The rate of growth for housing prices across the country has notably dropped compared to the earlier, more hectic market months of 2021.
In a recent monthly housing market update report, senior RBC economist Robert Hogue noted that the housing market has “calmed down considerably this summer,” which is taking the pressure off of Canadian housing prices.
Although home prices are still on the rise, the pace of appreciation is less than what it was prior to the summer. For the past three months, the average rate of increase was 0.8 per cent month-to-month, a noticeable difference from the first quarter of 2021 when the average rate was 2.6 percent monthly. The rate of price appreciation during the last three months is also significantly less than levels recorded between July 2020 to March 2021, when prices grew by an average of two per cent.
Hogue explained that further home price moderation is anticipated for the period ahead. The latest changes to the mortgage stress test, affordability issues for buyers and reduced housing budgets are expected to play a role in the cooling of price growth. However, the senior economist noted that widespread home price declines are not on the cards.
Photo: James Bombales
“Exceptionally tight demand-supply conditions in most markets will continue to provide solid protection against any major price corrections though we see prices flattening by early-2022,” said Hogue in the report.
During August, the composite MLS Home Price Index increased by 0.9 per cent month-to-month to $736,600, up 21.3 per cent from 2020 but down from 22.4 per cent in July.
After four consecutive months of dropping inventory levels, the number of new listings coming to market across Canada inched up by 1.2 per cent from July to August. Although this gave buyers some more choice, the boost in available homes was “drops in a bucket” for supply-starved markets. Vancouver, Kitchener-Waterloo and Montreal recorded inventory increases of 12.7 per cent, 8.9 per cent and 3.7 per cent, while Toronto, Ottawa and Winnipeg saw inventory drop by 1.8 per cent, 10.4 per cent and 6.5 per cent during August.
Nationwide, sales declined by 0.5 per cent in August, but this was much less than the 7.9 per cent average drop in sales noted during the last four months.
“The slight increase in new listings no doubt contributed to slowing down the pace of decline,” said Hogue’s report. “We expect supply availability to remain a central factor charting the path of home resales in the coming months.”
The recent market cooling trends have been the most prevalent in smaller Canadian markets. Communities such as Chilliwack and Kamloops in British Columbia, along with Barrie, Guelph and Hamilton in Ontario, have recorded home resales falling back to or below pre-COVID levels.
This pattern is related to supply shortages created by the recent housing market boom in these areas, Hogue explained, where demand and supply is still tight regardless of lower activity levels. The affordability advantage of smaller markets has waned compared to their more populated counterparts, particularly with downtown condos that have appreciated less in value, said the report.
On October 6, RE/MAX affiliates around the world will give back and strengthen their local communities.
Worlds apart but always connected, RE/MAX affiliates around the globe will participate in the inaugural Global RE/MAX Day.
The RE/MAX network’s nearly 140,000 agents in more than 110 countries and territories are invited to participate in the networkwide day of service, designed to give back to the communities in which they live and work. The first Global RE/MAX Day is being held on Wednesday, October 6.
“RE/MAX affiliates build community with their work every day. On October 6, RE/MAX affiliates will strengthen those same communities through acts of service,” says Shawna Gilbert, RE/MAX Vice President of Global Development. “Global RE/MAX Day is a day for all RE/MAX agents to come together – all around the world – to celebrate the people and communities they love.”
RE/MAX affiliates are encouraged to gather a group of colleagues and volunteer at a charity of their choice or through a community service project on Global RE/MAX Day. To further build community, participants can share their efforts with other RE/MAX affiliates using the hashtag #GlobalREMAXDay.
RE/MAX has a long history of giving back. Since 1992, the brand has partnered with Children’s Miracle Network Hospitals to raise funds for children treated at pediatric hospitals in the U.S. and Canada. In its nearly 30-year partnership, RE/MAX affiliates have donated more than $170 million to CMN Hospitals. Additional programs, including those dedicated to children, environmental activities, education and outreach, are hosted by RE/MAX affiliates throughout the global network each year and contribute to the well-being of local communities.
“Giving back is built into the RE/MAX culture,” says Mike Reagan, Senior Vice President of Industry Relations and Global Growth & Development. “To see the impact RE/MAX affiliates make all around the world – no matter the country, culture or language – is one of the greatest benefits of being with the global network. Community service is universal.”
