash for one of their pals until they realized it would overlap with the concerts.
“Something as simple as getting together and having dinner is now thrown out the window,” he said.
Dayani says the group rescheduled the gathering for after Swift leaves town. In the meantime, he plans to hunker down at his Toronto residence.
“Her coming into town has kind of changed up my social life,” he added.
“We’re pretty much just not doing anything.”
Max Sinclair, chief executive and founder of A.I. technology firm Ecomtent, suggested his employees avoid the company’s downtown offices on concert days, saying he doesn’t see the point in forcing people to endure potential traffic jams.
“It’s going to be less productive for us, and it’s going to be just a pain for everyone, so it’s easier to avoid it,” Sinclair said.
“We’re a hybrid company, so we can be flexible. It just makes sense.”
Swift’s concerts are the latest pop culture moment to draw attention to Toronto’s notoriously disastrous daily commute.
In June, One Direction singer Niall Horan uploaded a social media video of himself walking through traffic to reach the venue for his concert.
“Traffic’s too bad in Toronto, so we’re walking to the venue,” he wrote in the post.
Toronto Transit Commission spokesperson Stuart Green says the public agency has been working for more than a year on plans to ease the pressure of so many Swifties in one confined area.
“We are preparing for something that would be akin to maybe the Beatles coming in the ‘60s,” he said.
Dozens of buses and streetcars have been added to transit routes around the stadium, and the TTC has consulted the city on potential emergency scenarios.
Green will be part of a command centre operated by the City of Toronto and staffed by Toronto police leaders, emergency services and others who have handled massive gatherings including the Raptors’ NBA championship parade in 2019.
“There may be some who will say we’re over-preparing, and that’s fair,” Green said.
“But we know based on what’s happened in other places, better to be over-prepared than under-prepared.”
Metrolinx, the agency for Ontario’s GO Transit system, has also added extra trips and extended hours in some regions to accommodate fans looking to travel home.
A day before Swift’s first performance, the city began clearing out tents belonging to homeless people near the venue. The city said two people were offered space in a shelter.
“As the area around Rogers Centre is expected to receive a high volume of foot traffic in the coming days, this area has been prioritized for outreach work to ensure the safety of individuals in encampments, other residents, businesses and visitors — as is standard for large-scale events,” city spokesperson Russell Baker said in a statement.
Homeless advocate Diana Chan McNally questioned whether money and optics were behind the measure.
“People (in the area) are already in close proximity to concerts, sports games, and other events that generate massive amounts of traffic — that’s nothing new,” she said in a statement.
“If people were offered and willingly accepted a shelter space, free of coercion, I support that fully — that’s how it should happen.”
This report by The Canadian Press was first published Nov. 13, 2024.
TORONTO – Hundreds of Taylor Swift fans lined up outside the gates of Toronto’s Rogers Centre Wednesday, with hopes of snagging some of the pop star’s merchandise on the eve of the first of her six sold-out shows in the city.
Swift is slated to perform at the venue from Thursday to Saturday, and the following week from Nov. 21 to Nov. 23, with concert merchandise available for sale on some non-show days.
Swifties were all smiles as they left the merch shop, their arms full of sweaters and posters bearing pictures of the star and her Eras Tour logo.
Among them was Zoe Haronitis, 22, who said she waited in line for about two hours to get $300 worth of merchandise, including some apparel for her friends.
Haronitis endured the autumn cold and the hefty price tag even though she hasn’t secured a concert ticket. She said she’s hunting down a resale ticket and plans to spend up to $600.
“I haven’t really budgeted anything,” Haronitis said. “I don’t care how much money I spent. That was kind of my mindset.”
The megastar’s merchandise costs up to $115 for a sweater, and $30 for tote bags and other accessories.
Rachel Renwick, 28, also waited a couple of hours in line for merchandise, but only spent about $70 after learning that a coveted blue sweater and a crewneck had been snatched up by other eager fans before she got to the shop. She had been prepared to spend much more, she said.
“The two prized items sold out. I think a lot more damage would have been done,” Renwick said, adding she’s still determined to buy a sweater at a later date.
Renwick estimated she’s spent about $500 in total on “all-things Eras Tour,” including her concert outfit and merchandise.
The long queue for Swift merch is just a snapshot of what the city will see in the coming days. It’s estimated that up to 500,000 visitors from outside Toronto will be in town during the concert period.
Tens of thousands more are also expected to attend Taylgate’24, an unofficial Swiftie fan event scheduled to be held at the nearby Metro Toronto Convention Centre.
Meanwhile, Destination Toronto has said it anticipates the economic impact of the Eras Tour could grow to $282 million as the money continues to circulate.
But for fans like Haronitis, the experience in Toronto comes down to the Swiftie community. Knowing that Swift is going to be in the city for six shows and seeing hundreds gather just for merchandise is “awesome,” she said.
Even though Haronitis hasn’t officially bought her ticket yet, she said she’s excited to see the megastar.
“It’s literally incredible.”
This report by The Canadian Press was first published Nov. 13, 2024.
OTTAWA – Via Rail is asking for a judicial review on the reasons why Canadian National Railway Co. has imposed speed restrictions on its new passenger trains.
The Crown corporation says it is seeking the review from the Federal Court after many attempts at dialogue with the company did not yield valid reasoning for the change.
It says the restrictions imposed last month are causing daily delays on Via Rail’s Québec City-Windsor corridor, affecting thousands of passengers and damaging Via Rail’s reputation with travellers.
CN says in a statement that it imposed the restrictions at rail crossings given the industry’s experience and known risks associated with similar trains.
The company says Via has asked the courts to weigh in even though Via has agreed to buy the equipment needed to permanently fix the issues.
Via said in October that no incidents at level crossings have been reported in the two years since it put 16 Siemens Venture trains into operation.
This report by The Canadian Press was first published Nov. 13, 2024.
