How can Toronto’s housing supply crisis be solved?

Fergal McAlinden
other

The city is facing a “critical shortage,” says real estate board president

 The ongoing housing market slowdown and lower demand shouldn’t distract from the “critical shortage” of homes available for purchase in the Greater Toronto Area (GTA), the president of the region’s real estate board has said.

Kevin Crigger (pictured), president of the Toronto Regional Real Estate Board (TRREB), told Canadian Mortgage Professional that the number of new listings in the GTA remained troubling, despite purchase activity having declined in recent months.

“If you look at any period where we’ve had changes in the market, whether they be regulatory or otherwise, we’ve seen periods where people sit on the sidelines and take a wait-and-see approach,” he said. “I think that certainly is the biggest thing contributing to a decrease in the number of transactions.

“But when you look at the number of new listings coming to market, we effectively are seeing a 20-year low. So despite changing market conditions, we still are in a market that is fairly tight in terms of supply.”

That will pose a challenge when the housing market eventually kicks back into gear, Crigger said, with a release of pent-up demand set to shine a light once again on the inventory shortfalls facing the Toronto region.

TRREB recently launched a campaign ahead of municipal elections on October 24 urging candidates to understand the importance of prioritizing affordable housing. The association wants candidates to address measures it says delay or prevent the construction of new homes such as lengthy approval processes and exclusionary zoning, as well as prohibitive development fees and land transfer taxes.

Read next: Toronto home sales plunge further in September

Excessive red tape is one of the most significant contributors to Toronto’s housing supply problem, according to Crigger, particularly at a municipal level.

“The municipal level is where supply is ultimately brought to market. Building permits are issued, the approval process occurs,” he said. “So there’s no level of government more impactful to the supply conversation than municipalities.

“Even speaking to mayors of major cities within Canada, I think you’ll see that there’s agreement that the lengthy periods now for approval, and the often-confusing process, is certainly not acceptable and is really exacerbating the problem.”

Streamlining development applications could help bring more inventory to the housing market – but it’s also important to focus on building the right type of homes he said, such as midsize developments, especially with most neighbourhood land throughout the city currently zoned exclusively for single-family homes.

Positive signs

Despite the grim outlook for housing supply facing Toronto, one positive is that “for the first time in memory,” it has become a key conversation at all levels of government, Crigger said.

“TRREB, for many years, has been sounding the alarm on supply-related issues while the government [was] focused on attempts at suppressing demand. And I think, finally, every level of government agrees that we have a substantial supply problem,” he said.

“It’s very encouraging to see that all levels of government understand the need for collaboration and, most importantly, that it’s a key policy objective at all levels.”

Read next: Where prices are set to rise (and fall) in Canada’s housing market

That said, the urgency of the problem is one that authorities have been slow to realize, with short-term solutions aimed at cooling demand having prevailed over decisive longer-term action in recent years, according to Crigger.

“Solutions that focused on sort of Band-Aid, short-term end results have had less than no effect on the overall market,” he said. “And unless politicians are willing to truly lead and govern and address supply head on, we’re going to have a worse and worse issue as it relates to not only ownership affordability – but also rental affordability.”

TRREB recently revealed new polling results conducted on its behalf by Ipsos that showed 71% of residents of Toronto and the “905” – the suburban area surrounding the city – want municipalities to focus on increasing housing and rental supply, instead of attempting to cool demand.

That’s an “incredibly important” number, Crigger said, especially ahead of the municipal elections at the end of October.

“I would encourage voters to look very closely at the platforms put forward, at policies put forward,” he said, “because definitely supply needs to be a key conversation to address concerns related not only to the ownership side of housing, but the rental side of housing as well – which seems to be less of a conversation.”

Copyright © 1996-2022 KM Business Information Canada Ltd.

Housing market correcting, not crashing: RBC economist

Fergal McAlinden
other

Still, there’s some way to go before the downturn reaches its endpoint

 While home prices across Canada are projected to fall further into the early part of next year, the housing market is in the midst of a correction rather than a crash, according to a prominent economist.

