TRREB Predicts Strong Demand To Persist Through 2022

Rachel Rehkopk
other

 Active listings in the Toronto Region are down at their lowest levels in more than two decades according to the latest numbers from the Toronto Regional Real Estate Board (TRREB).

In their January 2022 release, we can see that despite being in a new calendar year, not much has changed in terms of GTA market conditions from last month. There are still too few homes listed for sale compared to the total number of buyers who are searching, creating an incredibly competitive marketplace with strong price pressure.

Despite record-low inventory levels, January of 2022 still saw 5,636 transactions, the second-highest on record (second to last year’s 6,888 sales, down 18.2%). New listings also fell in relative lockstep, down 15.5% when compared to last year, leading to only 4,140 active listings on the market. 

Like we saw throughout 2021, these tight market conditions are contributing to price growth within the GTA. The average price for a home in the region climbed to $1,242,793 in January, up  28.6% year-over-year. In many regions, tight market conditions have led to strong price growth when compared to more recent months. On average across the region, the price of a  detached, semi-detached, and condo-townhouse grew approximately 10% from last month alone, up 9%, 11%, and 11% respectively.

Related read: Why this might be the best time in 2022 to sell your home.

According to TRREB’s 2022 Market Outlook, the trends we’re already seeing in January are predicted to continue playing out through the rest of the year: including strong consumer demand, and low inventory leading to a competitive landscape for buyers.

 

TRREB Predicts 2022 Will See Strong Price Growth, But Won’t Beat Sales Records Set In 2021

TRREB suggests in their 2022 Market Outlook that total sales volume in the GTA will reach 110,000 in 2022, which is a decline from last year’s record-setting peak, but still a strong year by any historical standards. If their prediction rings true, it will be the third-highest year in recent history, just behind 2016 with 113,040 transactions.

Despite slowing sales numbers, TRREB doesn’t think that prices are set to fall in the Region. They suggest we’ll see an approximate 12% year-over-year price increase, bringing the average price of a home in the region to $1,225,000 by the end of the year.

Factors Contributing to Growing Real Estate Prices in 2022

When it comes to why TRREB is forecasting continued price growth into the new year, it all comes down to persistent demand for housing in the Region. TRREB President, Kevin Crigger explains:

“Immigration into Canada and the GTA is expected to be at or near record levels in 2022. All of these people will require a place to live. On top of this, job creation in average to above-average income sectors is expected to remain strong, further buoying consumer confidence to make a large-ticket purchase of a home. Unfortunately, the supply of listings will remain  constrained, sustaining strong competition between buyers and double-digit growth in selling prices.”

Here’s an overview of the key market factors TRREB suggests will have a positive impact on the market:

Labour Market Recovery

TRREB cites that the overall economic outlook for high-quality job creation will remain high in 2022, giving many residents of the GTA increased confidence in their ability to gain or retain employment in the long term that will help them afford the ongoing costs of a home purchase.

Simply put, people who feel confident in their employment are more comfortable with undertaking the commitment of buying a home. TRREB sees this economic optimism as a strong indicator that housing demand will continue into the new year.

Near-Record Levels of Immigration

After nearly two years of global border closures and related public health measures, TRREB notes that the federal government’s pandemic recovery plan puts increasing immigration into renewed focus. Record, or near-record levels of immigration are expected in the coming years in the Toronto Region – and with this comes increased demand for all types of housing, both to purchase or rent.  This increase in demand will continue to create competitive conditions for buyers, ultimately leading to price growth.

Persistent Low Inventory

As the real estate board cited throughout 2021, the available supply of homes in the market isn’t keeping pace with record levels of demand, leading to rapid price appreciation in the most competitive markets.

The above-mentioned economic optimism as it pertains to the labour market for high-earners, coupled with increasing immigration levels, sets the scene for strong demand to persist into the new year.

Factors Contributing to Lower Sales Volumes in 2022

Despite a strong demand for real estate into the new year, TRREB still predicts that we will see fewer sales this year than we did last – although, they’ll be at a higher price point. To explain this perspective, TRREB’s Chief Market Analyst Jason Mercer explains,

“While home sales will remain strong historically, there are a few key factors that will see transactions slightly off last year’s record pace. First, higher borrowing costs in 2022 will see some households on the margin of affordability temporarily put their purchase on hold. Second, after above-average per capita home sales in 2021, there will be some give-back in 2022, simply because the pool of ready buyers will be smaller. Finally, the perpetual lack of inventory in the GTA will preclude some willing buyers from getting a deal done – simply put: you can’t buy what’s not available for sale.”