The 2021 Global RE/MAX Day coincides with Global Balloon Around the World Day – held the first Wednesday in October – a fitting day given the red-over-white-over-blue hot air balloon logo RE/MAX is known for around the world.
Popular outrage at the soaring price of Canadian housing has a fix that almost no one is talking about — certainly not those aspiring to be Canada’s prime minister.
While they have not framed it specifically as a method of curbing Canada’s property sector, central bankers are the exception to that rule. Bank of Canada governor Tiff Macklem insists he is preparing to push a lever expected to have a real effect on the escalating price of houses: hiking interest rates.
People with a stake in Canada’s diverse housing sector, including homeowners, investors and those aspiring to buy, will be paying close attention to Wednesday’s latest data from the Canadian Real Estate Association.
They will also be watching Canada’s inflation numbers coming out on the same day, expected by economists to hit 3.9 per cent. If so, that will be the highest Canadian inflation figure since 2003.
Watching for a continued housing slide
In Canada’s hottest markets, including Greater Vancouver and Toronto, regional housing data released early this month showed little sign of cooling in August. But nationally, many expect the July slide in both sales and prices to continue in Wednesday’s results.
The Canadian housing market is complicated, influenced by immigration, demographics, the rate of construction and speculative demand, sometimes called “exuberance.” But as with any expensive asset, there is a clear relationship between price and interest rates.
Simply put, in the case of things you cannot afford to buy outright — especially houses that take years to pay off — prices are partly determined by how much it costs to borrow the money to buy them.
In the current market, it is hard to break out how much the fear of increasing interest rates is affecting the real estate market, but if you can believe our central bankers, that threat is rising.
“It is reasonable to expect that when we do eventually need to reduce monetary stimulus, our first move will be to raise the target for the overnight rate — our policy interest rate,” Macklem said in last week’s speech to the Quebec Chamber of Commerce. That would come, he said, before the bank began selling off the bonds that it is still accumulating at a rate of $2 billion worth per week as a secondary means of stimulating the economy.
The exact moment when the worm turns and rates start to rise will be determined by such things as when economic indicators such as employment bounce back and whether inflation goes down on its own, but the Bank of Canada is currently projecting it will hike rates next year. It will also inevitably be influenced by what the U.S. central bank does, simply because getting too far out of sync with U.S. rates affects the loonie and thus exports.
A recent editorial cartoon (which I now cannot find to share) shows an old and wrinkled Jerome Powell, chair of the U.S. Federal Reserve, still threatening to increase rates off their current lows. New U.S. consumer price index numbers out Tuesday showed inflation there remains high, with prices growing 5.3 per cent year on year, down fractionally from the 5.4 per cent in the previous release.
Reason for hesitating
There is a good reason for hesitancy. Rising interest rates have a wide impact on stock and bond markets, as well as on business and government borrowing. In fact, one argument that inflation would be inevitable was that higher rates would push government borrowing costs too high.
“Inflation could be seen as the most politically palatable solution,” suggested a report last year from the global investment giant BlackRock.
But interest rates certainly have an impact on the price of houses. They had a strong upward effect on house prices as rates fell, as Mike Moffatt, an economist at Western University’s Ivey Business School in London, Ont., has explained, and the opposite will almost certainly happen if interest rates begin to rise.
While the required down payment has rocketed with the total selling price, perhaps most interestingly, the lifetime interest costs over the 25-year mortgage actually declined between 2004 and 2021.
Effectively falling interest rates — in some cases recently as low as two per cent — have pushed the interest costs on a million-dollar mortgage to a very affordable $20,000 a year. But as we have seen in the past, when interest rates rise instead, lifetime carrying costs rise as well. That changes the calculus for buyers, whether they are buying to live in the house or as an investment.
An unmentionable solution
In the past, rising interest rates have pushed house prices down, although it takes months or years to take effect.
The leading political parties in the current federal election all want to make housing more affordable. Several have plans to increase housing construction, and some say they will offer subsidies to help new buyers into the market. But none have celebrated the idea of higher interest rates.