Robert Hogue (pictured top) of RBC Economics told Canadian Mortgage Professional that declining home prices in many markets should be taken in the context of skyrocketing price growth in recent years, and that their future trajectory would vary significantly by market.

“Our view remains that what is taking place now is a correction that’s obviously at different speeds depending on which part of the country we’re talking about,” he said, “and it’s in large part reversing some of the excesses that occurred during the pandemic. That correction is not over, and still has more to come.”

That’s because the Bank of Canada is expected to continue hiking its trendsetting interest rate in the coming months, Hogue said, a development that would see variable mortgage rates increase in tandem. Still, although no uptick in the average national home price is imminent before the end of the year, it could arrive at some point in the next six or so months.

“Our best guess right now is that the bottom of the market will probably occur in the early part of 2023 in terms of activity,” Hogue said, “and maybe around the spring for prices – but that will likely vary market by market.”

Read next: “This too shall pass”: Executive talks challenges of current market

RBC expects that benchmark prices will have fallen 14% across the country by next spring, driven primarily by big drops in Ontario and British Columbia, while Canada’s national housing agency has also recently revised its forecasts for home price declines.

Canada Mortgage and Housing Corporation (CMHC) had initially said national housing prices could fall 5% by the middle of next year compared with early 2022 – although it now believes prices could be down as much as 15% by that time.

That’s primarily because inflation has proven stickier than initially expected, meaning Canada’s central bank has taken more aggressive action than anticipated, CMHC’s CEO Romy Bowers said.

Meanwhile, the country’s most prominent real estate body, the Canadian Real Estate Association (CREA), slashed its own home sales forecast and year-over-year price growth expectations in recent weeks.

It envisages a 20% decline in yearly sales and a 4.7% increase in the national home price over last year – a marked difference from its June projection that sales would fall by 14.7% and the national average price would grow 10.8%.

Canada’s independent budgetary watchdog also said at the end of September that home prices could potentially plummet by up to 23% from their peak this year with 11 of the country’s largest markets posting declines, although it noted these were possible scenarios rather than forecasts.

Nonetheless, Canada’s rapidly cooling housing market probably won’t give the Bank of Canada pause for thought on its rate-hiking trajectory, according to Hogue. That’s because inflation remains far too high – and the risk of inflation expectations becoming entrenched could create a “feedback loop” that proves hugely damaging for the economy, he said.

Read next: Is the Bank of Canada winning its war on inflation?

“I think the Bank of Canada is entirely focused on inflation at this point,” he told CMP. “That doesn’t mean that it’s not looking at what’s contributing to inflation and all the economic fundamentals and major sectors like housing – I’m sure it is, it looks at the housing market and other sectors very closely.

“But ultimately, right now, I think it is totally focused on… specifically inflation expectations, because the longer inflation stays higher, the higher the risk of households and businesses expecting inflation to continue to stay high.”

Some observers believe the Bank of Canada will move even higher on its benchmark rate than earlier envisaged in order to puncture inflation and bring down runaway costs of living.

The Organisation for Economic Co-operation and Development (OECD) now expects the Bank to hike its rate to 4.5% in 2023, belying the view among many economists that the rate would not surpass 4%.

That forecast arrives as the OECD also reduces its expectations for Canadian GDP growth next year by 11 basis points, with global economic indicators pointing to an “extended slowdown” according to its secretary-general Mathias Cormann.

Copyright © 1996-2022 KM Business Information Canada Ltd.

East Vancouver 1.23-acre Trout Lake assembly sells for $23.8 million

Western Investor Staff
Western Investor

Langley 1.05-acre infill site sells for $2.9 million

Western Investor Staff
Western Investor

Development site in Willoughby’s Routley neighbourhood of Langley is designated residential bonus density 2, with potential for traditional and compact single-family units.

Frontline Real Estate Services, Langley, for Western Investor

Property type: Development land

Location: 19819 68 Avenue, Langley B.C.

