Home Prices on a Downward Trend and Demand for Homes with Rental Units on the Rise

This week’s top real estate stories.

By  Jared Lindzon | 2 minute read

Jul 28

Wahi's Week in Real Estate

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

Rate Hikes Have Home Prices Trending Downwards   

The Bank of Canada is probably pleased with itself right now, as its recent rate hike campaign delivers the intended results. Last month saw a huge drop in GTA home prices as stressed buyers hit their breaking point. According to the Building Industry and Land Development Association 2,526 new homes sold in June — a 32% increase over last year, but 30% below 10-year averages. The overall decline in sales, coupled with a spike in inventory, has prices trending downwards. The price of a new condo dropped 8.4% while single-family homes saw declines of 6.9% compared to last year.   

“As housing becomes more unaffordable, demand is rising for homes that come with their own rental units, such as basement apartments, garden suites or coach houses.”

Now Even Renters Need to Borrow

Last week saw some scary indicators of just how bad the rental market had gotten in the GTA — from protests and strikes to warnings from panicky developers — and this week only brought more ominous signs. Chief among them is the launch of a loan business designed to help renters cover their deposits and first and last month’s rent. Nesturo mimics the buy-now-pay-later model to offer renters in Ontario a literal foot in the door. Typically, only owners need to apply for loans, but in this pricey market even renters need financial assistance to put a roof over their heads.    

Tiny Homes With Big Price Tags   

Prices are skyrocketing for renters of all kinds in the GTA, but the biggest price jumps in recent months have occurred among the tiniest of homes, as residents are priced out of more spacious accommodations. According to a report by Urbanation, condos under 400 square feet saw the fastest annual rent growth in the second quarter of the year, jumping by more than 15%, while those between 400 and 499 followed in second, increasing by 14%. Now condos of 400 square feet or less cost an average of $2,121 per month, while bigger units under 500 square feet average $2,309.  

Luxury Market Slows Thanks to New Rules  

Like flying economy or eating fast food, the GTA’s wealthiest haven’t had to confront a challenging housing market, but that may be changing. According to a report by luxury real estate brokerage Engel & Völkers, Canada homes in the $10 to $20 million range are taking longer to sell these days — averaging 112 days in June, compared with 40 days one year prior — and they’re pointing the finger at Ottawa. According to the report the foreign buyer ban and vacant home tax — both of which came into effect January 1 — are to blame for the slow sales activity.

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The Hottest Homes On the Market Include Rental Units   

That dream of becoming a homeowner may come with the nightmare of being a landlord. As housing becomes more unaffordable, demand is rising for homes that come with their own rental units, such as basement apartments, garden suites or coach houses, according to legalsecondsuites.com CEO Ken Bekendam. He recently told Global News that it’s the only way many can afford their dream property, or qualify for a big enough mortgage. According to a CMHC report, Calgary, Edmonton and Vancouver have seen a spike in secondary suite construction, and Ontario’s recent More Homes Built Faster Act aims to inspire similar results.  

Jared Lindzon

Wahi Writer

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