WATCH | Promises for house prices made on the campaign trail:
NDP Leader Jagmeet Singh promised to address sky-high housing prices, Conservative Leader Erin O’Toole proposed a savings account for gig workers and Liberal Leader Justin Trudeau offered increased financial support for seniors on the campaign trail. 2:03
According to the rules we share with the U.S., Britain and several other economies, politicians don’t talk about their power to raise or lower interest rates. That job is officially delegated to the central bank, supposedly to prevent the politicization of the role. But there may be another reason it has become unmentionable.
In a country like Canada, where the housing market seems to be in the process of swallowing the entire economy, raising interest rates would likely have an enormous decelerating impact well beyond cutting the price for first-time homebuyers.
Even if rising inflation and out-of-control real estate ultimately mean that an increase in the cost of borrowing becomes a necessary evil, forcing people to think about the consequences is unlikely to be an election-time winner.
Are you planning to purchase an old home? This could be a very smart real estate move, as old houses tend to cost less than modern builds. Additionally, if you’re the type of person who appreciates the nostalgic appeal and charm of an older home, then this will be a gratifying choice for you.
Although older houses bring undeniable historical character and uniqueness, there are a few things you need to be aware of before buying one. Here is a list of important things to look for when buying an old house to avoid running into trouble:
Harmful Building Materials
The very first thing you should check before buying or moving into an old house is the presence of harmful building materials. Generally, houses built before 1978 are known to contain lead-based paints and asbestos. These chemicals pose a danger to both children and adults. Therefore, if you find the house to have these chemicals, you need to hire a professional to remove them before you settle in.
The foundation of a home plays an important role in its overall stability—it’s what the entire structure sits upon. Many old houses tend to have foundation issues due to tear and wear, seismic waves, wet soil or tree root activity. In order to make the house livable, you need to hire a structural engineer to inspect and repair any damages or cracks. Experts can assess the situation and ensure the foundation is properly restored.
The roof is another common problem among old houses. If a house is very old, the roof shingles likely have depreciated and become less effective. Depending on the roof type the house has, its quality and efficacy can deteriorate based on weather, maintenance and quality of installation. Consider reaching out to professionals in your area to get an estimate on repair or replacement.
Unlike modern homes, older ones usually have old electrical connectivity, which cannot withstand modern usage and appliances such as HVAC systems, computers and televisions, to name a few. Therefore, you need to ensure that the connection is updated before you finally move in. Among the areas to pay attention to are knob and tube wiring. These kinds of wiring were common in the early 1900s and are likely to be no longer effective.
Moving into an old house can be a great decision. It brings a piece of history, uniqueness and classic proposition to your life. If you’re determined to own an older home, though, you need to take your time and check on the things mentioned above. Doing this will help you get a house worth your money and ultimately protect your investment!
There’s been little movement in the right direction since the last federal election. Hot market conditions have been exacerbated by COVID-19, with extreme competition, unaffordable prices, and barely time to breathe in the whirlwind, let alone take the time required to make a calm and controlled decision. Read more. . .
Elliston, Newfoundland is known as the Root Cellar Capital of the World. Root Cellars cover the landscape of Elliston, which was the first community to use the Root Cellars as a symbol for early subsistence in such harsh climates that are part of Newfoundland’s heritage. How many are there, you ask? Over 135 of them! Have a look at the beauty that lies beneath the rock formations of Elliston. Where else would you want to live?
Before you decide to buy a home, carefully consider the costs.
According to Canada Mortgage and Housing Corporation (CMHC), your monthly housing costs should not be more than about 35% of your gross monthly income. This includes costs such as mortgage payments and utilities.
Your entire monthly debt load should not be more than 42% of your gross monthly income. including mortgage payments and all your other debts.
Investing in a mortgage will pay off in the long run versus giving that money to a landlord.
