Tag Archives: Royal LePage

2019 web

Forecast 2019 – where are Canada’s hottest housing markets?

Latest News


Forecast 2019 – where are Canada’s hottest housing markets?

2019 web

Wondering where Canada’s hottest housing markets are, as 2018 comes to a close and 2019 is just around the corner? Well, that all depends on who you ask.

Two of Canada’s large realty firms – Royal LePage and ReMax – both issued their 2019 housing market outlooks on Dec. 11.

Yes, the very same day.

Rather than produce two stories on the exact same topic, just from different sources, we thought it would be interesting to compare them. And while there are some commonalities in their forecasts, there are also some interesting discrepancies.

There is no ‘Canadian’ market

Let’s begin with the headline of ReMax’s 2019 Housing Market Outlook: “Canadian home prices expected to increase by 1.7 per cent in 2019.”

Yeah, about that. Forget that headline. As we recently wrote, those national numbers are pretty meaningless. It’s like trying to summarize the weather, temperature or traffic as “Canadian.”

But, just for comparison purposes, ReMax estimates Canadian home prices will grow 1.7 per cent in 2019; Royal LePage, 1.2 per cent.

National numbers that do matter are interest rates, GDP growth and employment. Then there’s immigration, which affects some markets more than others, mortgage regulations and housing supply. All of these factors are the key drivers of real estate. But more on that later.

Now let’s take a look at some of the regional highlights.

GTA

ReMax says:

  • Toronto average prices down 4% in 2018 to $789,181
  • Toronto average prices forecast to rise 2% in 2019 to $804,964

In Toronto, rising interest rates and the mortgage stress test were the two major factors affecting market activity in 2018, with average sale prices dropping by four per cent from $822,572 in 2017 to $789,181 in 2018, and unit sales down by 16 per cent. Lack of affordability in the single-detached segment will make it difficult for buyers wanting to enter this market. Resale condos, on the other hand, now represent almost 37 per cent of total sales, fueled by affordability.

ReMax Housing Market Outlook, select major markets

Region 2018

 Average Home Price

 

2019

Average Home Price

(Forecast)

Year-over-Year

(%)

Vancouver $1.05M $1.01M -3.0%
Edmonton $379,539 $360,562 -5.0%
Calgary $487,399 $487,399 0.0%
Saskatoon $333,187 $343,182 0.6%
Regina $322,500 $322,500 0.0%
Winnipeg $323,001 $335,921 4.0%
Windsor $299,750 $329,725 10.0%
London $379,654 $398,636 5.0%
Kitchener-Waterloo $473,275 $487,473 3.0%
Hamilton-Burlington $707,949 $849,538 2.0%
Barrie $477,839 $492,174 3.0%
Oakville $1.08M $1.13M 5.0%
Mississauga $705,406 $733,622 4.0%
Brampton $577,846 $600,959 4.0%
Durham $594,585 $612,422 3.0%
Toronto $789,181 $804,964 2.0%
Ottawa $678,670 $705,816 4.0%
Halifax $299,982 $308,981 3.0%
St. John’s $265,523 $265,523 0.0%

 

Elsewhere in Ontario

Rising interest rates and the stress test continue to make it difficult for prospective buyers in Barrie, Oakville and Durham regions.

“This is particularly true for first-time buyers and single Millennials, as evident in cities like Brampton, Kingston and Durham,” says Christopher Alexander, executive vice-president and regional director, ReMax of Ontario-Atlantic Canada.

Hottest in the province

The hottest market in Ontario? Windsor, which showed price growth of 13 per cent in 2018, to $299,750, with another 10 per cent increase forecast for 2019. London is also expected to be strong, with prices to increase another five per cent next year, after rising 17 per cent this year to reach $379,654.

 

Royal LePage says:

  • GTA average price in 2018 $844,000
  • GTA average price forecast to rise 1.3% to $854,552

“Compared to the record pace of home appreciation seen in 2016 and 2017, the GTA housing market is now positioned for much healthier and sustainable growth in future years,” says Chris Slightham, broker and owner, Royal LePage Signature Realty.

Many regions outside of Toronto’s core saw price declines in 2018, a result of overshooting in previous years. The continued population growth should cause the suburbs to stabilize and reignite price growth. In addition, the potential subway expansion into the suburbs should stabilize and increase home prices in close proximity to new transit infrastructure.

Elsewhere in Ontario

The median price in Ottawa is expected to increase 2.5 per cent in 2019 to $487,910, benefitting from the city’s healthy economy and high income per household, driven by the public and technology sectors.

Interestingly, Royal LePage also notes that neither the new mortgage rules nor recent interest rate hikes have notably affected Ottawa’s housing market.

 

Highlights from other Canadian markets

The star performer of all major Canadian markets in 2019? Montreal, according to Royal LePage.

“Quebec will out-perform the nation in 2019,” says President and CEO Phil Soper. “Like other regions of the country, the economy is strong and people are working. What is different is affordability. We have to remember that Montreal sat out the rapid home price inflation we saw in Vancouver and Toronto this decade, and in Calgary the decade before.”

As for the ReMax outlook for Montreal, Quebec did not participate in this year’s forecast.

 

 

Royal LePage Market Survey Forecast

Region  

2018 Aggregate Home Price
(Year End Estimate)


2019 
Aggregate
Home Price 
(Forecast)
Year-over-Year (%)
Canada $631,000 $638,257 1.2%
Greater Toronto Area $844,000 $854,552 1.3%
Greater Montreal Area $409,000 $421,306 3.0%
Greater Vancouver $1.28M $1.29M 0.6%
Ottawa $476,000 $487,910 2.5%
Calgary $484,000 $473,104 -2.3%
Edmonton $386,000 $378,691 -1.9%
Winnipeg $306,000 $309,829 1.3%
Halifax $321,000 $326,096 1.6%
Regina $327,000 $311,505 -4.7%

 

Influential factors

Now for more on those national factors that do influence real estate.

“I would call attention to two factors influencing our forecast that deserve special consideration,” says Soper. “Firstly, home prices are appreciating, albeit at a snail’s pace. Secondly, the Canadian market is supported by strong economic fundamentals, including a robust rate of new household formation and excellent employment growth.

