Canadians seeking detached homes have returned to the market amid “softer” values in the second quarter, according to a new release from Re/Max Canada.
The 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). Re/Max found an increase in second-quarter home sales across 40 per cent of Greater Toronto Area neighbourhoods and 31 per cent of the Greater Vancouver region, compared to Q1.
“For those buyers that were active in (the second quarter), 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 homeownership,” said Christopher Alexander, president of Re/Max Canada, in Thursday’s release.
According to the report, there have been some existing sellers in the City of Toronto who have used the opportunity to trade up to larger homes or more desirable neighbourhoods closer to the city. “The difference between the selling price of an existing property and the purchase price of a new one … has narrowed considerably,” the report said, a shift that can work in favour of the buyer given mortgage portability. Condominium owners have also benefited as values for their apartments and townhomes have remained relatively stable, while detached housing values have softened.
In the City of Toronto, the benchmark price of a detached home was $2,073,989 in February. In July, it fell to $1,515,763, according to TRREB. Meanwhile, the benchmark price for condominiums in the City of Toronto was $738,930 in July, down from the most recent peak of $840,444 in March but still up seven per cent over last year.
In Vancouver, the discounts are not as pronounced. For example, in April, detached homes saw a benchmark price of $2,139,200 compared to $2,000,600 in July.
“Buyers shouldn’t expect big bargains,” Elton Ash, executive vice-president at Re/Max Canada, said.
“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,” Ash said.
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 the Fraser Valley. The decline in listings comes 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 significantly affect housing markets in these major centres down the road.
Canada is set to welcome over 430,000 immigrants annually until 2024, as stated in the federal government’s revised target released earlier this year. Fifty per cent of those newcomers will reside in the GTA.
“Inventory remains a puzzle that policy can’t solve in the foreseeable short or long term,” Alexander said. “It’s a real challenge, as the 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.”
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