Last gasp effort to realize home ownership sends
Q2 sales up over Q1 levels in 40 per cent of GTA markets and 31 per
cent of Greater Vancouver
communities
TORONTO, Aug. 18,
2022 /CNW/ -- While detached housing values show
substantial year-over-year gains in the first half of 2022,
successive increases to the Bank of Canada's (BOC) overnight rate put a damper on
price appreciation in the second quarter of the year in both the
Greater Toronto and Vancouver
Areas, according to a report released today by RE/MAX Canada.
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To illustrate, the 2022 RE/MAX Hot Pocket Communities Report
compared market activity in the first and second quarter of 2022 in
terms of unit sales and prices, analyzing 60 Toronto Regional Real
Estate Board (TRREB) districts, 16 regions within the Real Estate
Board of Greater Vancouver
(REBGV), and six areas in the Fraser Valley Real Estate Board
(FVREB). In the Greater Toronto
Area (GTA), the Central and West End of the 416 held up
relatively well in terms of average price while Durham, Peel, York, Halton and Dufferin surrendered some of
the staggering gains realized in recent years. Preliminary
estimates of Q2 median prices in Greater
Vancouver's Squamish area
and the Sunshine Coast were
comparable to first quarter figures, while West Vancouver and Vancouver West/Howe Sound
reported moderate increases.
"Buyer sentiment changed virtually overnight as growing
geopolitical concerns and spiralling inflation destabilized global
markets, leaving the Bank of Canada little option but to raise interest
rates," says Christopher Alexander,
President, RE/MAX Canada. "Those
fast and furious incremental increases placed downward pressure on
housing sales and prices, improving affordability on one hand, but
eroding it on the other."
RE/MAX found that second quarter values in the GTA were 10 to 15
per cent below Q1 levels in Durham
(-14.6 per cent), York (-12.9 per
cent), Halton (-12.7 per cent), Dufferin (-12 per cent) and Peel
(-11.2 per cent). Just 15 per cent of GTA markets noted an uptick
in average price in the second quarter of the compared to the
heated first. Five of those markets are located in the central
core, including Dufferin Grove,
Little Portugal, Trinity-Bellwoods, Palmerston-Little Italy and
Kensington-Chinatown (C01); Yonge-St.
Clair, Casa Loma, Wychwood and the Annex (C02); Forest Hill South, Oakwood-Vaughan,
Humewood-Cedarvale and Yonge-Eglinton (C03); Mount Pleasant East
and West (C10); and Leaside and Thorncliffe Park(C11). Three are in
the West End, including High Park North, Junction Area,
Runnymede-Bloor West Village, Lambton-Baby
Point, Dovercourt-Wallace, Emerson and Junction (W02);
Stonegate-Queensway(W07); and Islington City Centre, West Etobicoke, West Mall, Markland Wood, Eringate-Centennial-West Deane,
Princess, Rosethorn Edenbridge, Humber Valley, Kingsway South (W08). One market that
experienced price growth is located the East End – South Riverdale, Greenwood-Coxwell,
Blake-Jones and North Riverdale
(E01).
DOWNLOAD THE PRICE AND SALES HEAT MAPS: Greater Toronto Area & Greater Vancouver Area/Fraser Valley
"Given that the core has traditionally been more resilient,
bolstered by strong demand, a finite supply of homes available for
sale, higher household incomes, and greater equity at the top end
of the market, the results are not unexpected," says Alexander.
"The price softening was clearly more evident in suburban areas and
the outer perimeters of the 416, most of which experienced strong
upward momentum during the height of the pandemic as buyers sought
to leave the city."
Core markets in Vancouver West and West Vancouver/Howe Sound also bucked the
downward price trend in in terms of preliminary estimates of Q2
median values, posting increases of 2.4 per cent and just over
eight per cent respectively. Squamish and the Sunshine Coast also held steady, with no
change reported between the first and second quarters. Seventy-five
per cent of markets in Greater
Vancouver, however, experienced a downturn in Q2 median
values, coming off peak levels reported in the first quarter of the
year. Most of the declines reported were below 10 per cent, with
one outlier – Whistler/Pemberton,
which fell by just over 16 per cent ($3,020,000 vs. $3,622,500). Given fewer sales and the types of
detached properties in that particular market, an increase in the
number of homes sold at lower price points could drag the median
price down. In the Fraser Valley, percentage declines in average
price ranged from a low of just over three per cent in Langley to a high of close to 13 per cent in
Delta - North between the first and second quarter.
"While we have seen some easing in prices, the sky is nowhere
near falling," explains Elton Ash,
Executive Vice President, RE/MAX Canada. "In fact, there is relative stability
in terms of market conditions, so buyers shouldn't expect big
bargains. Sales-to-active listings remain squarely in balanced
territory overall and even tight in some areas. In Vancouver, for example, supply was lower this
June than last in 50 per cent of markets and sales are down
accordingly. This trend will likely keep prices fairly stable
moving forward."
RE/MAX REALTORS® also noted a reversal in pandemic
trends over the past six months, as work from home situations
change and buyers rethink the exodus to suburban and rural areas.