“The future for Canadian housing remains bright, perhaps too bright. With an increasing number of gainfully employed people looking to put a roof over their heads, and the scarce availability of rental accommodation, policy makers in our major markets will once again be struggling with housing shortages. More than an affordable housing problem, we will once again be facing an overall housing supply crisis.”

As for interest rates, the Bank of Canada held its benchmark interest rate of 1.75 per cent on Dec. 5, citing a weaker than expected energy sector. Further rate increases are expected in 2019, making it more difficult for Canadians to buy a home in 2019.

The Bank forecasts GDP will increase 2.1 per cent in 2019, a modest increase over 2018, while Canada’s unemployment rate fell to 5.6 per cent in November, the lowest on record since 1976.

RELATED READING

5 things we can learn from real estate in 2018

7 factors that will affect GTA housing in 2019 – and 5 reasons to consider buying NOW

GTA moving into balanced market for 2019

GTA new home market gains further momentum in October

Delays in approval process contributing to housing affordability issue in GTA

What the GM plant closure means for Oshawa economy and housing market

 

SHARE  

Featured Products


Oshawa

What the GM plant closure means for Oshawa’s economy and housing market

Latest News


What the GM plant closure means for Oshawa’s economy and housing market

Oshawa

General Motors Canada has confirmed that it plans to close all assembly operations in Oshawa, Ont. after next year, leaving the community reeling with concern for the local economy and housing market.

And with good reason.

Auto manufacturing in the city of about 170,000 dates back as far as 1907, and the plant is still a major employer. It employs about 2,500 hourly and 400 salaried workers, with many more engineers working at GM’s adjacent Regional Engineering Centre.

Oshawa Mayor John Henry has said the closure would have ripple effects well beyond the city, hurting businesses and families throughout the Durham Region.

“From a personal finance perspective, this news is devastating for the people of Oshawa,” says Rubina Ahmed-Haq, personal finance expert. “Not only the ones whose jobs will be affected and have the obvious financial impact of losing a steady income. But, also those who depend on those workers to run their businesses – everything from restaurants to dry cleaners to places of interest around the area will be impacted. As well as property values, which are already much lower in Oshawa compared to other parts of the GTA, will take a further hit.”

Durham Region home prices

Illustrating Ahmed-Haq’s point, home prices in the Durham Region have already been feeling the pinch.

 

Historical average home prices, Durham Region
2018: $591,739 (as of October)
2017: 624,225
2016: $528,475
2015: $439,842
2014: $388,610
2013: $354,548

Source: Canadian Real Estate Association

 

Values continued to decrease during the third quarter of 2018, according to the latest Royal LePage House Price Survey. Over the three-month period, the aggregate home price in Oshawa and Ajax decreased 2.8 per cent and six per cent year-over-year to $538,757 and $664,640, respectively. Home values in Pickering also depreciated when compared to the same time last year by 4.4 per cent to $709,260, and the aggregate price in Whitby decreased 3.5 per cent to $677,243.

Oshawa median home prices

Standard two-storey homes
Q3 2018 $557,071
Q3 2017 $576,922
Q/Q % change 0.8
Yr/yr % change -3.4

Detached bungalows
Q3 2018 $512,001
Q3 2017 $517,237
Q/Q % change 2.3
Yr/yr % change -1.2

Standard condos
Q3 2018 $278,224
Q3 2017 $281,864
Q/Q % change 0.3
Yr/yr % change -1.3

Aggregate
Q3 2018 $538,757
Q3 2017 $554,070
Q/Q % change 1.2
Yr/yr % change -2.8

Source: Royal LePage National House Price Composite, October 2018

 

What we can expect in the housing market

“After an announcement such as this, we often witness an immediate softening of purchase demand in the city and its surrounds, while the shock and reality of the situation settles in,” Don R. Campbell, real estate expert and author told HOMES Publishing. “This slowdown doesn’t hit the stats immediately, as there are a lot of deals that are already in the process of closing in the next couple of months. However, come February, the numbers begin to reflect the new reality. That is phase one.

“Phase two is when average sale prices begin to fall, as confidence in the market begins to slip further. In other scenarios, it is just a sign of a move ‘down-market’ or to lower priced properties. However, in today’s world, the existing ‘stress-test’ will be combined with this lack of confidence to exacerbate the normal situation.”

A third phase may follow eight months to a year after the actual closure, when EI benefits begin to run to the end of their course, confidence in the potential return of the GM jobs begins to fade and families have to start making big decisions of relocation to find new appropriate jobs.

“In other words,” Campbell says, “the announcement of and the subsequent closing of the plant kicks off a predictable but sad ripple effect that will last for years.”

If there is one potential saving grace in this news, it’s that Oshawa and the surrounding area has a more diverse economy than in the past, which will help slightly buffer the pain, says Campbell.

“However, the pain is coming and it is real and far reaching.”

The Oshawa plant is not the only facility to be affected by GM’s decision to “accelerate its transformation for the future.” Two locations in the Detroit area are also scheduled to be shut down, which could have spillover affects in related industries across the border in the Windsor, Ont. area.

RELATED READING

Oshawa housing to move into buyers’ market thanks to GM closure

New home buying opportunities abound in Oshawa and Durham Region

Focus on Whitby and Oshawa

6 Ontario municipal elections to watch regarding housing

 

SHARE  

Featured Products


Hamilton

First-time homebuyers may catch a break in certain Ontario markets

Latest News


First-time homebuyers may catch a break in certain Ontario markets

Hamilton

Attention would-be homebuyers in the Greater Golden Horseshoe: Recent home price trends indicate the recovery is on, but there are still some opportunities for first-time buyers in certain areas.

According to the latest Royal LePage House Price Survey and Market Survey Forecast, year-over-year home prices made modest gains in many regions across Canada in the third quarter of 2018. The national trend was largely influenced by price appreciation in Greater Vancouver, while property in the Greater Toronto Area experienced continued year-over-year price declines, with modest gains in value when compared to the previous quarter.

The Royal LePage National House Price Composite shows that the price of a home in Canada increased 2.2 per cent year-over-year to $625,499 in the third quarter of 2018. When broken out by housing type, the median price of a two-storey home rose 1.4 per cent year-over-year to $736,337, while the median price of a bungalow climbed 1.5 per cent to $519,886. Condominiums continued to see the highest rate of appreciation nationally when compared to the detached segment, rising 6.7 per cent year-over-year to $441,240.

