Market Watch - Rising Mortgage Rates Continue to Slow Market Activity

Bank of Canada rate hikes, including the 50-basis point hike on June 1, are impacting home buyers in the short term. There is now a psychological aspect where potential buyers are waiting for a bottom in price. This will likely continue through the summer. However, as home buyers adjust to higher borrowing costs, housing demand will be supported by extremely low unemployment, high job vacancies, rising incomes and record immigration.

Ontario - Housing Market Conditions Continued to Evolve in Response to Higher Borrowing Costs

Toronto, 02 June 2022 -- Greater Toronto Area (GTA) housing market conditions continued to evolve in response to higher borrowing costs. Similar to April results, May 2022 sales were down on a monthly and annual basis. Conversely, active listings at the end of May were up on a month-over-month and year-over-year basis. More balanced market conditions have provided buyers with more negotiating power. As a result, while benchmark and average home prices were up substantially compared to last year, selling prices trended lower on a month-over-month basis.

"Bank of Canada rate hikes, including the 50-basis point hike on June 1, are impacting home buyers in the short term. There is now a psychological aspect where potential buyers are waiting for a bottom in price. This will likely continue through the summer. However, as home buyers adjust to higher borrowing costs, housing demand will be supported by extremely low unemployment, high job vacancies, rising incomes and record immigration" said TRREB President Kevin Crigger.

GTA REALTORS reported 7,283 sales through TRREB's MLS System in May 2022 - down 38.8% compared to May 2021 and down nine% compared to April 2022. The number of new May listings was similar to last year's level and edged up on a month-over-month basis. With sales down and new listings trend flat to slightly up, the number of active listings was up on a year-over-year basis by 26%.

Market conditions remained tight enough to support an overall average selling price of $1,212,806 for May 2022, representing an annual growth rate of 9.4%. The MLS Home Price Index Composite Benchmark was also up on a year-over-year basis by 23.9%. On a month-over-month basis, both price metrics were lower, reflecting more balanced market conditions.

"Price trends observed over the past three months - both in terms of moderating annual growth rates and the recent month-over-month dips - are in line with TRREB's forecast for 2022. After a strong start to the year, the current rate tightening cycle has changed market dynamics, with many potential home buyers putting their purchase on hold. This has led to more balance in the market, providing buyers with more negotiating power" said TRREB Chief Market Analyst Jason Mercer.

Ottawa’s May Residential Resales Underperform Expectations

Ottawa, June 3, 2022 -- Members of the Ottawa Real Estate Board sold 1,846 residential properties in May through the Board’s Multiple Listing Service® System, compared with 2,285 in May 2021, a decrease of 19%. May’s sales included 1,384 in the residential-property class, down 22% from a year ago, and 462 in the condominium-property category, a decrease of 11% from May 2021. The five-year average for total unit sales in May is 2,031.

“With year-over-year resales declining in March and April, and now with this downward trend continuing into May, traditionally the highest performing month for resales, it is quite clear that Ottawa’s resale market is shifting away from the blazing pace of 2021,” states Ottawa Real Estate Board President Penny Torontow. “And if rising interest rates, cost of living, and inflation aren’t enough factors to cause a pullback, the powerful and deadly storm that brought our city to its knees last month has justifiably impacted the market as well.”

“Our data shows a sharp decline in new listings with a corresponding increase in cancelled/suspended listings on the MLS® System in the period following the storm. Overall, in May, however, there were 3,120 properties that entered the market. This is on par with last May and is 5% over the 5-year average. The result is an 18% increase in residential-class inventory. Meanwhile, there was a slight decline (0.4%) in condominium inventory, but this is not surprising since they have likely become an entry point for many first-time homebuyers due to the affordable price point.”

The average sale price for a condominium-class property in May was $472,920, an increase of 11% from 2021, while the average sale price for a residential-class property was $802,393, increasing 8% from a year ago. With year-to-date average sale prices at $824,276 for residential and $470,353 for condominiums, these values represent a 12% increase over 2021 for both property classes.*

“Average prices, while still higher than 2021, are showing signs of adjusting to the pace of the market with a month-over-month decrease of 2% in both property classes. In April, we also saw a decline of 1-3%. In contrast, January to March experienced month-to-month increases ranging from 2% to 12%. This may be good news for Buyers, including the fact that the months of inventory have increased to 1.2 for residential and 1 month for condominiums. We are still a far cry away from a balanced market, but it finally seems to be moving in the right direction,” Torontow suggests.

“Additionally, another statistic that we see increasing is the cumulative days on market (CDOM), which is now 14 days, increasing from 11 days last May. CDOMs are typically between 30-60 days in a balanced market, and usually closer to that one-month mark in Ottawa. I mention this because we don’t want Sellers to panic if their homes aren’t selling as quickly as perhaps their neighbours’ properties did. Buyers will also have a little more breathing room if this trend continues.”

