Metro Housing Prices Bounce Back, and National Market Finding Balance

This week’s top real estate stories.

By  Jared Lindzon | 2 minute read

Every Friday, Wahi brings you the most important real estate stories from the past week.

Big City Housing Prices Bounce Back from Rate Hikes 

Rate hikes may have slowed price increases for a brief period, but new research suggests home prices are back on the rise in Canada’s major cities. According to the Teranet-National Bank Composite House Price Index, the country’s 11 largest metros saw home prices increase 1.1% this August as compared to August 2022, the first annual increase in nine months. Leading the way was Calgary, which saw a 6.2% jump, followed by Halifax, with a 5.1% gain. On the other end of the spectrum, prices dropped by 3.6% in Winnipeg, 2.3% in Ottawa-Gatineau, and 1.7% in both Hamilton and Montreal. 

With Sales Down and Supply Up, National Housing Market Inches Towards Balance

After a messy falling out kicked off by the pandemic and exacerbated by interest rate hikes, Canada’s housing supply and demand are gradually getting reacquainted. According to the Canadian Real Estate Association’s August report seasonally adjusted sales dropped 4.1% in the first full month following the latest rate round of rate hikes in mid-July, while the number of newly listed properties increased by 0.8%, following a cumulative gain of 24% between March and July. With sales slowing and new listings speeding up the national housing market is gradually moving towards something that resembles balance for the first time in years.

More Canadians Are Giving Up on Home Ownership 

Canadians are increasingly giving up on home ownership, including some existing owners. According to a Mortgage Professionals Canada survey half of non-owners don’t think they’ll ever purchase a home, up 15% from six months earlier. The survey also found that 17% plan to become first time owners in the next two years, down 5% from half a year ago. Affordability has become such a challenge that three times as many homeowners now say they can no longer afford their mortgage. Now experts fear some are being forced to sell, which may account for some of the recent increases in listings. 

Economists Forecast 2024 Recession, With Significant Housing Market Implications 

The Old Farmer’s Almanac is forecasting a bitter winter ahead for Canada, and so are economists. With the economy shrinking in the second quarter of the year, unemployment trending upward and inflation back on the rise, experts warn the country is barrelling towards a recession. Global economic forecaster Oxford Economics predicts a moderate one is on the horizon, which could lead to as much as a 10% decline in housing prices by early 2024. In fact, experts are no longer concerned about further rate hikes, with some even forecasting a drop in borrowing costs early in the New Year. 

City Hall Red Tape Exacerbating Toronto Housing Supply Challenges 

Toronto’s housing supply horrors have many culprits, but a new report suggests the call is coming from inside the house. According to a report by the Building Industry and Land Development Association, delays at Toronto’s Committee of Adjustments — which approves renovations and add-ons — is adding costly delays to supply-enhancing housing projects. The report found that applications are processed in 95 days, well above the 30-day standard set by the province and 32 longer than the City’s own target. The report notes that such delays add 8% to 14% to construction costs and recommends a complete overhaul of the committee.
 

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