Looking ahead, Royal LePage projects a further uptick in home price appreciation in the fourth quarter, forecasting a 1.5-per-cent increase in the aggregate price of a home in Canada over the next three months.

ECONOMIC FUNDAMENTALS

“Positive economic fundamentals, supported by a new agreement on trade, should bolster consumer confidence across Canada and stoke demand in the nation’s real estate market,” says Phil Soper, president and CEO, Royal LePage. “Dangerously overheated regions have cooled considerably this year, while home prices have remained remarkably resilient. This is the soft landing that policy makers were hoping for.”

“I am concerned that the slower market will cause housing supply issues to be shuffled aside for other priorities,” Soper adds. “The return of runaway home prices in the country’s largest markets remains a real threat. Not this year, but in the near future. Job growth is strong, Canada is attracting more of the best and brightest from around the world and the large millennial cohort is putting increasing pressure on our limited new housing stock. It is imperative that all levels of government address looming supply shortages, particularly in affordable housing.”

After a number of years where Canada’s major real estate markets were tilted decidedly in favour of home sellers, 2018 has provided relief for many purchasers, particularly first-time buyers. “The desire to own a home remains strong with younger families,” says Soper. “Single-digit price appreciation makes pursuing the dream of home ownership a realistic proposition for many.”

FIRST-TIME OPPORTUNITIES

During the third quarter, Ontario continued to see noticeable differences between appreciation rates in the GTA and surrounding Golden Horseshoe cities and beyond. Despite some price relief in the GTA, buyers – particularly young families – from the region are venturing out to other Southern Ontario cities in search of more affordable homes, where price points are still significantly lower.

In contrast, over the same period, the aggregate price of a home in the GTA remained relatively flat year-over-year, depreciating 0.4 per cent to $836,402. The City of Toronto maintained solid ground, increasing by a healthy 5.2 per cent, while nearly every suburban region studied, except for Mississauga, posted year-over-year price declines. However, quarter-over-quarter, the aggregate price of a home in the GTA rose 1.3 per cent. By the end of the fourth quarter, Royal LePage expects the aggregate price of a home in the GTA to rise to $853,097, a further 2.0 per cent over the third quarter of 2018.

“The GTA is emerging from a housing correction that was triggered by a combination of eroding affordability and government intervention,” says Soper. “The introduction of the mortgage stress test in particular slowed activity in Toronto’s ‘905,’ bringing lower prices to the over-heated suburban region. Quarter-over-quarter trends are pointing to the end of this correctional cycle and the beginning of a modest recovery in the region.”

HOTTEST 5 GGH MARKETS BY PROPERTY TYPE

Median price growth, year-over-year, third quarter 2017-18, Royal LePage

DETACHED TWO-STOREY

Niagara-St. Catharines
9.4%
$434,946

Kitchener-Waterloo Cambridge
6.5%
$541,134

Guelph
6.2%
$589,682

Hamilton
5.1%
$606,671

Toronto
4.7%
$1.268M

 

DETACHED BUNGALOW

Niagara-St. Catharines
7.2%
$394,337

Hamilton
5.1%
$509,384

Guelph
4.9%
$501,329

Kitchener-Waterloo Cambridge
3.5%
$458,370

Vaughan
2.3%
$1.279M

 

CONDOMINIUM

Toronto
9.3%
$561,733

Mississauga
9.1%
$415,733

Hamilton
8.9%
$344,422

Kitchener-Waterloo Cambridge
7.8%
$302,184

Scarborough
6.8%
$387,149

 

RELATED READING

5 affordable neighbourhoods for detached homes in 416 and 905

GTA housing market correction coming to an end, ReMax says

6 Ontario municipal elections to watch regarding housing

 

 

SHARE  

Featured Products


Toronto

6 Ontario municipal elections to watch regarding housing

Latest News


6 Ontario municipal elections to watch regarding housing

Toronto

By Wayne Karl

The countdown is on – just days to go to the 2018 Ontario municipal elections. In Toronto, in what’s shaping up to be a two-horse race between Mayor John Tory and challenger Jennifer Keesmaat, housing is one of the key issues.

But it’s not the only city or town in and around the GTA where real estate development is a hot topic.

Here’s a select list of a few more municipal elections to watch, and we might as well start with the biggest and highest profile municipality:

TORONTO

Incumbent: John Tory
Challenger: Jennifer Keesmaat
What’s at stake: Housing affordability, or the lack thereof. Both Tory and Keesmaat have announced plans to address the growing affordability issue in the city – what some describe as a crisis. Keesmaat wants to build 100,000 units of “truly affordable, high-quality housing in the next 10 years.” This is a plan some sources in the industry have already declared as doomed to fail.

Tory proposes to build 40,000 affordable rental units over 12 years, or roughly 3,300 annually.

The challenge for both? Defining what affordable housing even is, in a city with median home prices of $883,892, andthe most expensive average one-bedroom rent in the country, $1,900 per month.

Home builders have been lobbying the City and the Province to address land supply and other policies which complicate this already complex issue.

 

MARKHAM

Markham

Incumbent: Frank Scarpitti
Challenger(s): Steven Chen, Shan Hua Lu, Abdul Rahman Malik, Jawed Syed
What’s at stake: As the fourth most populous community in the GTA after Toronto, Mississauga and Brampton, Markham has been a hotbed for economic growth and development for years. It has also become one the most expensive housing markets, with median home prices of almost $1 million for the third quarter of 2018, according to Royal LePageAnd Scarpitti, first elected in 2006 and known as developer- and builder- friendly, has been there through much of it.

 

BRAMPTON

Brampton

Incumbent: Linda Jeffrey
Challenger(s): Mansoor Ameersulthan, former Ontario PC Party leader Patrick Brown, Baljit Gosal, Wesley Jackson, Vinod Kumar Mahesan, John Sprovieri
What’s at stake: Brampton is booming, and Jeffrey is seeking a second term after winning the 2014 election with almost 50 per cent of the vote.

Vision 2040 is an ambitious long-term plan to reinvent Brampton, and includes transformations such as model new neighbourhoods connected by an expanding transit network, new core loop, walking and cycling networks, communities designed to promote walking, and a new eco-park and sustainability built into everything.

