Market Watch - Home Buyers Demand Returning to More Typical Levels
Based on the trends observed in the April housing market, it certainly appears that the Bank of Canada is achieving its goal of slowing consumer spending as it fights high inflation. Negotiated mortgage rates rose sharply over the past four weeks, prompting some buyers to delay their purchase.
Despite slower sales, market conditions remained tight enough to support higher selling prices compared to last year. However, there is evidence of buyers responding to increased choice in the marketplace, with the average and benchmark prices dipping month-over-month.
Ontario - Market Conditions Remained Tight
Toronto, 03 May 2022 -- The Greater Toronto Area (GTA) housing market continued its adjustment to higher borrowing costs, with the number of transactions down on a monthly and annual basis. As has been the case with previous rate tightening cycles, some home buyers have moved to the sidelines to determine how they will reposition themselves in the marketplace given the higher rate environment and related impact on affordability.
“Based on the trends observed in the April housing market, it certainly appears that the Bank of Canada is achieving its goal of slowing consumer spending as it fights high inflation. Negotiated mortgage rates rose sharply over the past four weeks, prompting some buyers to delay their purchase. Moving forward, it will be interesting to see the balance the Bank of Canada strikes between combatting inflation versus stunting economic growth and related government revenues as we continue to recover from and pay for pandemic-related programs,” said TRREB President Kevin Crigger.
GTA REALTORS® reported 8,008 homes sold through TRREB’s MLS® System in April 2022 – a 41.2% decrease compared to April 2021 and a 27% decrease compared to March 2022. On a year-over-year basis, the decline in sales was greater in the ‘905’ area code regions surrounding Toronto, particularly for detached houses. The MLS® Home Price Index Composite Benchmark was up by 30.6% year-over-year in April 2022. The benchmark level in April was down in comparison to the March level. The average selling price, at $1,254,436, was up by 15% compared to April 2021, but down compared to the average selling price of $1,300,082 in March 2022.
“Despite slower sales, market conditions remained tight enough to support higher selling prices compared to last year. However, in line with TRREB’s forecast, there is evidence of buyers responding to increased choice in the marketplace, with the average and benchmark prices dipping month-over-month. It is anticipated that there will be enough competition between buyers to support continued price growth relative to 2021, but the annual pace of growth will moderate in the coming months,” said TRREB Chief Market Analyst Jason Mercer.
Ottawa - April Residential Resales in a Flux
Ottawa, May 4, 2022 -- Members of the Ottawa Real Estate Board sold 1,889 residential properties in April through the Board’s Multiple Listing Service® System, compared with 2,394 in April 2021, a decrease of 21%. April’s sales included 1,419 in the residential-property class, down 23% from a year ago, and 470 in the condominium-property category, a decrease of 13% from April 2021. The five-year average for total unit sales in April is 1,849.
“With the number of transactions just slightly over the 5-year average, this was one of the weakest performing Aprils we have seen in a while,” states Ottawa Real Estate Board’s President Penny Torontow. “Considering that the number of new listings increased last month, it is a bit of a surprise that sales were off.”
“Certainly, there are a few factors at play: rising interest rates, growing Buyer frustration, April’s cooler temperatures, as well as the housing supply measures recently announced by the government – these could all be causing Buyers to pull back with a wait-and-see approach. We are watching the rest of the spring market closely to determine if this could perhaps be an early indicator of a shift in the market. Since April is only one month, we will be monitoring to see if it becomes a trend moving forward.”
“The fact remains that it is still a Seller’s market with supply under one month. Bidding wars and multiple offers persist in some pockets, prices continue to rise, albeit more moderately, and the market remains relatively strong,” she adds.
The average sale price for a condominium-class property in April was $473,702, an increase of 11% from 2021, while the average sale price for a residential-class property was $829,318, increasing 12% from a year ago. With year-to-date average sale prices at $830,588 for residential and $469,603 for condominiums, these values represent a 13% and 12% increase over 2021, respectively.*
“Limited supply and high demand will continue to place upward pressure on prices. And as long as there are buyers willing to pay, average prices will reflect the inventory shortage. However, it is conceivable that price growth may moderate as we do not see the level of price escalations that occurred earlier in the pandemic,” Torontow suggests.
“Although the number of new listings in April (2,846) was down by 11% from 2021, the number of properties that entered the market was still 10% over the 5-year average (2,600), and 214 units more than what was added to the housing stock in March. This has increased Ottawa’s months of inventory to just under a month’s supply. In March, it was just over two weeks. This is good news for potential buyers as they will have more options and more opportunities to enter the market.”
“In fact, the condominium market may be performing slightly better than residential property classes due to the fact that they are the most affordable price point to enter the market and could possibly now be considered the new entry-level property type.”
“We have also noticed a marked increase in the number of rental properties listed on the MLS® System. Since the beginning of the year, OREB Members assisted clients with renting 1,786 properties compared to 1,458 last year at this time. An increase of 23% and almost double the quantity recorded in pre-pandemic years. As for lease prices, the average cost for a 1-bdrm is approximately $1,850, and a 2-bdrm is $2,200 for rentals listed on the MLS® System. These values are roughly 3-4% higher than this time in 2021. Ottawa REALTORS® are an excellent resource when it comes to finding a rental property or vetting tenants – contact one today!”
British Columbia - Home Buyer Demand Returning to More Typical Levels
METRO VANCOUVER - 5 APRIL 2022 -- Home buyer demand in Metro Vancouver* returned to more historically typical levels in April.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 3,232 in April 2022, a 34.1% decrease from the 4,908 sales recorded in April 2021, and a 25.6% decrease from the 4,344 homes sold in March 2022.