Land size: 1.05 acres

Zoning: Designated residential bonus Density 2 in local Neighbourhood Plan

Potential: Compact single-family detached

Sale price: $2.95 million

Brokerage: Frontline Real Estate Services, Langley, B.C.

Brokers: Megan Johal, Adam Lawrence and Justin Mitchell.

© 2022 Western Investor

Surrey one-acre industrial with business sells for $10.35 million

Western Investor Staff
Western Investor

The 8,325-square-foot building holds a profitable welding and fabrication business in Port Kells, close to Trans-Canada Highway

Fraser Elliott, Vancouver, for Western Investor

Type of property: Industrial and with business

Location: 18697 96 Avenue and 18725 96 Avenue, Surrey, B.C.

Property size: 8,325 square feet (warehouse)

Zoning: Light industrial

Land size: 1.072 acres

List price: $11 million

Sale price: $10.35 million

Brokerage: Fraser Elliott, Vancouver

Broker: Fraser Elliott

© 2022 Western Investor

Toronto home sales plunge further in September

Fergal McAlinden
other

The city’s housing market slowdown is continuing

September home sales in the Toronto area were down 10% from August and 44% over the same month last year, while the number of new September listings was at its lowest for two decades.

That news, revealed by the Toronto Regional Real Estate Board (TRREB) on Wednesday, arrives as the market continues its pronounced slowdown amidst rising interest rates, a cost-of-living crisis, and declining home values across many segments.

The 11,237 new listings in the Greater Toronto Area (GTA) in September marked the month’s lowest number for 20 years, down by nearly 17% over the same time last year.

The composite benchmark price of a home in the GTA, just over $1.08 million, increased by 1% over August – but was 4.3% lower than in September 2021.

Read next: Where prices are set to rise (and fall) in Canada’s housing market

TRREB’s chief market analyst Jason Mercer noted in remarks accompanying the release that the average selling price “may have found some support” towards the end of the summer, with some homebuyers potentially seeing tighter conditions in certain GTA markets as new listings plunged year over year.

The average price of detached homes across the GTA took a substantial hit, dropping by 10% compared with the same month last year to just under $1.37 million. Semi-detached properties posted a 6.5% decline (to $1.04 million) and condos saw their average price tick upwards to $730,818 – an increase of about 3%.

Those figures come a day after the real estate board in Vancouver, another of Canada’s hottest marks in recent years, revealed that the Greater Vancouver Area (GVA) had also seen a substantial decline in sales in September, by 46% year over year and by 10% from August.

Copyright © 1996-2022 KM Business Information Canada Ltd.

Metro Vancouver homes sales slide but prices stick

Frank O’Brien
Western Investor

With more than 15,700 homes listed for sale in a slowing market, prices may face further downward pressure

