Higher Borrowing Costs See Buyers Remain on Hold

High borrowing costs and uncertainty on the direction of interest rates have seen many would-be home buyers remain on the sidelines in the short term. We’re seeing a slow decline in sales activity but it’s minimal and not unexpected for this time of year. Prices are adjusting and coming down, and apartments are seeing the largest increase in sales activity over last October. 

Ontario - Higher Borrowing Costs See Buyers Remain on Hold

Toronto, November 2, 2023 – Lack of affordability and uncertainty remained issues for many would-be home buyers in the Greater Toronto Area (GTA) in October 2023. As a result, sales edged lower compared to last year. However, selling prices remained higher than last year’s levels.

“Record population growth and a relatively resilient GTA economy have kept the overall demand for housing strong. However, more of that demand has been pointed at the rental market, as high borrowing costs and uncertainty on the direction of interest rates has seen many would-be home buyers remain on the sidelines in the short term. When mortgage rates start trending lower, home sales will pick up quickly,” said TRREB President Paul Baron.

REALTORS® reported 4,646 GTA home sales through TRREB’s MLS® System in October 2023 – down 5.8% compared to October 2022. On a month-over-month seasonally-adjusted basis, sales were also down in comparison to September.

New listings in October 2023 were up noticeably compared to the 12-year low reported in October 2022, but up more modestly compared to the 10-year average for October. New listings, on a seasonally adjusted basis, edged slightly lower month-over-month compared to September 2023.

The October 2023 MLS® Home Price Index Composite benchmark and the average selling price were both up on a year-over-year basis, by 1.4% and 3.5% respectively. On a seasonally adjusted basis, the MLS® HPI Composite benchmark edged lower compared to September 2023 while the average selling price remained at a similar level. Both the MLS® HPI Composite benchmark and average price remained above the cyclical lows experienced at the beginning of 2023.

“Competition between buyers remained strong enough to keep the average selling price above last year’s level in October and above the cyclical lows experienced in the first quarter of this year. The Bank of Canada also noted this resilience in its October statement. However, home prices remain well below their record peak reached at the beginning of 2022, so lower home prices have mitigated the impact of higher borrowing costs to a certain degree,” said TRREB Chief Market Analyst Jason Mercer.

“In the current environment of extremely high borrowing costs, it is disappointing to see that there has been no relief for uninsured mortgage holders reaching the end of their current term. If these borrowers want to shop around for a more competitive rate, they are still forced to unrealistically qualify at rates approaching 8%. Following their most recent round of consultations, the Office of the Superintendent of Financial Institutions should have eliminated this qualification rule for those renewing their mortgages with a different institution,” said TRREB CEO John DiMichele

Ottawa MLS® October Home Sales Show Typical Lull

Ottawa, November 7, 2023 -- The number of homes sold through the MLS® System of the Ottawa Real Estate Board totaled 816 units in October 2023. This was a small reduction of 2.7% from October 2022.

Home sales were 36.4% below the five-year average and 30.8% below the 10-year average for the month of October.

On a year-to-date basis, home sales totaled 10,700 units over the first 10 months of the year. This was a substantial decline of 12.3% from the same period in 2022.

“Life is expensive these days, which likely has both buyers and sellers staying put,” says Ken Dekker, OREB President. “We’re seeing a slow decline in sales activity but it’s minimal and not unexpected for this time of year. Prices are adjusting and coming down, which is also indicative of the types of homes that are selling — apartments seeing the largest increase in sales activity over last October. While Ottawa’s inventory is slowly building, chronic supply issues mean there’s always an undercurrent of demand. Don’t let the lull fool you: now is a prime time for buyers to be looking for opportunities before the current carries us from a balanced market into seller’s territory.”

The MLS® Home Price Index (HPI) tracks price trends far more accurately than is possible using average or median price measures.

The overall MLS® HPI composite benchmark price was $638,600 in October 2023, nearly unchanged, up only 1.8% from October 2022.

The benchmark price for single-family homes was $721,600, up 2.2% on a year-over-year basis in September.

By comparison, the benchmark price for a townhouse was $501,100, nearly unchanged, up 1% compared to a year earlier.

The benchmark apartment price was $424,100, unchanged from year-ago levels.

The average price of homes sold in October 2023 was $660,836, increasing 2.9% from October 2022. The more comprehensive year-to-date average price was $671,983, a decline of 5.9% from the first ten months of 2022.

The dollar value of all home sales in October 2023 was $539.2 million, unchanged from the same month in 2022.

OREB cautions that the average sale price can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The calculation of the average sale price is based on the total dollar volume of all properties sold. Price will vary from neighbourhood to neighbourhood.

The number of new listings saw an increase of 6.6% from October 2022. There were 1,895 new residential listings in October 2023. New listings were 2% above the five-year average and 5.4% above the 10-year average for the month of October.

Active residential listings numbered 3,062 units on the market at the end of October, a sizable gain of 16.7% from the end of October 2022. Active listings haven’t been this high in the month of October in more than five years. 

Active listings were 43.8% above the five-year average and 10.9% below the 10-year average for the month of October.

Months of inventory numbered 3.8 at the end of October 2023, just up from the 3.1 months recorded at the end of October 2022. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.

British Columbia - Metro Vancouver housing market holds steady in October

Metro Vancouver, 18 October 2023 -- An increase in newly listed properties is providing more choice to home buyers across Metro Vancouver1, but sales remain below long-term averages.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential sales in the region totalled 1,996 in October 2023, a 3.7% increase from the 1,924 sales recorded in October 2022. This total is 29.5% below the 10-year seasonal average (2,832) for October.