Low Inventory Continues to Constrain the Market

While low inventory is playing a role in driving up real estate prices, it’s also playing a role in reducing the total number of potential sales. TRREB’s research also suggests that intentions to list will likely remain flat from 2021, or decrease slightly, meaning we’re unlikely to see significant changes to this low-inventory environment in the upcoming year.

Normalization in Per-Capita Home Sales 

During the pandemic, many households experienced higher than usual savings rates, as commuting, taking vacations, and going out to bars and restaurants were largely put on pause. This factor, coupled with historically low borrowing costs, led to record levels of home purchases in 2020 and 2021, well above the per-capita norm in the GTA.

TRREB suggests that these conditions may have contributed to many households purchasing sooner than they otherwise would have, so we may experience some “giveback” of these sales in 2022 and 2023 – meaning a slightly reduced consumer demand from this group of buyers. However, TRREB cautions that the extent of this “giveback” will likely be mitigated through the increase of demand expected from immigrations.

Higher Borrowing Costs

The Bank of Canada made it clear in their last announcement that higher interest rates are coming in the near future. And, generally speaking, higher borrowing costs tend to lead to fewer home sales – helping to explain why we likely won’t see 2022’s sales volumes beat the records set last year.

When it comes to how higher borrowing costs may impact pricing, TRREB cites that due to the stress test buyers already need to qualify higher than their current contract rate,  so we will likely see the qualification standard that buyers are eligible to borrow remain the same for most of 2022. This means that despite rate increases, the amount a buyer can qualify for is anticipated to remain constant.  

How Does This Compare to Other 2022 Predictions?

The Toronto Regional Board isn’t the only group forecasting a strong, but moderated, 2022 market. The Canadian Real Estate Association called for a very similar 11% price growth across Ontario, also citing that lower sales volumes are to be expected. 

To find out more about what Zoocasa’s team is predicting for the 2022 market, read our 2022 Market Trend Report here.

 

© 2015 – 2021 Zoocasa Realty Inc., Brokerage

How “chronic undersupply” is affecting Vancouver’s housing market

Ryan Garner
Livabl

 While pandemic-driven demand remains high, lack of supply remains the biggest issue facing Vancouver’s housing market, changing both buyer expectations and the way realtors advise their clients.

There are currently less than 5,700 active listings across Metro Vancouver, according to recent figures from the Real Estate Board of Greater Vancouver. The lack of available inventory has caused bidding wars to intensify, raising the benchmark price for a detached home to more than $1.9 million.

“Single-family houses are no longer an option for most people in the City of Vancouver,” said Mike Stewart, a Vancouver-based realtor. “We’re seeing most of the sales activity and demand in the suburbs, and even more demand as you get further from the downtown core.”

Affordable Vancouver condos in scarce supply

The supply crunch has trickled down to Metro Vancouver’s condo market, which has seen its benchmark price increase 14 per cent during the last year, hitting $775,700, with a current sales-to-active listing ratio of 49.7 per cent.

Additionally, condo pre-sales in downtown Vancouver have been hampered by a lack of new projects due to government red tape and high construction costs.

“In terms of pre-sale condos, you’re not seeing a lot happen in the core of the city because the City of Vancouver is so slow to allow new supply to be built,” said Stewart. “And anything that is being built is super high-end because it’s the only way a developer can benefit from a financial perspective.”

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Despite rising prices, Vancouver hasn’t had trouble attracting high-end buyers. According to Sotheby’s International Realty Canada, the city’s luxury condo market saw sales over $4 million increase 137  per cent during 2021, while there were more than 1,600 sales over $1 million, up 171 per cent from the previous year.

However, those who simply can’t afford the high price point of luxury properties have been forced to search for alternatives outside the city. Statistics Canada estimates that Vancouver’s population decreased for the first time in 45 years during 2021, dropping by 6,780 for a total of 693,325.