There’s also a significant education infrastructure project that will bring a new Ryerson University campus, with Sheridan College as an academic partner, to downtown Brampton for 2022. Oh, along with thousands of students.

 

ORANGEVILLE

Orangeville

Incumbent: Jeremy Williams
Challenger(s): Sandy Brown, Darrin Davidson
What’s at stake: Been to Orangeville lately? It’s no longer a sleepy little pit-stop town as you drive north to Collingwood or Georgian Bay.

With new home and community development taking place, particularly in the west part of town, the biggest challenge Orangeville faces is urbanization. Williams wants to preserve the small town feel and welcome development, while avoiding becoming a discount housing destination for people moving north out of the Toronto area.

Brown, a local realtor, likely understands the issues, and wants to “arrest out of control spending.”  He says Orangeville residents pay the highest property taxes in the GTA.

 

OSHAWA

Oshawa

Incumbent: Current mayor of Oshawa John Henry has given up his seat to run as Durham’s regional chair
Challenger(s): Kenneth Carruthers, Dan Carter, Joe Ingino, Adam Kunz, Sara Lear, Rosaldo Russo, Bob Rutherford
What’s at stake: In short, continued growth in population and economic diversity, which drive housing demand. Oshawa’s population grew to 379,848 in 2016, according to the 2016 Census, up 6.6 per cent from 2011. This is second in the entire province only to Guelph – and even ahead of Toronto at 6.2 per cent.

Oshawa is expected to boast one of the fastest growing economies in the province this year, with growth of 2.6 per cent, according to the Conference Board of Canada. And this is down from 3.2 per cent in each of the last two years.

In terms of housing development, several builders are active in the area with lowrise homes. Homebuyers are liking the comparative bargains and the proximity to Toronto.

 

BARRIE

Barrie

Incumbent: Jeff Lehman
Challenger: Ram Faerber
What’s at stake: Lehman is seeking his third term, while local businessman Faerber is looking to unseat him.

Barrie ceased being a weekend destination years ago, and has become a favourite among real estate investors for its population growth and the job opportunities that come with a growing and increasingly diverse local economy.

However, as a smaller centre (population of 197,059,up 5.4 per cent from 2011), Barrie is sometimes subject to market swings. Median home prices slipped five per cent for the third quarter of 2018, from the same period last year, to $505,136. Some shorter-term good news, however, is that prices are up 0.4 per cent from the second quarter of this year.

Wayne Karl is Senior Digital Editor at Homes Publishing. wayne.karl@homesmag.com 

RELATED READING

Keesmaat’s 100,000 housing plan doomed to fail

5 steps to solving the housing affordability issue in Ontario

Housing policies must focus on supply

 

 

SHARE  

Featured Products


dvp

Canada has a new trade deal. Now what?

Latest News


Canada has a new trade deal. Now what?

dvp

by Wayne Karl

Canada, the U.S. and Mexico have a “new NAFTA” deal, the so-called the United States-Mexico-Canada Agreement (USMCA).

Now what?

And what does it all have to do with real estate?

Plenty, when you consider that economic health is essential to the housing market. And though there have been some ups, downs and regional disparities, the Canadian economy for the most part has hummed along for the last 10 years or so.

So too, has Canadian real estate – again, with provincial and local variances.

Without a strong economy, you don’t have job and wage growth. Without those, you don’t have population growth, which drives demand in real estate, whether renting or buying. And without all of that, you don’t get home building and construction, both key drivers of employment and economic growth.

The U.S. and Mexico are, respectively, Canada’s first- and third-largest merchandise trading partners in the world. Canada is respectively the second- and fifth-largest merchandise trading partner of the U.S. and Mexico, and the largest export market for the U.S.

In 2017, trilateral trade reached nearly US$1.1 trillion.

Anything that affects all of that, understandably, makes people nervous.

In its Canadian Outlook Executive Summary, Autumn 2018 – published pre-USMCA – the Conference Board of Canada cited concerns over trade negotiations for a lack of business investment and other risks to the economy.

The new USMCA, our federal government says, offers crucial predictability and stability for Canadian businesses, investors, traders, workers and innovators. The deal will “create good, well‑paying, middle class jobs, strengthen economic ties and expand Canada’strade in North America.”

The Canadian auto industry, for one, is pleased with the new trade deal.

“The (Canadian Vehicle Manufacturers’ Association) congratulates the Canadian government in finalizing the new agreement on a trilateral North American basis,” the CVMA said when the deal was announced. “While we look forward to reviewing the details pertaining to automotive trade more closely, the Canadian negotiating team is to be commended on reaching a modernized agreement which provides certainty and builds a strengthened platform for trade across the industry. We look forward to updates and working with government towards finalizing and implementing the USMCA.”

More than 136,000 jobs are directly tied to vehicle assembly in Canada, the CVMA says. All told, direct and indirect jobs associated with vehicle manufacturing in the country are estimated at more than 792,000.

Anything that risks employment– in Ontario cities such as Oakville, Oshawa and Windsor – understandably, makes people uneasy.

“The completion of the USMCA agreement may not be perfect, but what it does is bring is a level of surety,” Don Campbell, real estate investor, researcher and author told Homes Publishing. “Companies now know the new rules and can adjust their plans accordingly. They’ve been sitting and waiting to finalize plans, investment strategies, manufacturing plant building or renovations. They can now spend the next few months analyzing and planning for capital deployment for 2019.

“It also brings a sense of relief for those in the automotive cities in Ontario, and in fact could move some lost manufacturing back to Canada due to the “minimum auto wage” clause. That won’t be immediate but something to watch.”

SELECT ONTARIO AUTO INDUSTRY TOWNS

Oakville

  • A perennially strong performer in the GTA housing market
  • One of the priciest markets in the GTA, with median aggregate home price of $1.01 million for Q2 2018, according to the latest Royal LePage National House Price Composite
  • Increasingly diversified economy, not just dependent on the auto industry

 

Oshawa

  • One of more affordable markets in the GTA, especially for detached homes
  • Median aggregate home price of $533,888 for Q2 2018, according to Royal LePage
  • Hot bed for new home development at the moment
  • Though dipping slightly from 3.2-per-cent GDP growth in the last two years, Oshawa’s economy is forecast to advance a still healthy 2.6 per cent this year, the Conference Board says

 

Windsor

  • One of the hottest housing markets (yet very affordable) in Ontario, in terms of price growth
  • Median aggregate home price of $241,081 for Q2 2018, according to Royal LePage
  • 4.5 per cent median aggregate home price growth from Q1 to Q2, 2018 – and 16 per cent year-over-year
  • Local economic growth may slow to two per cent for 2018,after exceeding three per cent every year between 2014 and 2017, according to the Conference Board

IMPACT ON INTEREST RATES AND HOUSING

“The lack of a free trade agreement between Canada and the United States brought about a high degree of economic uncertainty in Canada in recent months,” James Laird, president of CanWise Financial and co-founder of Ratehub.ca, told Homes Publishing.