Detached home sales rose in 40 per cent (24/60) of markets surveyed
in the GTA in the second quarter of 2022, with the vast majority of
increases noted the 416 area code (20/60). However, affordable
price points also continued to draw buyers. Durham Region was also
a hot spot with half of its markets reporting an uptick in
home-buying activity (4/8). Greater
Vancouver experienced an increase in sales in 31 per cent of
markets (5/16), including Island-Gulf, North Vancouver, Squamish, Sunshine
Coast and Whistler/Pemberton.
"For those buyers that were active in Q2, improved housing
affordability due to easing prices and the threat of higher rates
down the road clearly provided the impetus for many to leap into
detached home ownership," explains Alexander. "Greater selection,
particularly in coveted hot pockets, also played a significant role
in April and May as the pandemic-fuelled buying spree drew to a
close. Buyers locked into five-year fixed terms as the overnight
rate hovered between one per cent in early April to 1.5 per cent in
early June."
There have been some existing sellers who have used this
opportunity to trade up to larger homes or more desirable
neighbourhoods closer to the city. The 'spread' -- the difference
between the selling price of an existing property and the purchase
price of a new one -- has narrowed considerably, and given mortgage
portability, the move can work in favour of the buyer. Condominium
and strata owners have also seen benefits in the "spread" as values
for their apartments and townhomes have remained relatively stable,
while detached housing values have softened.
"Buying intentions overall are expected to remain healthy, even
if some buyers pause temporarily," says Ash. "While interest-rate
hikes have edged up carrying costs, we can't discount the effect of
the tight rental market, which has seen average rents increase by
double-digits year-over-year in the GVA and GTA. As potential
buyers face those realities, many will still conclude that the
benefits of ownership make better financial sense."
Several markets stood out in terms of sales in the Toronto
Region. Some of the areas that have seen the greatest activity
include Toronto's West End, where
a single-detached home on a 50-ft. lot with a price tag under
$1.5 million is still a possibility.
Both W04 (comprised of Yorkdale-Glen Park, Briar Hill-Belgravia,
Maple Leaf, Rustic, Brookhaven-Amesbury, Beechborough-Greenbrook,
Mount Dennis, Weston and
Humberlea-Pelmo Park) and W06 (which includes Alderwood, Long
Branch, New Toronto, and Mimico) noted an uptick in sales in
the second quarter compared to the first, with the average price in
W04 hovering at just over $1.3
million and the average in W06 sitting at just under
$1.5 million.
In the East End of the GTA, sales in E01 climbed 26.5 per cent
in the second quarter compared to the first. With close proximity
to the downtown core and the Lake
Ontario shoreline, and an average price of $1,863,815, this community has proven
exceptionally hardy under current circumstances.
Those seeking affordability helped prop up second-quarter sales
in Ajax, Whitby, Clarington and Scugog in Durham Region. With
the average price of a single-detached home hovering at just over
$1 million in Clarington to just over $1.2 million in Ajax, the region has an abundance of
entry-level product for cost-conscious buyers.
The top end of the market has also proven resilient overall
throughout the GTA, with detached housing sales over $2 million up 10 per cent in the first half of
the year compared to the same period in 2021. Not surprisingly, the
softening in overall price has brought out the bargain hunters at
luxury price points, which would explain the increase in sales in
Bedford Park-Nortown, Lawrence Park
North and South (C04), Rosedale, Moore Park (C09) and Leaside (C11)
in the central core, where average prices hovered at just under
$3 million, $4.1 million and $3.126
million respectively in the second quarter of the year.
Some of Vancouver's most
durable areas have been in Burnaby, Coquitlam and Port
Coquitlam. These established communities are drawing
purchasers who are looking for affordable detached housing with
good accessibility to the downtown core, with preliminary estimates
of the Q2 median values ranging from just $1.445 million in Port
Coquitlam to $2.12 million in
Burnaby. North Vancouver and Squamish have also held up well, with both
experiencing rapid growth well before it was further accelerated by
the pandemic.
Despite the softening in housing markets overall, active
detached housing listings in June were running almost 19 per cent
below the 10-year average in the GTA, approximately 12 per cent
below the 10-year average in the GVA and close to nine per cent
below the 10-year average in Fraser Valley. This, at a time when
builders are pulling up stakes and shelving proposed developments
due to softer demand. While the impact of those decisions will not
be felt immediately, the decision to withdraw will have major
repercussions on housing markets in these major centres down the
road.
"Inventory remains a puzzle that policy can't solve in the
foreseeable short or long term," says Alexander. "It's a real
challenge, as supply of detached homes remains low from a
historical perspective and also in the context of population growth
and future needs. This will remain a crucial factor impacting
Toronto and Vancouver, which are now seen as world-class
markets. Tougher market conditions and a possible recession will be
major market hurdles, but history reminds us that recessions often
bring strong rebounds. There's always a reason buyers say, 'I wish
I'd bought back then.' Real estate has traditionally stood the test
of time. Looking ahead, urbanization alone will be a significant
boon to future housing demand, as Canada's urban population is projected to grow
by 10 million by 20501."
1 https://esa.un.org/unpd/wup/Publications/Files/WUP2014-Highlights.pdf
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SOURCE RE/MAX Canada