Since the Bank of Canada (BoC) started raising interest rates in the spring of 2022 at a time of post-crisis sky-high home prices, first-time homebuyers have sat on the sidelines amid a housing affordability crisis. They have been waiting to dip their toes in the Canadian real estate market in this span. However, two groups of buyers have taken advantage of the current housing environment: seasoned buyers and investors.Seasoned homebuyers and investors have driven many “hot pockets” of the Canadian real estate market in the first half of 2024, according to the findings of a new RE/MAX Hot Pocket Communities study.What were some of the chief findings in the widely watched report? Let’s dig deeper.Investors, Seasoned Homebuyers Fuelling’ Hot Pockets’ of Canadian Real Estate MarketThe report revealed that experienced buyers and investors fuelled price gains for detached homes in places like the Greater Toronto Area (GTA), the Greater Vancouver Area (GVA), and Fraser Valley. Put simply, they have buoyed price gains of approximately 40 percent in 83 surveyed local markets and boosted sales by 30 percent in the first six months of the year.Unsurprisingly, detached housing in various neighbourhoods in the Toronto real estate market recorded substantial gains in both prices and sales, such as Forest Hill, Trinity-Bellwoods, Dufferin Grove, and Little Portugal. Typically, the report says, downtown and midtown communities have been “a perennial favourite with purchasers in Toronto.”Forest Hill, Trinity-Bellwoods, Dufferin Grove, Little Portugal, and other downtown and midtown communities have been a perennial favourite with purchasers in Toronto.“Chronically undersupplied micro-markets in Toronto’s downtown/midtown are experiencing healthy demand, with multiple offers a frequent occurrence,” the report stated. “Unlike 2021/2022, accepted offers were rarely over list price.”The vast 905 part of the GTA also enjoyed upward movements in transaction activity and prices, with Durham, Halton, and York Regions posting “an upswing in average price.”Conversely, price appreciation was rampant in the GVA and Fraser Valley real estate markets amid tight supply. According to the study, more than two-thirds (70.6 percent) of Greater Vancouver neighbourhoods witnessed median price gains for detached homes. Comparable trends were also evident in Fraser Valley communities, such as Burnaby, Port Coquitlam, and Squamish.“While affordability remains the top obstacle for first-time homebuyers, more experienced buyers and investors are taking advantage of softer housing values, making their moves ahead of the Bank of Canada’s (BoC) end to quantitative tightening,” said RE/MAX President Christopher Alexander in the report.“Pent-up demand continues to build, with an estimated 20,000 to 25,000 buyers currently lying in wait in the GTA, and another 5,000 buyers in the Greater Vancouver area ready to pull the trigger. The first interest rate cut in June did little to incentivize buyers, but early indications show the second may have struck a nerve.”The Bank of Canada (BoC) has lowered benchmark interest rates from the more than two-decade high of five percent. This has produced a spillover effect in the mortgage market because the five- and ten-year government bonds have slipped since the central bank signalled that more loosening of monetary conditions would occur in the coming months.What are the three notable trends identified in the class of veteran homebuyers and investors? Here is a breakdown:Homeowners took advantage of the modest price dip to trade up from their principal residence.Taxes were a significant hurdle for residents and non-residents, mainly because of the vacancy levies.Investors are upscaling their primary homes because of the recently imposed capital gains tax hike.Will First-Time Homebuyers Return?The economic climate has been rough for middle-income households looking to buy Canadian real estate, be it a single-family home, a townhouse or a condo apartment. Be it cumulative across-the-board inflation, higher home prices, or six percent mortgage rates, purchasing a home in many of these markets has been incredibly difficult.However, while it might appear that current homeowners, multiple property owners, and investors are dominating the Canadian real estate sector, experts predict that first-time homebuyers will gradually re-enter the market. At the same time, the plethora of hurdles could temper re-entry, warns Alexander.On the one hand, the federal government’s latest announcement of extending the amortization period from 25 to 30 years would be a key benefit for homebuyers as it would alleviate housing costs. On the other hand, the substantial price gains in various housing markets nationwide would offset the benefits.“That said, all boats rise with the tide – once the first-time buyers segment gains greater traction, we should see a ripple effect,” he stated. “We’re not there quite yet, but the tide is beginning to turn.”Ultimately, a key hurdle for Canada to overcome is a United States recession. Although various economic data points suggest that the world’s largest economy will avert a downturn this year, the financial markets have braced for a contraction, with the three-day market crash in early August serving as evidence of widespread recession concerns.“With closely tied economies, Canada is not insulated, so expect buyers to stay tuned to any possible economic headwinds,” Alexander added.The post Canadian Real Estate Hot-Pockets Fuelled by Investors, Seasoned Buyers appeared first on RE/MAX Canada.