“With the USMCA providing a level of trade certainty, Canada’s economy is free to expand at its natural pace. The dominant variable under consideration by the Bank of Canada will now become inflation, and the Bank of Canada will likely use interest rate hikes to keep rising inflation numbers in check. It will be a shock if the Bank of Canada chooses not to increase interest rates on Oct. 24. Canadians should also expect a greater frequency of interest rate hikes in 2019, starting with a rate hike early in the new year.”

Wayne Karl is Senior Digital Editor at Homes Publishing. wayne.karl@homesmag.com 

RELATED STORIES

U.S. tariffs on steel will hurt Canadian real estate

GTA housing market correction coming to an end, ReMax says

 

SHARE  

Featured Products


Housing market in GTA sees price gains

Housing market in GTA sees price gains

Latest News


Housing market in GTA sees price gains

The Greater Toronto Area’s housing market sees double-digit year-over-year price gains in fourth quarter of 2017

The Royal LePage House Price Survey released January 10, 2018 revealed double-digit growth across the GTA in the fourth quarter of 2017 compared to the same quarter last year. Home values continue to be influenced by an exceptionally strong start to 2017. During the quarter, demand continued to slow in many suburban regions across the GTA. With the exception of condominiums, all housing segments studied depreciated on a quarter-over-quarter basis, as poor winter weather, growing affordability constraints and the threat of a new stress test caused many prospective homeowners to sit on the sidelines, waiting to see if prices would soften.

In the fourth quarter of 2017, the aggregate price of a home in the region grew 14 per cent year-over-year to $837,873. When broken out by housing type, the median price of a two-storey home in the GTA climbed 13.9 per cent year-over-year to $982,637, while the median price of a bungalow increased 8.3 per cent year-over-year to $806,183. During the same period, the median price of a condominium within the region saw the most significant price hike, surging 19.5 per cent to $476,421.

“Over the last decade, condominium prices have tended to be less volatile when compared to other property types, maintaining strong upside appeal while demonstrating resilience in the face of varied market conditions,” said Kevin Somers, COO, Royal LePage Real Estate Services Limited. “When markets soar, prospective homeowners will increasingly look to more affordable property types, like condos, as a result of their diluted purchasing power. This causes pricing and sales activity to ramp up in these categories.

“Even when overheated, condominium price growth is often more manageable relative to other property types given its lower price point,” added Somers. “When prices skyrocket, detached homes are far more likely to overshoot their mark, and because they are considerably more expensive, any decline in market characteristics will be far more pronounced within the segment, especially when home values are already placed out of the reach of many potential purchasers.”

On a quarter-over-quarter basis, the aggregate price of a home in the GTA fell 1.7 per cent, while the median price of a two-storey home and bungalow declined by 2 per cent and 2.4 per cent, respectively, when compared with the previous three-month period. Condominiums were the only segment to witness a slight gain on a quarter-over-quarter basis, rising 0.4 per cent.

Since the beginning of the quarter, continued affordability constraints and waning consumer confidence kept many purchasers on the sidelines in the hopes that prices would soften, especially in suburban regions outside of the core where rates of appreciation far surpassed those experienced in the City of Toronto. When compounded with the Office of the Superintendent of Financial Institutions’ (OSFI) most recent policy announcement, which will require that all new uninsured mortgages undergo a stringent stress test, sentiment softened further as prospective homeowners continued to process the new regulation’s effect on the market and their purchasing power.

“Many potential purchasers believe that there may be one final act remaining in the Greater Toronto Area’s most recent housing cycle and they are willing to hold off and see if a significant price adjustment is just over the horizon,” Somers said. “However, while hope remains eternal, prices are still very much comparable to the recent peak of the market, and frankly, it would be a very big surprise if the Greater Toronto Area completely shifted to a buyer’s market. External demand for housing across the metropolitan area is expected to remain strong thanks to the region’s robust economy luring many buyers into its jurisdiction from across Canada and around the globe.

“Peak millennials, who are also increasingly reaching the age of homeownership, will also place a significant strain on inventory across the region, turning the process of finding a home into an exercise in adjusting expectations,” concluded Somers. “As with Vancouver and many other major cities around the world, the trade-off between housing type and location will likely become more prevalent in the future across the GTA.”

According to Royal LePage’s most recent Market Survey Forecast, the company predicts that the aggregate price of a home in the GTA will appreciate by 6.8 per cent by the end of 2018, as many purchasers acclimate to the new mortgage rules and continue to compete over low inventory levels.

Market Summaries

City of Toronto

Market trends began to heat up slightly in the Toronto, with the region’s robust economy luring many purchasers from across the GTA into the region, seeking to live and work downtown. As opposed to many suburban cities across the metropolitan area, desirable properties that were priced correctly tended to sell quite quickly within the region and would often receive multiple offers. During the quarter, the median price of a home in the area rose 17.7 per cent year-over-year to $850,899.

Buyers have taken a wait-and-see approach in Scarborough, causing the region to transition towards more of a balanced market. Yet, despite recent trends increasingly favouring purchasers, prices still remain high, causing many prospective homeowners to look to the condominium segment or leave the city entirely for areas outside of the GTA where homes are more affordable. When compared to the fourth quarter of 2016, price appreciation remained strong within the region, with the median home value rising 8 per cent to $659,625.

York Region

Trends began to vary significantly across the York Region, with sales activity in Richmond Hill falling as a result of previously high levels of appreciation pricing many purchasers out of the market. While some buyers are trying to capitalize on current prices, many homeowners are not willing to list their properties as they believe that they should still fetch as much as they would have in the spring.