Meanwhile, Surrey led B.C. in population growth last year, adding 13,004 new residents for a total population of 614,600. Nearby Langley welcomed 4,702 newcomers to reach 166,400 as people venture further from Metro Vancouver and into the Fraser Valley.

“A one-bedroom resale in Burnaby is probably going to be priced in the high $700,000s, so that’s not affordable for many people,” Stewart said. “But out in Surrey and Langley people are getting options that start at $400,000, which might sound extremely high for the rest of the country but out here it’s pretty affordable.”

Vancouver housing inventory prone to politics

Stewart notes that new housing supply has become a politicized issue in Vancouver, with the tug-of-war between NIMBYs and environmentalists contributing to lengthy project delays and “chronic undersupply.”

“You’re starting to see people like [B.C. Housing Minister and Attorney General] David Eby believe that more supply equals less expensive housing, and it would be nice to see that from city government,” said Stewart.

Eby spoke out against calls for additional taxes as a means to curb demand last month, claiming that a massive increase in housing supply is the best way to meet the needs of a growing population and improve affordability.

However, one bright spot to help alleviate the supply crunch has come from First Nations groups which own large tracts of land that are being used to construct new housing.

One example is the Squamish First Nation development Senákw, which aims to construct 6,000 homes on 11.7 acres of reserve land near the south end of the Burrard Street Bridge in Kitsilano. The project is expected to be Canada’s largest development on First Nation lands.

“The First Nations, quite frankly, are the only level of government that are actually stepping up to the plate and supplying housing in the numbers that are required across the city, and it’s wonderful to see,” Stewart said. “That’s the most exciting thing happening in the next five to 10 years in the City of Vancouver.”

For the time being, low inventory will continue to impact both realtors and their clients. And although the issue may be most prominent in Vancouver, it extends across the province.

“There just aren’t enough options out there for our clients,” said Stewart. “We did about 500 transactions last year and I have about 19 realtors across British Columbia that I send business to, and each one of them says lack of supply is the biggest issue.”

 

© 2020 BuzzBuzzHome Corp.

Victoria fully-leased office building sells for full list price

Colliers Canada
Western Investor

Leased to government tenants, the 29,363-square-foot building on 0.34 acres in downtown Victoria sold for $10.1 million.

Property type: Office building

Location: 836 Yates Street, Victoria, B.C.

Size of property: 29,363 square feet

Land size, in acres: 0.34 acres

Zoning: CBD-2

List price: $10.1 million

Sale price: $10.1 million

Date of sale: January 28, 2022

Buyer: Starlight Acquisitions Ltd., Toronto

Brokerage: Colliers Canada, Victoria, B.C.

Brokers: Ken Cloak and Tristan Spark

 

© 2022 Western Investor

79 room Columbia Hotel SRO sells for 16 Million dollar

Corbel Commercial Inc.
Western Investor

Off-market deal with non-profit in Vancouver’s Downtown East Side sells property for $5.9 million over assessed value at $202,500 per room.

Type of property: Single-room occupancy hotel 

Location: 303 Columbia Street, Vancouver

Number of units: 79 units Year complete: 1920

Property size: 6,100 square feet

Land size, in acres: 0.14 acres

Zoning: HA-2 (Heritage Area).

Retail: Pub at ground level.

BC Assessment value (2022): $10.15 million.

Sale price: $16 million.

Type of transaction: Off-market deal

Buyer: Atira Women’s Resource Society (non-profit).

Date of sale: January 31, 2022

Brokerage:  Corbel Commercial Inc., Vancouver

Brokers: Willow King, Marc Saul and Robert Tham.

 

© 2022 Western Investor

Banking watchdog warns housing prices could plunge 20 percent when speculative fever breaks

Financial Post Staff
The Vancouver Sun

Office of the Superintendent of Financial Institutions chief describes the pandemic housing surge as the perfect storm

 Peter Routledge, head of the Office of the Superintendent of Financial Institutions, said that housing markets that saw a rapid increase in prices could see falls as much as 20 per cent. Photo by Bloomberg

Canada’s federal banking regulator described the housing market as being in the late stages of a “speculative fever,” and warned that prices could plunge by as much as 20 per cent in some markets.