"With properties coming to market at a rate roughly five% above the ten-year seasonal average, there seems to be a continuation of the renewed interest on the part of sellers to participate in the market we’ve been watching this fall. Counterbalancing this increase in supply, however, is the fact sales remain almost 30% below their ten-year seasonal average, which tells us demand is not as strong as we might expect this time of year."

Andrew Lis, REBGV director of economics and data analytics

There were 4,664 detached, attached, and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in October 2023. This represents a 15.4% increase compared to the 4,043 properties listed in October 2022 and is 4.8% above the 10-year seasonal average (4,449) for the month.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 11,599, a 12.6% increase compared to October 2022 (10,305). This change is also 0.6% above the 10-year seasonal average (11,526).

Across all detached, attached, and apartment property types, the sales-to-active listings ratio for October 2023 is 17.9%. By property type, the ratio is 12.9% for detached homes, 20.9% for attached, and 21.5% for apartments.

Analysis of the historical data suggests 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 surpass 20% over several months. 

“With more supply in the form of resale inventory, and weaker demand in the form of slower sales, we’ve seen market conditions overall adjust towards more balanced conditions. It’s noteworthy that the multifamily segment remains more active than the detached segment at this time,” Lis said. “While the highest borrowing costs we’ve seen in over a decade continue to constrain affordability, a silver lining for buyers is that price increases have abated with these more balanced market conditions, meaning purchasing power is holding steady for the moment.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,196,500. This represents a 4.4% increase over October 2022 and a 0.6% decrease compared to September 2023.

Sales of detached homes in October 2023 reached 577, a 0.7% decrease from the 581 detached sales recorded in October 2022. The benchmark price for a detached home is $2,001,400. This represents a 5.8% increase from October 2022 and a 0.8% decrease compared to September 2023.

Sales of apartment homes reached 1,044 in October 2023, a 4.9% increase compared to the 995 sales in October 2022. The benchmark price of an apartment home is $770,200. This represents a 6.4% increase from October 2022 and a 0.2% increase compared to September 2023.

Attached home sales in October 2023 totalled 356, a 6.6% increase compared to the 334 sales in October 2022. The benchmark price of a townhouses is $1,100,500. This represents a 6% increase from October 2022 and a 0.2% increase compared to September 2023.

Alberta - Price gains continue in Calgary's real estate market as inventory remains low

City of Calgary, November 1, 2023 – October sales activity slowed over the last month in alignment with typical seasonal patterns. However, with 2,171 sales, levels were 17% higher than last year and amongst the highest levels reported for October. Sales activity has been boosted mainly through gains in apartment condominium sales as consumers seek affordable housing options during this period of high interest rates.

New listings also improved this month compared to last year, reaching 2,684 units, reflecting the highest October levels reported since 2015. Despite the gain, relatively strong sales prevented any significant shift in inventory levels, which remain over 40% lower than levels traditionally available in October.

“Despite some recent improvements in new listings, supply levels remain challenging in our market,” said CREB® Chief Economist Ann-Marie Lurie. "It will take some time to see a shift toward more balanced conditions and ultimately more price stability.”

With a months of supply of one and a half months, we continue to experience upward pressure on home prices. The unadjusted benchmark price in October reached $571,600, a gain over last month and nearly 10% higher than last October.

Detached - Both sales and new listings improved over levels reported last October. However, with 1,302 new listings this month and 976 sales, inventory levels slowed over the last month. Inventory levels remain the lowest ever reported for October. Inventory levels have declined for all homes priced below $700,000, leaving conditions exceptionally tight for lower-priced homes. The only area where conditions are not as tight as last year is for homes priced above $1,000,000, where the months-of-supply has risen to 4.3 months.

Persistently tight conditions continue to cause further price gains in the detached market. As of October, the unadjusted benchmark price reached $697,600, a slight increase over last month and 12% higher than last October. Prices trended up over the last month across every district except the South East. Year-to-date benchmark prices have increased the most in the North East and East districts.

Semi-Detached - New listings in October improved over the low levels reported last year. However, with 235 new listings and 179 sales, the sales-to-new listings ratio remained relatively high at 76%, preventing any significant change in the inventory levels. Inventory levels are nearly half the levels traditionally seen in October and have not been this low since October 2005.

 Persistently tight conditions have continued to support price growth. In October, the unadjusted benchmark price increased over the last month, reaching $628,700, a year-over-year gain of 13%. Prices trended up over September across most districts, with the most significant monthly gain occurring in the City Centre district. Like the detached sector year-to-date, the highest price growth has happened in the most affordable districts of the North East and East.

Row - The 420 new listings this month were met with 375 sales, keeping the sales-to-new listings ratio high at 89% and preventing a significant shift in inventory levels. Row inventory levels have not been this low since October 2005. At the same time, October sales reached a record high for the month, keeping the months of supply low at one month.

 Persistently tight market conditions have supported further gains in prices this month. In October, the unadjusted benchmark price reached $425,200, a monthly gain of over one% and nearly 19% higher than last October. Prices have risen across most districts, but this month, the largest monthly gain occurred in the City Centre, which has also seen the lowest year-to-date price growth compared to the other districts.

Apartment Condominium - Record high sales in October were possible thanks to the steep gain in new listings.   However, with 727 new listings and 641 sales, the sales-to-new listings ratio remained high at 88%, and inventories continued to trend down. The decline in inventory levels has been driven mostly by condos priced below $300,000, which now represent only 38% of all inventory, a significant decline compared to the 53% reported last year.

 Persistent seller market conditions have driven much of the recent gains in prices. The unadjusted October benchmark price reached $316,600 in October, a monthly gain of over one% and a year-over-year increase of 16%. Year-to-date price gains have occurred across every district in the city, with some of the largest gains arising in the lower-priced North East and East districts.