For more tips, visit https://remaxinfinity.ca/looking-to-buy/
Canadians invest in home renovations to improve quality of life, not to add value in current Canadian real estate market
Challenging Canadian housing market conditions put additional importance to home renovations since the start of COVID-19, both for those looking to stay and those selling
More than half of Canadians renovated their home in 2020 with the intention of living in it, with 29% renovating to enhance their lifestyle for non-essential reasons (aesthetic and/or recreational purposes) and 29% doing so for essential reasons (safety and maintenance)
Only 16% of Canadians said they renovated to increase the market value of their home in order to sell within in the next one to three years
Is there a pandemic occurring in Atlantic Canada? A look at the region’s housing data may convince any observer that Canada’s east coast was not experiencing a public health crisis. Despite the severity of COVID-19, the area has seen both its economy and the real estate sector grow to levels unseen before. The Newfoundland and Labrador real estate market finished 2020 on a high note, and it kicked off 2021 with the same gusto. Read more . . .
At the start of 2020, few would have anticipated that St. John’s real estate would be one of the hottest Canadian housing markets by the end of the year. Twelve months later and the nation’s east coast is witnessing exponential growth in its housing sector. Commercial development, population growth, and a rebounding economy are contributing to the area’s booming real estate market. And this could be a main headline in Canadian real estate news for many years to come. Read more. . .
It might seem counter-intuitive, but buying a home in winter – from house-hunting, to getting all your worldly belongings from point A to point B – can actually be easier, cheaper and more convenient than any other time of the year. Here’s why the colder, darker months of the year could actually be a bright spot for homebuyers.
Although home starts experienced a double-digit decline in September, the broader demand trends and the continuation of permit approvals suggest that overall resilience in this category will persist. Let’s take a deeper dive in the numbers
Contact us today! RE/MAX Infinity knows new home construction.
Residential sales in 2021 are expected to lower than 2020 transactions, but on par with 2019 numbers. St. John’s Metro area currently has about nine months of inventory, down from 11 months in 2019. While the number of homes for sale has decreased in 2020 compared to past years, the downward trend for residential sales in 2021 is not expected to continue. Current supply levels are expected to continue or increase slightly in 2021. The number of days it took to sell a home decreased in 2020, however days on market are likely to maintain current levels or increase slightly in 2021. Read more…
How to Create More Space Indoors in the Winter Months
We reached out to our RE/MAX Influencers – a panel of RE/MAX Sales Associates from across Canada – who provided some great insight into what you can do to help create more space indoors during the upcoming winter months.
Ready to find that special indoor space of your own? Check out our latest listings!
Believe it or not! Because Canada is home to several places where spooky sightings and unexplainable encounters are known to happen. So, keep the lights on while reading about some of thecreepiest and most haunted locales in Canada. And feel the skin on your neck stand up!
Blowing the budget is everyone’s biggest fear when it comes to home renovation projects. Even if you follow standard guidelines—like building in a 20% cushion to cover unexpected costs, vetting contractors, and staying focused—it’s hard to prevent spending more than you’d like to. But with some strategic planning, you can save money in the lead-up to your big remodel and cut costs without cutting corners.
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Rather buy than renovate? Check our our latest listings:
September was yet another record-breaking month for home sales across Canada. Throughout the summer, we witnessed record high sales numbers because of the delayed start to the usual hot spring selling season and as we get deeper into fall, those numbers aren’t slowing down yet:
Connect with a RE/MAX Infinity Agent for detailed information about your neighborhood and its price trends!
Home buying is an exciting but sometimes complex process. Learn all the ways a REALTOR® can help you succeed with the most important purchase of your life. Once you’ve decided you’re ready to buy, a REALTOR® can guide you through the entire process and from start to finish.
If you are ready to buy, check our RE/MAX Infinity’s latest listings here:
Tips for sellers including everything you need to know from listing your home, to marketing your home and dealing with offers. Maybe you have questions about deciding when to sell, how to manage your money; RE/MAX will have you ready for anything!
A mortgage pre-approval is an important first step in the home-buying process. Having a pre-approval in hand tells you how much you can spend on a home, and it locks in the current low interest rate for up to 120 days, so you can shop the market knowing you’re insulated from rate hikes in the near future. If the rate drops, your lender should honor the new lower mortgage rate when you’re ready to make your purchase.
The amount that a financial institution is willing to lend for a mortgage depends on a number of factors. Your lender will check your financial standing to determine how much you can borrow, how much you can afford, and which loans might be best-suited to your specific circumstances. Applying for a mortgage requires a written application and supporting documentation, and it can be a slightly intimidating process. Here are three things lenders will want to know before giving you a mortgage pre-approval.