Meanwhile, at the opposite end of the spectrum, home values in Vaughan remained remarkably resilient during the quarter, as the region posted one of the strongest quarterly and year-over-year gains of any region within the GTA in both the bungalow and condominium market segments. As a result, in the fourth quarter of 2017, the median price of a home in Richmond Hill and Vaughan grew by 7.9 per cent and 16.5 per cent year-over-year to $1,246,771 and $1,080,366, respectively.

The Markham housing market sputtered in the fourth quarter of 2017, as sales activity and prices within the region’s high priced two-storey market segment declined. Newly built, larger condominiums served as a bright spot for the region, enticing a significant amount of interest from purchasers. Meanwhile, homeowners within the detached resale market decided to forgo listing their homes until conditions and pricing improved. While home values fell by 4.7 per cent on a quarterly basis, large gains witnessed during the spring caused the region’s aggregate home price to surge when compared to the same time last year, rising 11.2 per cent to $1,063,513.

Brampton

The relative affordability of the Brampton housing market enticed purchasers back into the market from the sidelines during the fourth quarter of 2017, as quarterly price changes helped home values align with prospective homeowners’ expectations, predominantly piquing the interest of many first-time buyers and residents already found within the city. As a result, the region witnessed a slight increase in sales activity, and the aggregate home price rose 14.7 per cent year-over-year to $709,071.

Mississauga & Oakville

While some purchasers jumped into the Mississauga and Oakville housing markets to find a property before the new OSFI stress test took effect, the majority of prospective homeowners elected to wait on the sidelines in order to gauge the impact of the new policies. This however did not translate into a large reduction in pricing, as inventory remained low across the regions. Existing residents are now also holding off on listing their homes, believing that pricing may be rekindled once new market conditions are absorbed. During the quarter the aggregate price of a home in Mississauga and Oakville increased by 12.7 per cent and 14.2 per cent year-over-year to $742,200 and $1,105,412, respectively.

Milton

The aggregate price of a home in Milton climbed 10.2 per cent year-over-year to $728,584 in the fourth quarter of 2017, as previous high home price appreciation caused market trends to slow within the region. On a quarter-over-quarter basis, the aggregate price of a home within the city fell 4.6 per cent, primarily as a result of eroded affordability.

Durham Region

During the quarter, Oshawa and Ajax experienced the largest aggregate home price increases of any area studied within the Durham Region, rising 10.9 per cent and 11.6 per cent year-over-year to $534,008 and  $689,325, respectively.

Pickering also saw a significant increase in price, with its aggregate home value rising 10.5 per cent this year over last to $718,336, while home values in Whitby grew by 8.9 per cent to $675,416 over the same period.

Nationally

Canada’s residential real estate market saw strong, but slowing year-over-year price growth in the fourth quarter of 2017. The Royal LePage National House Price Composite, compiled from proprietary property data in 53 of the nation’s largest real estate markets, showed that the price of a home in Canada increased 10.8 per cent year-over-year to $626,042 over the three-month period. When broken out by housing type, the median price of a two-storey home rose 11.1 per cent year-over-year to $741,924, and the median price of a bungalow climbed 7.1 per cent to $522,963. During the same period, the median price of a condominium appreciated faster than any other housing type studied, rising 14.3 per cent to $420,823 on a year-over-year basis.

“To prospective homeowners in our largest cities, condominiums represent the last bastion of affordability,” said Phil Soper, president and CEO, Royal LePage. “This is especially true for first-time buyers whose purchasing power has been reduced by tightening mortgage regulations.”

In line with Royal LePage’s previous Market Survey Forecast, Royal LePage predicts that the price of a home in Canada will increase 4.9 per cent by the end of 2018. Looking ahead, the company anticipates that the new OSFI stress test will slow the housing market in the first half of 2018, as buyers adjust their expectations and many market participants take a “wait and see” approach.

“The unsustainably high rates of home price appreciation witnessed in recent years in B.C. and Ontario were dangerous to the stability of not only the housing market, but to the broader economy itself,” said Soper. “Policy measures like the OSFI stress test will quell runaway housing inflation to an extent. However, we do foresee an upswing in demand in the latter portion of the year, as prospective buyers adjust to the new realities. To put it another way, the demand is still there.”

The Royal LePage House Price Survey provides information on the three most common types of housing in Canada, in 53 of the nation’s largest real estate markets. Housing values in the House Price Survey are based on the Royal LePage National House Price Composite, produced quarterly through the use of company data in addition to data and analytics from its sister company, RPS Real Property Solutions. Commentary on housing and forecast values are provided by Royal LePage residential real estate experts, based on their opinions and market knowledge.



SHARE  

Featured Products


Predictions for the 2018 real estate market

Welcome to 2018!

Latest News


Welcome to 2018!

The only safe prediction for the real estate market for this year is that it will be unpredictable.

by Gale Beeby
HPG Editor-in-Chief

As we head into the Year of the Dog, the only thing I can predict with absolute certainty is that are as many diverse opinions about the state of the real market in the GTA as there are breeds listed by the Canadian Kennel Club.

According to the Chinese zodiac, the dog — full of energy, faithful and intelligent — has a long-held position as the protector of the home and as man’s best friend. So, regardless of what the economists say will happen, perhaps it is an auspicious year for the homebuyers.

MY TOP FIVE PREDICTIONS

Rough Time For First-Time Buyers

This is the sector of the market that is being hit hardest by new government policies, especially the new mortgage qualification stress test imposed by the Office of the Superintendent of Financial Institutions (OFSI). The rule requires anybody buying a property with less than a 20 per cent down payment of their own money (not mom and dad’s) be qualified for their mortgage at either the Bank of Canada’s rate of 4.99 per cent or with an extra 2 per cent added to their approved mortgage rate. Experts think this might eliminate about 10 per cent of buyers out of the market. Many will put off buying a new home until they can save enough money for a down payment under the new rules.

Interest Rates Will Rise

I know, we’ve been hearing that interest rates will increase the last few years, but the Bank of Canada raised the rate in July and September to its current rate of 1 per cent, up from a record low of 0.5 per cent. Experts differ on when — and how much — the Bank of Canada will raise rates, but they do all agree that rates are going up. I’m betting they are and I’m locking in my mortgage in the first quarter of 2018.