 

“There is a speculative fever that takes over private markets and that’s what’s playing out,” in housing, Peter Routledge, head of the Office of the Superintendent of Financial Institutions, said on the latest edition of political consultant David Herle’s weekly podcast, The Herle Burly. “Looking ahead, it feels like we’re at the later stages of that phase. My expectation is that as rates go up, assuming they do, some of that fever is going to abate a little and you’ll see a slowdown in prices.”

Routledge, a former analyst at National Bank who was running Canada Deposit Insurance Corp. when he was tapped to lead the OSFI last year, described the surprising surge in home prices during the pandemic as a perfect storm: Many households were sitting on lots of equity thanks to the rising home prices of the past decade; delinquency rates in Canada are low, which lowers the risk for lenders; a “herd mentality” kicked in as prices steadily rose; and the Bank of Canada dropped its benchmark lending rate to effectively zero.

 

As those forces recede, housing markets will cool, and some might even correct, Routledge said.

“In some markets where you had a really rapid increase in prices, you could see a fall of 10 (per cent), 20 per cent, even,” Routledge said. “But that will just be a return back to a little bit more sanity after a sudden buildup in prices.”

The Superintendent of Financial Institutions, however, does not think the steep price drops he expects in some cities are likely to pose a broader threat to the country’s financial system.

Toronto and Vancouver, the country’s priciest markets, have weathered similar declines before.

“You’re talking peak-to-trough declines of 20 per cent,” in those cities between 2015 and 2017, he said. “So we can absorb that volatility.”

Canada’s housing market has been setting records for the better part of a decade, led by Vancouver and Toronto. The frenzy has spread to other cities during the pandemic, as demand for bigger houses, or cheaper ones than can be found in major centres, caused Toronto-like price increases in places such as Ottawa, Montreal, and Moncton, New Brunswick.

Investors took note and jumped on the opportunity to turn a profit. Routledge said a “speculative boom” in housing has added extra heat to the market. Typically, investors account for about 15 per cent of home sales, but currently they are responsible for about 22 per cent of sales, he said.

“Even though that seems like a little bit, it’s quite significant incremental demand into the system,” Routledge said.

However, investors’ interest in the housing market likely is about to decline. “With rates going up, with the general recognition that, ‘Boy, housing is pretty fully valued,’ I’m not sure your expected return in the housing sector … I think a smart investor would think twice and maybe look at other outlets,” he said.

 

© 2022 Vancouver Sun

Greater Vancouver home price tops $1.25 million as listings plunge

Emma Crawford
Western Investor

Tight supply pushed Metro Vancouver detached home prices up almost 23 per cent year-over-year in January, says real estate board

Because of low supply, total unit sales in January were down for both detached and attached homes, while apartment sales inched upward | Darren Stone, Times Colonist
Tight supply pushed Metro Vancouver detached home prices up almost 23 per cent year-over-year in January, says real estate board
The number of Greater Vancouver homes listed for sale in January was 31.8 per cent lower than what was seen in January 2021, and this is nudging home prices ever higher, according to a Real Estate Board of Greater Vancouver (REBGV) report released February 2. 
The benchmark price for all home types was $1,255,200 in January, which is 18.5 per cent higher than the benchmark average in January 2021. For detached homes, the benchmark price reached $1,953,000 – 22.7 per cent higher than one year ago. The price for attached homes increased 24.3 per cent over the year, reaching $1,029,500, and for apartments grew 14 per cent to $775,700.
The biggest year-over-year increases in benchmark home prices across the region were seen in Maple Ridge (up 35.9 per cent to $1,134,900) and Pitt Meadows (up 37.7 per cent to $1,035,000).
A total of 5,663 homes are currently listed for sale, compared with 8,306 in the same period last year.
Keith Stewart, REBGV economist, said inventory is “less than half of what would be optimal to begin the year.”
“As a result, hopeful home buyers have limited choice in the market today,” he said. “This trend is causing fierce competition for a scarce number of homes for sale, which, in turn, increases prices.”
Because of the low supply, total unit sales in the month were down 15.9 per cent for detached homes (622 units sold) and 23.3 per cent for attached homes (348). As prices for those more expensive home types kept climbing, more buyers turned to condo apartment sales, with 1,315 units changing hands in the month – an increase of 10 per cent, year-over-year.
REBGV data includes sales and prices for Vancouver, West Vancouver, North Vancouver, Burnaby, New Westminster, Coquitlam, Port Coquitlam, Richmond, Port Moody, the Sunshine Coast, Whistler, Squamish, Pitt Meadows, Maple Ridge and South Delta. It does not include Langley or Surrey.