Sales are down, listings up and pricea are holding steady. | Western Investor
September housing sales across Greater Vancouver and the Fraser Valley dropped as much as 50 per cent compared to a year earlier, but benchmark home prices are holding relatively firm.
However, with more than 15,700 homes for sale in a slowing market, prices may face downward pressure.
Sales fell to 1,687 in the month, the lowest level for September since 2018, which marked the slowest sales month in 30 years, according to data from the Real Estate Board of Greater Vancouver (REBGV).
Total transactions through the multiple listing service were down 47 per cent from a year earlier, with some markets seeing declines above 51 per cent.
Last month’s sales were 35.7 per cent below the 10-year September sales average.
Despite the year-over-year sales skid, the composite benchmark home price in Greater Vancouver was up 3.9 per cent from September of last year to $1.15 million.
Sales of detached houses dropped 44.7 per cent over the year, but the benchmark price was 3.8 per cent higher than a year earlier and down just 2.4 per cent from August 2022, at $1.90 million.
In the Fraser Valley, total housing sales in September nosedived 51.9 per cent compared to September 2021, but the benchmark price of a detached house was up 4.1 per cent on the year, to $1.46 million. Townhouse benchmark prices increased 11.6 per cent from a year earlier to $822,400, while condo apartment prices were up 14.5 per cent in the same period to $530,400, despite slumping sales.
Home prices across Metro Vancouver, however, have been declining by an average of about 1.5 per cent per month for the past six months, real estate data shows.
“There’s no question that interest rates continue to be a primary factor in the market trends over the past six months or so,” said Sandra Benz, president of the Fraser Valley Real Estate Board. “The sales slowdown we’re seeing reflects a level of caution exercised by buyers, who are likely waiting for the market to settle further before jumping in.”
She added, “ In the meantime, we anticipate prices may continue to decline across all categories.”
Kevin Skipworth, a partner in Dexter Associates Realty of Vancouver, noted that interest rates have increased less than prices have fallen, on a percentage basis.
The average five-year fixed-rate mortgage rate increased by 1.95 per cent in the last six months, but the price of a detached house in East Vancouver has fallen 10.6 per cent and it dropped by 13.4 per cent in North Vancouverm he said, and by double-digits in East and South Burnaby, Port Coquitlam, Maple Ridge, Pitt Meadows and Ladner, compared to April 2022.
“The benchmark detached house price in Greater Vancouver is now $173,400 less than it was six months ago, and it has fallen by $270,000 in the Fraser Valley,” Skipworth said, “That covers a lot of mortgage payments”
Listings are increasing, which may keep prices from rallying.
In Greater Vancouver, the total number of homes currently listed is 9,971, an 8 per cent increase compared to September 2021 and up 3.2 per cent from August 2022, the REBGV reports.
There are now 5,805 homes for sale in the Fraser Valley, up 52.3 per cent compared to September of 2021, the Fraser Real Estate Board reports.

© 2022 Western Investor

Vancouver home sales down 46% from last Sept., 10% from August: board

Canadian Press
The Vancouver Sun

The B.C. board says sales in the region totalled 1,687 last month, down from 3,149 the September before and 1,870 in August.

Houses are seen on a hillside in Burnaby, B.C., on Saturday, April 17, 2021. The Real Estate Board of Greater Vancouver says September’s homes sales dropped by 46 per cent since last year and 10 per cent from August. Photo by DARRYL DYCK /THE CANADIAN PRESS

VANCOUVER — The Real Estate Board of Greater Vancouver says September’s home sales dropped by 46 per cent from last year and 10 per cent from August as interest rate increases cooled buyer sentiment.

The B.C. board says sales in the region totalled 1,687 last month, down from 3,149 the September before and 1,870 in August.

Last month’s sales were almost 36 per cent below the 10-year September sales average.

Andrew Lis, the board’s director of economics and data analytics, attributed the lower sales levels to the Bank of Canada hiking interest and mortgage rates in an effort to tamp down inflation.

Those hikes have contributed to the market’s composite benchmark price reaching $1,155,300 last month, up 3.9 per cent from last September but down 2.1 per cent from August.

The number of homes currently listed for sale in the area is 9,971, an eight per cent increase compared with September 2021 and a roughly three per cent jump from August.

“With fewer homes selling and new listings continuing to come to market, inventory is beginning to accumulate, providing buyers with more selection compared to last year,” Lis said, in a news release.

“With more supply and less demand within this market cycle, residential home prices have edged down in the region over the last six months.”

© 2022 Vancouver Sun

Ten most affordable places to rent in Canada in 2022

Jonathan Russell
other

It is important to compare average rent prices with the cost-of-living in each city

 Not ready to buy? There are still plenty of great places to rent in this country, whether you are ready to leave the more expensive rental markets or you’re able to work remotely. Here are the 10 most affordable places to rent in Canada in 2022.

Montreal, Quebec

Montreal, Quebec, is the major centre in Canada that currently offers the cheapest rent. It is also the city where the rent has increased the least year over year (0.7%). The one-bedroom median rent price in Montreal is under $1,400 and you can find one-bedrooms for as low as $600.