Condos Will Be The New Norm in Family Housing

As prices of ground-related housing (detached, semi-detached and townhomes) has escalated to point where most buyers can no longer consider anything but a condo unit in a midrise or highrise building, buyers are looking at multi-residential buildings, not just as an entry into the market, but also as their permanent home.

According to Altus Group, the average price of a condo apartment in the GTA in November was $702,992, while new single-family homes grew to $1,223,610. Builders are responding by designing larger condo units suitable for family living and Toronto is responding by building more schools and community centres around areas of intensification. Growing up in condo will become the new normal for many families in the GTA.

Detached Home Prices Will Continue to Escalate

Supply cannot match demand resulting in a squeeze for anybody with the dream of a owning a detached home anywhere in the GTA. In November, the average price of a new single-detached home was over $1.2 million, 25.1 per cent above November 2016’s benchmark of $977,890, according to Altus Group, adding that single-family home sales represented only 17.3 per cent of the new homes sold in the GTA in November 2017.

But the lower sales do not represent a decline in interest, warns the Building Industry and Land Development Association (BILD). “Single-family housing is still the first choice for many people, especially for those with families,” said BILD CEO and president Bryan Tuckey.

The reasons for the lack of land supply is complicated — Places to Grown policy, Greenbelt restrictions, lack of serviceable land to name a few — but the fact is there are fewer detached homes being built.

Buyers will be moving out of the GTA in order to afford a new house. Hotspots will include the Kitchener-Waterloo area, Burlington, Hamilton, the Niagara Region and Bowmanville.

New Appeals Process Will Continue to Slow Development

In December, the province passed legislation to eliminate the Ontario Municipal Board (OMB) and replace it with the Local Planning Appeal Tribunal (LPAT). Over the years, the OMB suffered from a reputation that was less than stellar, with many believing that the board sided with the developers in most appeals, which is, in fact, not the case. And, of course, an OMB appeal caused a lengthy delay, costing the builder/developer money, which is passed on to the homebuyer.

The government says that LPATs, on the other hand, will be an independent tribunal with the hopes of making the land-use planning appeal process faster, fairer and more affordable, and allowing community members have a say in how their neighbours are shaped. That’s a good thing, really, as community involvement should always be welcomed by developers.

However, I don’t believe that the LPATs will take any less time to resolve an appeal than the OMB. These things take time, and with more people involved, and more depositions to hear, LPATs could actually take longer. And when the tribunal is no longer made up of independent members who decide on a development using fact-based planning principles, then decisions are bound to be based on the dreaded NIMBY code rather than on whether the proposal has merit in and of itself.

Just remember, the Distillery District would not have come into existence if it were up to the City of Toronto — the OMB gave it the green light. And that’s just one example of a good planning decision made by the OMB.

WHAT THE EXPERTS SAY

New Housing

The Conference Board of Canada expects an overall modest increase for single-family homes in 2018 and predicts the economy to grow by only 2 per cent in 2018, which will inhibit Canadians’ ability to buy new homes. The building industry has responded by making the shift toward multi-residential buildings, with two out of three new homes built today multi-family. However, Toronto’s real gross domestic product (GDP) is expected to grow 2.5 per cent in 2018, showing few signs of problems on the horizon for the region. The real estate sector will continue to benefit from this robust economic performance. People still crave the live-work-play lifestyle in the core and companies, eager to be close to talent, are moving into new office spaces nearby to fill the new tech and research jobs they’re creating. Urban intensification will continue, especially in Toronto, where the GTA will see significant densification efforts.

PWC reports that the condominium market will perform steadily in the near term, with demand steady in most markets. Downtown cores remain most attractive to young professionals, retiring boomers and young families. The size of condo units has been slowly increasing, the Building Industry and Land Development Association (BILD) reports, in answer to the demand of family-sized units.

Resale Housing

According to research by the Bank of Canada and reported by the Canadian Real Estate Association, which oversees the resale housing market in Canada, tightened mortgage rules will reduce sales activity across Canada in the first half of 2018, particularly in and around Toronto and Vancouver. Some homebuyers will stay out of the market as they save for a larger down payment. Taking these factors into account has led CREA to revise its sales forecast for 2018. CREA also anticipates that tighter mortgage regulations will lead some buyers to opt for a smaller, lower priced home.

Re/Max predicts national home prices will increase by 2.5 per cent in 2018, with the GTA facing a flat year except in downtown Toronto and some suburban areas west of Toronto, including Oakville and Brampton.

Royal LePage predicts a 4.9 per cent price increase nationally and a price increase of 6.8 per cent in the GTA.



SHARE  

Featured Products


us_canada_real_estate_012017_fi

U.S. interest in Canadian real estate surges following presidential election

Latest News


U.S. interest in Canadian real estate surges following presidential election

(CNW) — According to data released January 20, 2017 by Royal LePage, Canada’s leading real estate services provider, American interest in Canadian property has risen following the U.S. presidential election, with an increased number of Americans conducting research into real estate markets across the nation.

American web traffic on RoyalLePage.ca, the company’s consumer real estate portal, has been correlated to recent U.S. political events. U.S.-originated sessions surged 329 per cent the day following the election and climbed 210.1 per cent year-over-year the week after Donald Trump’s victory. Looking at the full month of November, 2016, U.S. web traffic grew 73.7 per cent year-over-year when compared to the same period in 2015. This trend continued throughout the remainder of 2016, with American web traffic rising by 40.9 per cent year-over-year during the fourth quarter.

According to a new Canada-wide survey of 1,226 Royal LePage real estate advisors, U.S. interest in Canadian property will continue to climb, with 39.5 per cent of respondents forecasting that American inquiries into Canadian real estate will rise under Trump. In the fourth quarter of 2016 – of which November and December are traditionally quieter times for North American real estate activity – 15.6 per cent of the advisors polled received inquiries from south of the border.

“Always a desirable destination for migrants, Canada’s attractiveness as a country for international relocation has surged this decade,” said Phil Soper, president and chief executive officer of Royal LePage. “The United States was already a top source for immigration into Canada, and now in the period following the recent U.S. election, we are witnessing a material bump in American interest in Canadian real estate.”

During the fourth quarter of 2016, American interest was primarily focused on Canada’s largest markets, with Ontario, British Columbia and Quebec receiving 72.7 per cent of all U.S. regional page views generated on RoyalLePage.ca. Those looking to purchase Canadian real property were largely interested in the country’s residential market, with three quarters (75.2 per cent) of all American inquiries pertaining to this market segment.

