New numbers from the Canadian Real Estate Association confirm what buyers, sellers and homeowners have known for some time: the housing market is in a bad mood.
The group representing more than 155,000 real estate agents nationwide said in a statement Friday that September sales were down more than 30 percent compared to the same period a year ago.
Prices are also falling annually, with the median sale price for a home listed on the MLS system at $640,479. That’s up 6.6 percent from a year ago, and up more than 21 percent from the all-time high of $816,720 reached in February.
That was before the Bank of Canada began its aggressive campaign of rate hikes to curb runaway inflation. The central bank has raised its benchmark lending rate by more than three percentage points in the past six months, pushing variable-rate lending rates above five and even six percent.
This has poured cold water on the housing market, which was previously heated.
“The important thing to remember is that we are still in the middle of a period of rapid adjustment, with buyers and sellers trying to get a feel for each other, while many people have had to bring their house search plans on the drawing board.” CREA Chief Economist Shaun Cathcart said in a statement.
“As such, resale markets may remain quiet for some time yet, with the face of this currency putting even more pressure on rental markets.”
The rental market is hot
That’s the case in many markets across the country, including Brampton, Ont., where real estate agent Shaun Ghulam said he’s noticed an interesting dichotomy: The owning market has cooled, but competition for rentals is red
“Rental prices are ridiculous now,” he said in an interview. “If it’s $3,000 a month, people come in at $3,500.”
Earl Hypolite and Naomi Zitt-James rent an apartment in Toronto, but say they’re getting ready to buy, and will most likely buy a fixer-upper somewhere outside of downtown. (Darek Zdzienicki/CBC)
That uncertainty in the rental market is one of the reasons Earl Hypolite and Naomi Zitt-James say they want to buy their own home sooner rather than later. The couple rents an apartment in downtown Toronto, but with a seven-month-old baby and an older dog, they think it’s time to make the leap.
“When it was just the two of us, I think it was very attractive,” Zitt-James said of the rental.
“But now having that amount of money … going to rent instead of paying off something we own, it’s a little more unappealing than when we first moved in.”
Although they have no imminent purchase plans, they have been looking for properties outside the city, where prices have dropped significantly.
“I feel a lot better now that I know the prices have come down a little bit,” Zitt-James said. “I just feel a little sad for those people who came in and got those houses just to knock them down.”
Realtor Ghulam said sales prices have declined considerably in Brampton since the spring. Sellers are still asking prices they could have gotten six months ago, and when they don’t get an offer, they pull their home and try again at a lower price, hoping to spark a bidding war that rarely happens.
“Check how many times the property has been listed,” Ghulam said. “If it’s been listed four or five times, you know the seller isn’t serious about selling and they’re just playing.”
The result is a wide gap between seller and buyer expectations. “Sellers are on hold, they’re waiting to see where interest rates go,” he said. “Buyers are a bit hesitant because they want to wait until prices drop further.”