© 2022 Western Investor

Canada could see lowest jobless rate in more than 50 years

Nelson Bennett
Western Investor

There are about one million job vacancies and slightly more than one million people unemployed as country heads towards a potentially record -low jobless rate

 Economic forecasting is a complex business at the best of times, but trying to read the portents of a global economy in recovery from a pandemic has made it even more complicated.

“This is one of the more complex economic environments certainly encountered in my career as an economist,” Douglas Porter, chief economist for BMO Financial Group, said Feb. 1 during a session on financial and commodity markets at the Association of Mineral (AME) Roundup conference in Vancouver.

Generally, the signs are good, though the signals may be complicated somewhat by things economists have not had to factor in for decades, like high inflation and high employment.

One of the biggest stories of 2022 for the economy is going to be employment – high employment, that is, Porter said

“We have a very serious imbalance on the labour market front,” he said. “Right now in the U.S. we’ve got almost 11 million open jobs, whereas the amount of people counted as officially unemployed are less than 7 million.

“So we’ve got way more open jobs than we do have people unemployed. Historically, that kind of imbalance points due north for wages, and we are starting to see wage pressures mount in the U.S.”

In Canada, there are about 1 million job vacancies, though slightly more than 1 million people unemployed.

“We are starting to see wage pressures begin to build in Canada as well,” Porter said.

“We think that, by later this year, we could be looking at the lowest jobless rate that we’ve seen in more than 50 years in both Canada and the U.S.,” Porter said.

Though a global pandemic hasn’t been officially declared over yet, financial markets are operating as though it has., he added.

“Even with the ripple that we’ve seen in equity markets since the start of the year, largely speaking financial markets are still pointing towards relatively robust growth as we go through this year,” Porter said.

Commodities have been on fire since mid-2021, with everything from oil to lumber soaring. High oil prices in particular are helping drive up the consumer price index, and home prices that spiked roughly 20 per cent in the past year in Canada and the U.S. will also feed the inflationary fires.

“This is not just a North American story,” Porter said. “We are seeing strong gains in consumer prices almost across the emerging market and most of the advanced world. Even Japan, which has been looking at deflation, arguably, for about 30 years, is actually seeing inflation of almost 1 per cent, which is relatively high for Japan.”

U.S. inflation rates are among the highest, at 7 per cent.

Benchmark oil prices are well above US$85 per barrel. Porter said he thinks crude oil prices will settle around the US$75 to US$80 per barrel range. Even so, BMO expects inflation to linger longer than some economists initially predicted.

“Even with more moderate oil prices, with an improved supply chain situation, we are still looking at inflation in the range of 2.5 per cent to 3 per cent in Canada and the U.S. by late 2023, well above the sub 2 per cent trend that we were seeing before the pandemic began.

Housing prices will likely continue to add to inflationary pressure, Porter said.

 “Even if some of the reopening pressures do fade over the next year, even if oil pressures do stabilize, and even if the supply issues do improve, there is still some sting in the tail from wages and housing that could lead to firmer inflation lasting for some time.”

 

© 2022 Western Investor

Benchmark for a detached home in Metro Vancouver hit $1,953,000 in January

Ryan Garner
Livabl

Low housing inventory across Metro Vancouver resulted in decreased sales and increased prices during the first month of 2022.

According to the Real Estate Board of Greater Vancouver (REBGV), the region saw 2,285 residential home sales in January, a 15 per cent drop from the previous month and 4.4 per cent decrease from the 2,389 sales recorded in January 2021.

While last month’s sales were 25.3 per cent higher than the 10-year January sales average, reduced supply has resulted in a lack of options for prospective home buyers, putting upward pressure on prices.

Metro Vancouver had 4,170 new listings across all property types on its Multiple Listing Service (MLS) last month. While that represents a 114.4 per cent increase from December 2021, it’s also a 6.9 per cent decrease year-over-year.

A total of 5,663 homes are currently listed on the region’s MLS system, up 8.2 per cent from December but a 31.8 per cent decrease compared to January 2021 (8,306).