Homebuyers in the Toronto real estate market experienced a modest cool-down on the pricing front during the heat of summer, according to recent data from the Toronto Region Real Estate Board (TRREB).In July, the Home Price Index (HPI) composite benchmark, which is considered a more comprehensive measurement, showed that Toronto real estate prices tumbled by five per cent compared to the same time a year ago.The average selling price dropped by 0.9 per cent year-over-year last month to $1,106,617. In July 2023, the average sales price for a home in Toronto was $1,116,950.While sales activity rose at a modest pace of 3.3 per cent from a year ago, local real estate association experts say that a better-supplied housing market provided homebuyers with relief. New listings soared nearly 19 per cent year-over-year to 16,296 units, and active listings spiked more than 55 per cent to 23,877 units.In addition to lower home prices, mortgage rates have already slipped after the Bank of Canada (BoC) lowered interest rates from their more than two-decade high of five per cent. According to the Canada Mortgage and Housing Corporation (CMHC), the conventional five-year fixed mortgage rate has been below six per cent for two consecutive months. Additionally, the Financial Post recently reported that many lenders have offered a mortgage rate of below five per cent.So, while households could be enjoying some savings now, a looser lending environment and a tighter landscape could fuel demand and absorb some of the new supply that has entered the Toronto real estate market.As inventory is absorbed, market conditions will tighten in the absence of a large-scale increase in home completions, ultimately leading to a resumption of price growth.TRREB Chief Market Analyst Jason Mercer“As more buyers take advantage of more affordable mortgage payments in the months ahead, they will benefit from the substantial build-up in inventory,” said TRREB Chief Market Analyst Jason Mercer in a statement. “This will initially keep home prices relatively flat. However, as inventory is absorbed, market conditions will tighten in the absence of a large-scale increase in home completions, ultimately leading to a resumption of price growth.”Toronto Real Estate’s Supply ChallengesBecause of these possible scenarios, sector experts are urging further new home construction activity and industry innovation.“TRREB applauds Toronto City Council’s decision to consult with the province on adopting single egress stair requirements in the building code for multi-residential buildings up to four storeys. This would make it easier to create a variety of multi-family units large enough for families,” said TRREB CEO John DiMichele. “Another important part of the housing formula is connection to public transit. We are very encouraged to hear that we are closer to an opening date for the Crosstown LRT and are looking forward to a firm announcement.”After a sluggish start to new home construction activity earlier this year, the Toronto real estate market has witnessed a modest resuscitation in housing starts in recent months. New CMHC figures show that housing starts totalled 5,523 in July, up more than six per cent from the same time last year. In the first seven months of 2024, housing starts totalled more than 28,000 units, down from the 31,000 units during the same year-to-date span a year ago.Still, the CMHC projects that new home construction is on pace for the slowest level since 2018. This coincides with recent data showing that sales of new and pre-sale condos have cratered in the Greater Toronto and Hamilton Area (GTHA), which could spell bad news for future development.“Over the rest of the year, we expect [housing starts] to continue to trend down in the province and particularly in the GTA,” said Anthony Passarelli, CMHC’s lead economist for southern Ontario, told CBC News this past spring.With cumulative inflation running wild over the last few years and rampant price pressures throughout the industry – be it labour or raw materials – Toronto real estate prices need to remain high to generate a profit.Of course, this is not an isolated event situated in Toronto. A recent TD Economics note suggests that new home construction activity will trend downward nationally for the remainder of 2024.“Despite the rebound, housing starts remain below the multi-decade highs observed in 2021 and 2022, particularly in single and semi-detached units,” said Maria Solovieva, an economist at TD Bank. “We expect multi-family units to soon contribute to this decline, given weak pre-sale activity in recent years and elevated borrowing and construction costs.” Since monetary policy functions with a long and variable lag, the full rate hike effects since the spring of 2022 might begin becoming realized. Does this mean the central bank’s rate cuts will not be experienced for a couple of years? While the market correction was not as intense as many had anticipated, it waits to be seen if rate cuts will fuel demand and support prices this fall.The post Toronto Real Estate Prices Fall appeared first on RE/MAX Canada.

Interprovincial migration may have slowed from year-ago levels, however overall net migration to Alberta continues to climb, sparking demand in the province’s affordable real estate market, according to a new report from RE/MAX. The Calgary condo market saw sales increase modestly by almost three per cent in the first eight months of the year, with 5,722 units changing hands compared to 5,577 sales during the same period in 2023. Year-to-date average price has climbed 15 per cent year-over-year to just over $347,000, up from $301,868 in 2023, according to the Calgary Real Estate Board.Growth has been noted in virtually all areas of the city, with the greatest percentage increases in sales occurring in Eau Claire (59.1 per cent), Killarney/Glengary (46.7 per cent), Garrison Woods (64.7 per cent) Garrison Green (23.5 per cent) and Currie Barracks (18.2 per cent). Most condominium apartment sales are occurring in the downtown district, where walkability plays a major role. Younger buyers tend to gravitate toward the core area, which allows residents to walk to work and amenities. Not surprisingly, the highest number of sales occurred in the Downtown East Village, where 129 units have been sold year to date, up from 110 sales one year ago. Significant gains have also been posted in average price, with Saddle Ridge experiencing an increase in values close to 36 per cent, rising to $317,997 in 2024, followed by Hillhurst, which increased 21.4 per cent to $423,873. Out of the 12 key Calgary markets analyzed by RE/MAX, seven posted double-digit gains in values.Read the ReportSeller’s market conditions prevailed in the city throughout much of the year, with strong demand characterizing home-buying activity. Luxury apartment sales are on the upswing, with 49 apartments selling over $1 million so far this year compared to 41 during the same period in 2023, an increase of 19.5 per cent. Empty nesters, retirees and oil executives are behind the push for high-end units, most of which are in the downtown core offering spectacular views of both the Bow River and the mountains.First-time buyers are most active in the suburbs, where they can get the best bang for their buck in communities such as McKenzie Town, Panorama Hills and Saddle Ridge. Apartment values in these areas average around $300,000, making them an attractive first step to home ownership, but also an affordable entry point for small investors.After a heated spring market, inventory levels have improved substantially, with a relatively good selection of condominiums available for sale. Inventory levels hover at close to 1,500, up substantially from year-ago levels, with the sales-to-new listings ratio now sitting at 60 per cent. With interest rates trending lower, more buyers and a greater number of investors are expected to enter the market in the year ahead. Rather than waiting for next spring, when rates are lower but prices are higher, buyers may want to consider making a purchase today when supply is healthy and market conditions are less heated. Buying with a two-month closing could also capture the expected Bank of Canada rate cuts in October and December.Connect with a RE/MAX AgentThe post Migration Continues to Boost Demand in Calgary Condo Market appeared first on RE/MAX Canada.