Last month’s sales were 1.5% above the 10-year April sales average.
"Over the last two months, we’ve seen home sales ease down from the record-breaking pace of the last year. While still a small sample size, the return to a more traditional pace of home sales that we’ve experienced so far this spring provides hopeful home buyers more time to make decisions, secure financing and perform other due diligence such as home inspections." said Daniel John, REBGV Chair.
There were 6,107 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in April 2022. This represents a 23.1% decrease compared to the 7,938 homes listed in April 2021 and an 8.5% decrease compared to March 2022 when 6,673 homes were listed.
The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 8,796, a 14.1% decrease compared to April 2021 (10,245) and a 15.3% increase compared to March 2022 (7,628).
“With interest rates climbing and the total inventory of homes for sale inching higher each month, it’s important to work with your local Realtor to understand how these factors could affect your home buying or selling situation,” John said.
For all property types, the sales-to-active listings ratio for April 2022 is 36.7%. By property type, the ratio is 25.3% for detached homes, 47.1% for townhomes, and 45% for apartments.
Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12% for a sustained period, while home prices often experience upward pressure when it surpasses 20% over several months.
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,374,500. This represents an 18.9% increase over April 2021 and a one% increase compared to March 2022.
Sales of detached homes in April 2022 reached 962, a 41.9% decrease from the 1,655 detached sales recorded in April 2021. The benchmark price for a detached home is $2,139,200. This represents a 20.8% increase from April 2021 and a one% increase compared to March 2022.
Sales of apartment homes reached 1,692 in April 2022, a 26.1% decrease compared to the 2,289 sales in April 2021. The benchmark price of an apartment home is $844,700. This represents a 16% increase from April 2021 and a 1.1% increase compared to March 2022.
Attached home sales in April 2022 totalled 578, a 40% decrease compared to the 964 sales in April 2021. The benchmark price of an attached home is $1,150,500. This represents a 25% increase from April 2021 and a 1.1% increase compared to March 2022.
Alberta - Sellers' market conditions continue in April
City of Calgary, May 2, 2022 – Following an all-time record high month of sales in March, activity slowed down in April. However, with 3,401 sales, it was still a gain of six% over last year and a record high for the month of April.
“Despite some of the monthly pullback, it is important to note that sales remain exceptionally strong and are likely being limited due to supply choice in the market,” said CREB® Chief Economist Ann-Marie Lurie. “While further rate increases will likely start to dampen demand later this year, more pullbacks in new listings this month are ensuring the market continues to favour the seller, resulting in further price gains."
New listings trended down relative to last month and levels recorded last year. With the sales-to-new listings ratio remaining above 74%, there was not much of a shift in overall inventory levels.
With 4,850 units in inventory, we are nowhere near record low inventory levels, however, levels are far lower than what was recorded in April since 2014. What has changed in the market is the composition of the inventory levels. When comparing inventories today to what was available in 2014, we can see that detached homes comprise of a smaller share of the inventory levels, especially for properties priced below $500,000.
Overall, the Calgary market has seen the months of supply remain below two months since November of last year, placing significant upward pressure on prices. The benchmark price in April reached $526,700, which is nearly two% higher than last month and 17% higher than last year.
Detached - For the first time since spring of 2020, year-over-year sales slowed down. While sales have dropped, it is important to note that with 1,815 sales, this is still far stronger than long term trends. A decline in sales occurred for homes priced under $600,000. This pullback in sales for lower priced homes was likely related to further supply declines driven from reductions in new listings in those price ranges. Inventories in the detached sector have not been this low for the month of April in nearly 15 years.
While the slightly slower sales compared to inventory levels did help push the months of supply back above one month, conditions continue to remain exceptionally tight with 1.3 months of supply. This continues to place upward pressure on prices, but at a slower pace than the last three months. The detached benchmark price rose to $628,900 in April, which is 19% higher than last year.
Semi-Detached - A decline in new listings in April likely contributed to slower sales compared to last month. However, sales are still relatively strong and on a year-to-date basis and remain nearly 30% higher than last year and nearly double the long-term average. As the slower pace of sales was met with a decline in new listings, there was little change in the inventory situation and this segment continues to favour the seller.
Tight market conditions caused further price gains in the semi-detached sector. In April, the benchmark price reached $487,900, nearly two% higher than last month and over 16% higher than last April.
Row - While levels trended down from the previous month, new listings reached 781 units this month. This is a year-over-year gain of 24% and the highest level ever seen in April. The improvements in new listings helped support stronger sales activity which rose over last year’s levels and set a new April high. This boost in new listings did cause inventories to trend up compared to earlier in the year, but it was not enough to pull the market out of the sellers’ market conditions.
With just over one month of supply, persistently tight market conditions continue to place upward pressure on prices. Thanks to gains across every district, row prices rose by over two% compared to last month and are nearly 17% higher than last year.
Apartment Condominium - Like other property types, apartment condominium sales did ease relative to last month’s record highs. But with 642 sales this month, activity still improved by over 46% compared to last year reaching a record high for April. This in part was possible thanks to the 893 new listings that came onto the market. While it was not enough to dramatically change the supply levels in the market, the months of supply did edge up to nearly two months.
Tighter market conditions continued to cause prices to trend up in April. The apartment benchmark price rose across all districts and currently sits eight% higher than levels recorded at this time last year. The strong price gains over the past three months have helped narrow the spread from the 2014 record high price.