“U.S. interest in Canadian real estate is not a new phenomenon –– we are next door neighbours,” said Soper. “From Whistler to Muskoka, to Tremblant and Nova Scotia’s south shore, Americans have traditionally been the largest foreign cohort of recreational property purchasers in Canada. With our country’s ever-growing global reputation as a financially sound, happy and culturally tolerant place to raise a family, it is not surprising that interest has moved from a place to play, to a potential place to live and work.

“Given America’s vast population, even a fractional increase in the number of households following through on this initial interest and successfully completing the demanding process of emigrating to Canada could drive a material increase in the number of homebuyers from south of the border,” concluded Soper. “Our federal government is seriously considering increasing the quota of new Canadians welcomed from abroad, and with the high value of the U.S. dollar increasing Americans purchasing power, we may be seeing more moving trucks with U.S. license plates in our future.”

In last year’s inaugural “Best Countries” ranking published by US News in partnership with BAV and the Wharton School, Canada was ranked second worldwide in the comprehensive 75 element study, scoring very high on culture, sustainability, entrepreneurship and open-for-business categories. In the United Nations’ “Global Happiness Ranking,” Canadians scored in sixth place. Additionally, the Economist magazine’s widely followed “Most Liveable Cities” analysis, which ranks cities based on a balance of economic, safety and environmental factors, placed Vancouver, Toronto and Calgary in three of the top five spots worldwide, with no U.S. city ranked in the Top 10.

Provincial Summaries and Trends

Ontario led the country as the top-researched destination by Americans on RoyalLePage.ca in the fourth quarter of 2016, with 41.4 per cent of U.S. regional page views directed to the province. Over the same period, Ontario listings received a significant boost in U.S. page views, rising 54.5 per cent this year over last. According to the survey, 62.5 per cent of real estate advisors polled in Ontario cited the GTA as the most desirable location for U.S. parties making inquiries into a home purchase since October 2016, while just over two-thirds (67.2 per cent) pointed to the GTA as the region in which Americans purchased the most property over the same period of time. Looking ahead, 38.4 per cent of survey respondents from Ontario expect U.S. inquiries into Canadian real estate to increase following Trump’s assumption of power.

In the fourth quarter of 2016, British Columbia accounted for 17.4 per cent of U.S. regional page views, while also showing a 62.9 per cent increase year-over-year. Interestingly, according to the survey, Victoria garnered the most attention among B.C. cities from prospective U.S. homebuyers, being cited as the preferred location by approximately one third (32.1 per cent) of respondents. In comparison, one quarter (25.0 per cent) of respondents cited Greater Vancouver as the top region of interest among American homebuyers considering a real estate purchase in B.C. Looking ahead to 2017, 43.6 per cent of B.C. respondents anticipate American inquiries into Canadian real estate will increase after Trump takes office.

U.S. traffic to Royal LePage’s Quebec listings accounted for 13.9 per cent of the total website sessions logged across provinces in the fourth quarter of 2016, and showed a 17.6 per cent increase in U.S. page views, year-over-year. Meanwhile, the survey found that 40.0 per cent of Quebec respondents named the Greater Montreal Area as the main market in Quebec that Americans considered for a potential property purchase. In looking at property acquisitions by Americans since October 2016, of those polled in Quebec, over one half (53.3 per cent) of real estate advisors who sold a home to an American did so in the Greater Montreal Area, while 20.0 per cent sold a home in each of Quebec City and Mont-Tremblant. When Trump takes office, 52.2 per cent of Quebec respondents believe the region will see an increase in U.S. inquiries in the period that follows.

Despite accounting for a smaller percentage of U.S. website traffic provincially (7.4 per cent in Nova Scotia, 5.7 per cent in New Brunswick, 2.3 per cent in Prince Edward Island and 2.1 per cent in Newfoundland and Labrador), according to real estate advisors surveyed, Atlantic Canada saw the highest percentage of sales inquiries from Americans since October 2016. In fact, during the fourth quarter, Royal LePage’s data showed a year-over-year increase in U.S. website sessions of 180.4 per cent, 125.5. per cent, 53.4 per cent and 41.7 per cent for New Brunswick, Nova Scotia,  Prince Edward Island and Newfoundland and Labrador, respectively. Over one quarter (27.9 per cent) of survey respondents indicated that Americans have expressed interest in a property in the Atlantic region since October 2016, with a large majority of inquiries (54.8 per cent) and purchases (54.2 per cent) taking place in Halifax. Furthermore, almost half (48.1 per cent) of those surveyed in the region expect inquiries to increase Trump assumes power.

Provinces affected by recent economic downturns saw minimal interest from American buyers, with U.S website sessions for Alberta accounting for only 7.6 per cent of the total. The survey showed that, of those interested in Alberta, Calgary (54.6 per cent) and Edmonton (27.3 per cent) were cited by respondents as receiving the most interest from potential U.S. buyers. Notably, all (100 per cent) survey respondents working in the region indicated that they have not sold a home to an American since October 2016 – the only region in the country to report zero U.S. real estate transactions for this period. Similarly, only 26.4 per cent of respondents believe the region will see an increase in real estate inquiries by Americans after Trump takes office.

The other provinces in the Prairies saw the least amount of interest by prospective American homeowners since October 2016, with only 1.6 per cent of U.S. website sessions being associated with Manitoba and 0.5 per cent with Saskatchewan. According to survey respondents, of the U.S. buyers interested in these provinces, Americans mostly inquired about property purchases in Winnipeg (50 per cent), Saskatoon (20 per cent) and rural Saskatchewan (15 per cent). Looking ahead, one third (33.3 per cent) of respondents expect to see an increase in American inquires after Trump assumes power.

Survey Methodology

Royal LePage polled 1,226 real estate advisors across Canada between January 12-17, 2017. Each respondent was asked to complete a survey composed of questions regarding their region of expertise and observations and beliefs pertaining to U.S. interest in Canadian real estate since the 2016 presidential election.

Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of over 17,000 real estate professionals in more than 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting women’s and children’s shelters and educational programs aimed at ending domestic violence. Royal LePage is a Brookfield Real Estate Services Inc. company.

www.royallepage.ca


SHARE  

Featured Products