“But at the end of the day, each property for sale has its own hyper-local market factors (location, condition, other properties for sale in the same neighbourhood, etc.) that will affect the final sale price. If you want to know the most accurate price point to sell your home or what is the true market value of a home you are interested in, a licensed professional REALTOR® has the education and the experience with access to the most current market statistics and property information, to guide you into making the optimal decision for you and your budget.”

REALTORS® also help with finding rentals and vetting potential tenants. Since the beginning of the year, OREB Members assisted clients with renting 2,320 properties compared to 1,837 last year at this time.

British Columbia - Spring ushers in calmer housing market trends in Metro Vancouver

Metro Vancouver, 1 June 2022 -- After reaching record-setting levels in 2021, home sale activity has returned to more typical seasonal levels in Metro Vancouver* this spring due, in large part, to rising interest rates.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,918 in May 2022, a 31.6% decrease from the 4,268 sales recorded in May 2021, and a 9.7% decrease from the 3,232 homes sold in April 2022.

Last month’s sales were 12.9% below the 10-year May sales average.

"With interest rates rising, home buyers are taking more time to make their decisions in today’s housing market. Home buyers have been operating in a frenzied environment for much of the past two years. This spring is providing a calmer environment, with fewer multiple offer situations, which is allowing buyers to explore their housing options, understand the changing mortgage market, and do their due diligence." Said Daniel John, Chair, REBGV

There were 6,377 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in May 2022. This represents a 10.5% decrease compared to the 7,125 homes listed in May 2021 and a 4.4% increase compared to April 2022 when 6,107 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 10,010, an 8.8% decrease compared to May 2021 (10,970) and a 13.8% increase compared to April 2022 (8,796).

For all property types, the sales-to-active listings ratio for May 2022 is 29.2%. By property type, the ratio is 18.3% for detached homes, 35.5% for townhomes, and 38.1% for apartments.

Sales-to-active listings ratio - May 2022: 

• Detached homes18.3%
• Townhomes35.5%
• Condominiums38.1%
• Total 29.2%

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 $1,261,100. This represents a 14.7% increase over May 2021 and a 0.3% decrease compared to April 2022.

“Upward pressure on home prices has begun to ease in the housing market over the last two months,” John said. “Where home prices go next will depend on housing supply. While we’re beginning to see modest increases in home listings, we still need housing supply totals to more than double to bring the market close to balanced territory.”

Sales of detached homes in May 2022 reached 793, a 44.1% decrease from the 1,419 detached sales recorded in May 2021. The benchmark price for a detached home is $2,093,600. This represents a 15% increase from May 2021 and a 0.4% decrease compared to April 2022.

Sales of apartment homes reached 1,605 in May 2022, a 21.7% decrease compared to the 2,049 sales in May 2021. The benchmark price of an apartment home is $779,700. This represents a 15% increase from May 2021 and a 0.4% increase compared to April 2022.

Attached home sales in May 2022 totalled 520, a 35% decrease compared to the 800 sales in May 2021. The benchmark price of an attached home is $1,141,200. This represents a 21.5% increase from May 2021 and a 0.6% decrease compared to April 2022.

Alberta - Housing Market Sees Cooling in the Month of May

Edmonton, June 2, 2022 -- Total residential unit sales in the Greater Edmonton Area (GEA) real estate market decreased 1.6% compared to April 2022, yet saw a year-over-year increase of 4.4% from May 2021.

New residential listings increased 2.1% month-over-month from April 2022 and 13.1% from May of last year.

For May, single-family home unit sales were down 3.4% from May 2021, but increased 1.9% from April 2022 at 1,736. Condo unit sales increased 28.6% from May 2021 but were down 9% from April 2022. Duplex/rowhouse unit sales were up 5.8% year-over-year yet decreased 1.4% month-over-month.

Single-family homes averaged $492,037, a 5.7% year-over-year increase and a month-over-month decrease of 3.7%. Condominiums sold for an average of $239,011, seeing a decrease of 1.2% year-over-year, with only an increase of 0.3% when compared to April 2022. Duplex prices increased 10.5% from May 2021, selling at $395,783, resulting in a 3.3% decrease from April 2022.

The MLS® Home Price Index (HPI) composite benchmark price* in the GEA came in at $417,300, a 9.2% increase from May 2021, with no change being recorded from April 2022.

“We’re starting to see a slow down of the real estate market in the Greater Edmonton Area as we head into the early days of summer,” says REALTORS® Association of Edmonton Chair Paul Gravelle. “While we continue to see a lot of activity in the market, we’re not seeing as big of month-to-month changes for pricing, sales and days-on-market that we did earlier this year.”

Single-family homes averaged 23 days on the market, seeing no change from April 2022. Condos averaged 44 days on the market, decreasing by one day month-over-month, while duplexes averaged 25 days on the market, a one-day increase compared to last month. Overall, all residential listings averaged 29 days on the market, decreasing by four days year-over-year and down two days as compared to April 2022.