Housing market slowdown continues with sales and average prices well down from last year – CBC News
New numbers from the Canadian Real Estate Association confirm what buyers, sellers and owners have known for a while: the housing market is in a funk.
The group that represents more than 155,000 Realtors across the country said in a release Friday that sales for September were down by more than 30 per cent compared to the same period a year ago.
Prices are down on an annual basis, too, with the average selling price of a home listed on the MLS system going for $640,479. That’s down by 6.6 per cent compared to a year ago, and down by more than 21 per cent from the all-time high of $816,720 reached in February.
That was before the Bank of Canada began its aggressive campaign of rate hikes to rein in runaway inflation. The central bank has moved its benchmark lending rate up by more than three percentage points in the past six months, pushing rates on variable rate loans above five and even six per cent.
That’s poured cold water on the once red-hot housing market.
“The important thing to remember is we’re still in the middle of a period of rapid adjustment, with buyers and sellers trying to feel each other out while a lot of people have had to take their home search plans back to the drawing board,” CREA’s chief economist Shaun Cathcart said in a release.
“As such, resale markets may remain on the quiet side for some time yet, with the flipside of that coin being even more pressure on rental markets.”
Rental market is hot
That’s the case in many markets across the country, including Brampton, Ont., where realtor Shaun Ghulam said he’s noticed an interesting dichotomy: the market to own has cooled, but competition for rentals is red hot.
“Lease prices are ridiculous now,” he said in an interview. “If it’s $3,000 a month, people are coming in at $3,500.”
That uncertainty in the rental market is one reason why Earl Hypolite and Naomi Zitt-James say they’re looking to buy a house of their own, sooner rather than later. The couple rents an apartment in downtown Toronto, but with a seven-month-old baby and a large dog, they feel it’s time to make the leap.
“When it was just the two of us, I think it was really appealing,” Zitt-James said of renting.
“But now to have that amount of money … go into renting as opposed to paying down something that we own, it’s a little bit more unappealing than it was when we first moved in.”
While they have no imminent plans to buy, they have been looking at properties outside the city, where prices have come down a lot.
“I’m feeling a lot better now that I know that the prices have come down a little bit,” Zitt-James said. “I just feel a little sad for those people that went in and got those houses only to have it come down.”
Realtor Ghulam said selling prices have declined considerably in Brampton since the spring. Sellers are still asking for prices they might have gotten six months ago, and when they don’t get any offers, they delist their home and try again at a lower price, hoping to spark a bidding war that rarely comes.
“Check how many times the property has been listed,” Ghulam said. “If it’s been listed for four or five times, you know the seller is not serious to sell and they’re just playing.”
The result is a wide gap between seller expectations and those of buyers. “Sellers are holding off, they’re waiting to see where the interest rates go,” he said. “Buyers are a little hesitant because they want to wait until the prices drop more.”
TD Bank economist James Orlando says the numbers make it clear that recent rate hikes have taken a lot of momentum out of the market, spooking buyers but also would-be sellers.
“Listings fell for the third straight month, indicating that a softening economy and higher interest rates have yet to force a meaningful increase in supply,” he said of the numbers. “If anything, soft price conditions are keeping potential sellers on the sidelines.”