One of the reasons Montreal’s rent is so low is that there are more than enough apartments available compared to other major centres in Canada (such as Toronto and Vancouver, for instance). This excess in supply, coupled with the low cost-of-living in Montreal and government subsidies available for renters, make this city one of the more affordable places for rents in the country.

London, Ontario

The one-bedroom median rent price in London, Ontario, is $1,390, with a year-over-year increase of 13%. Those figures represent one of the cheapest cities in Canada for renters in 2022. It is also significantly lower than in Toronto (only 170 kilometres away), which has an average rent for a one-bedroom apartment closer to $2,000.

London is also an ideal place to work remotely, being a city in its own right but close enough to the Big City, if need be. It also offers a burgeoning tech scene, one of the best universities in the country, and a thriving arts scene.

Calgary, Alberta

With the average price of a one-bedroom rental at $1,230 (and a year-over-year increase of 12%), Calgary, Alberta, is one of the cheapest cities in Canada to rent in 2022. While Calgary consistently ranks as one of the more expensive cities in Canada in other areas, the average rent for two-bedroom apartments is roughly $1,290 per month. Despite low rental rates, the cost-of-living in Vancouver is nearly 50% lower than in Calgary and the cost-of-living in Toronto is almost 30% lower.

Windsor, Ontario

The average price of a one-bedroom apartment rental in Windsor, Ontario, is $1,210, a year-over-year increase of 15%. Rent here is significantly cheaper than in Toronto and Vancouver, and even Montreal. While being one of the most diverse cities in Canada, Windsor is also diversifying its economy, with the tech industry quickly catching up to the automotive sector as a major employer.

The city itself offers great restaurants, parks, trails, and bars, as well as close proximity to Detroit, Michigan, making it an excellent choice not only for budget-conscious renters but commuters and day-trippers as well.

Winnipeg, Manitoba

The average price of a one-bedroom apartment in Winnipeg, Manitoba, is $1,060, which is a year-over-year increase of 2%. Winnipeg is also one of Canada’s most affordable cities, making it a great spot for anyone who is money conscious. With a strong economy and low unemployment rate (just 4.5% in 2019), Winnipeg’s GDP growth has been 2.5% on average over the last five years. The cost-of-living here is relatively low compared to other cities in Canada. The Consumer Price Index in Toronto is 131. In Winnipeg? Just 118.7.

Saskatoon, Saskatchewan

The average rental price of a one-bedroom apartment in Saskatoon, Saskatchewan, makes it one of the cheapest on this list—$1,000 per month. That is a year-over-year increase of 8%. While that price may be attractive to most, it is important to note that the cost-of-living in Saskatchewan’s largest cities is still fairly high.

Quebec City, Quebec

With an average rental price for a one-bedroom apartment at $960 per month, you can’t really go wrong with Quebec City. Even at that price, it is a year-over-year increase of 28%. And despite its history, architecture, and culture—it is also one of the most affordable cities in the entire country to live.

Edmonton, Alberta

The capital city of the province of Alberta, Edmonton offers one-bedroom apartments with a rental price of just $940 per month, which is a year-over-year increase of 4%. Just to put it into context: the average one-bedroom apartment rental in Toronto is $1,350 per month. The reason Edmonton is so affordable is that it has a lot of apartments to offer compared to other Canadian cities and it also boasts a strong economy. These factors, coupled with a generally favourable cost-of-living, make Edmonton a great place to live.

Regina, Saskatchewan

One-bedroom apartments in Regina, Saskatchewan, will cost you $930 per month on average, which is a year-over-year increase of 6%. The capital city of Saskatchewan, Regina also boasts a relatively inexpensive cost-of-living.

St. John’s, Newfoundland and Labrador

St. John’s, Newfoundland and Labrador, offers one of the most affordable housing markets in all of Canada. It also offers the cheapest rent, with a one-bedroom median rent price at $880, which is a year-over-year increase of 2%. Once you’re there, however, it is important to note that the cost-of-living is higher than you might expect—and the winters just a little colder.

Copyright © 1996-2022 KM Business Information Canada Ltd.