“Our listing inventory on MLS is less than half of what would be optimal to begin the year. As a result, hopeful home buyers have limited choice in the market today,” Keith Stewart, REBGV economist said. “This trend is causing fierce competition for a scarce number of homes for sale, which, in turn, increases prices.”

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The benchmark price for all residential properties in Metro Vancouver reached $1,255,200 in January, an 18.5 per cent increase from January 2021 and a two per cent bump month-over-month.

Detached home prices keep hitting new heights, with a benchmark price of $1,953,000 representing a 2.2 increase from December and 22.7 per cent rise year-over-year.

Benchmark prices for attached homes and apartment properties saw month-over-month increases of 2.5 per cent and 1.8 per cent, respectively, hitting $1,029,500 and $775,7000.

“With home prices reaching new highs in recent months, the need has never been greater for government to collaborate with the building community to expedite the creation of housing supply and provide more choice for those struggling to buy a home today,” Stewart said.

Seller’s market conditions prevail in Metro Vancouver, with the 40.3 per cent sales-to-active listings ratio for all property types. The ratio is 28 per cent for detached homes, 51.6 per cent for townhomes, and 49.7 per cent for apartments.

“As we approach spring, we’ll keep a close eye on the impact of rising interest rates on buyers’ willingness to buy and on whether more home owners will opt to become sellers in what’s traditionally the busiest season of the year,” Stewart said.

 

© 2020 BuzzBuzzHome Corp.

Office vacancy in New Westminster falls to ‘all-time low’: report

Chris Campbell
Western Investor

Report blames a lack of supply

 The Save-On-Foods at the Brewery District is one of three New Westminster locations of the grocery chain; all the stores have been reduced to 50% capacity in the face of the Omicron wave.Julie MacLellan

A new report on office vacancies in Metro Vancouver says that New Westminster has the lowest vacancy rate in the region due to a lack of supply that is “hindering activity.”

The report by Avison Young says office vacancy in the city “fell to an all-time low” of 4.3% at year-end 2021 from 5.4% a year ago. By contrast, Burnaby has a rate of 7% while Richmond sits at more than 10%.

“Avison Young has tracked the market since 1998,” says the report. “Vacancy has been steadily tightening since year-end 2017 with leasing velocity remaining stable during that time – despite the arrival of COVID-19 in early 2020 – due to the completion of several significant lease deals that saw tenants occupying improved space. A lack of new supply has also contributed to vacancy reaching record lows in 2021. Vacant sublease space is not available; however, sublease opportunities are possible in spaces that remain partially occupied.”

There was no vacant space in class C properties at year-end 2021 and vacancy in class A buildings was at a “miniscule” 2.5%, the report said.

“Annual absorption of 18,623 sf in 2021 marked the fifth year of positive absorption recorded in New Westminster after three years of historically strong levels of leasing activity,” said the report. “Despite a slow start in the first half of 2021, tenants subsequently occupied a majority of office space in the back half of the year.”

Video game developer Offworld Industries occupied 14,500 sf at 713 Columbia Street and was one of the primary drivers of positive absorption in New Westminster in 2021.

“New office construction in New Westminster is currently limited to Wesgroup’s Brewery District,” the report said.

“Rental rates were relatively flat in 2021 despite tightening vacancy and limited options for tenants. Lingering uncertainty around COVID-19 along with a lack of availability will likely hinder leasing activity into 2022, which may work to offset the upward pressure on rates that would typically emerge when vacancy is at a record low and the delivery of new office supply is more than 18 months out. Vacancy is forecasted to tighten further in 2022.”

 

© 2022 Western Investor

South Surrey strip mall on .58 acres trades over ask at $5.3 million

Western Investor Staff
Western Investor

A potential development site, the four-unit King George Plaza retail strip of 6,900 square feet sold for $100,000 above its list price.

Property type: Retail

Location: 2336 King George Highway, Surrey, B.C.

Number of units: 4

Property size: 6,900 square feet

Land size: 25,500 square feet

Land size in acres: .58 acres

Zoning: CHI (Highway commercial industrial)

List price:$5.2 million

Sale price: $5.3 million

Capitalization rate: 3 per cent

Brokerage: Macdonald Commercial Realty, Vancouver.

Broker: Dean Bauman and Razi Mohamed.

 

© 2022 Western Investor