While usually a slower month for real estate activity, February’s market news was anything but typical. From big bank bubble warnings to new mayoral promises on affordable housing, here’s what made housing headlines last month.
East-Coast Home Listing Goes Viral
(February 10) Call it the little listing that could – a historic home for sale in the Maritimes went viral in early February, drawing over 1.4 million eyeballs in just five days. While the sellers and listing agent Wanda Graves were thoroughly surprised by the attention, it’s not hard to see why it attracted bids from as far as British Columbia; the home, located roughly an hour from Halifax, is practically palatial with 7,000 square feet, seven beds, three baths, and hand-carved wood finishes. It was also listed for a song at a $434,900! Considering that can barely net a bachelor unit in Canada’s steepest markets, it’s no wonder it drew curiosity from buyers across the nation.
Stated Graves to the Huffington Post, “It’s a property breathing on its own… We are so surprised with the amount of interest it’s created and how it’s taken off online.”
In the end, the 107-year-old home found its match, who scooped it up for over asking at $455,000.
Sorry to Burst Your Bubble, Toronto: BMO
(February 15) While the dreaded “B-word” has been used to muse about the health of Toronto’s real estate market, economists hadn’t actually bandied the label about directly – until mid-month, when Bank of Montreal Chief Economist Doug Porter dropped the bomb in a note to clients. “Let’s drop the pretence,” he wrote. “The Toronto housing market – and the many cities surrounding it – are in a housing bubble.”
Porter states that rapidly rising prices are no longer supported by economic factors, and likens the 22.6% price growth experienced over the past year to conditions in the 80s. “Prices in Greater Toronto are now up a fiery 22.6% from a year ago, the fastest increase since the late 1980s – a period pretty much everyone can agree was a true bubble – and a cool 21 percentage points faster than inflation or wage growth.”
Related Read: Does Canada Really Have a Housing Market Bubble?
No Bubbles in the Big Smoke: John Tory
(February 16) Toronto’s mayor claps back against claims of an overheated housing market, saying demand within the city and Greater Toronto Area is supported by economic factors.
“Reports will come out from economists – I don’t dismiss them, I read them all – but I also talk to a lot of people in the federal government and in the private sector and none of those people, to a person, has as yet told me there is any kind of panic driven or panic-inducing situation,” John Tory stated to reporters.
He says that while rising prices are a concern, they’re driven by solid growth factors such as immigration and migration and job growth in the city, and there’s no need to take any “knee-jerk” actions (such as the foreign investment tax introduced this summer in Vancouver) to temper what is a “reasonably healthy market.”
Tory also called on higher levels of government to help address scant supply issues in the region, which have been a main driver of rising real estate prices. “The city has to act responsibly to make sure we increase the supply of affordable housing – and we need to do that in partnership with other governments,” he said.
BC Budget Promises Help for First-Time Buyers
(February 21) The British Columbia Liberals revealed some goodies to alleviate the burden on buyers in their provincial budget, upping the Homeowner Grant threshold from $1.2 million to $1.6 million, and the First Time Home Buyer Property Transfer Tax threshold to $500,000 from $475,000, meaning those buying homes $500,000 and under will pay no transfer tax at all.
The measures were announced by BC Finance Minister Michael de Jong to the legislature, who emphasized more must be done to improve supply for buyers. “We can’t just focus on people getting into the market,” he stated. “And it won’t help those who by choice or necessity are seeking rental housing… The key to improving housing affordability over the longer term is to create new supply.”
The province also announced it is looking at ways to fast track the approval of housing development plans, and that it will invest $355 million to create 2,000 affordable housing units.
RBC CEO Adds to Bubble Chatter
(February 24) Another big bank head honcho expresses his concerns regarding the housing market – Royal Bank of Canada CEO Dave McKay states that Toronto real estate is suffering from a “dangerous mix of catalysts” including ultra-low mortgage rates, real estate speculation, foreign buyer activity and chronic low supply, and that measures to cool demand (such as Vancouver’s foreign investment tax) should be taken by policymakers.
Millennials Relying on Mom and Dad for Homeownership: Report
(February 28) Global bank HSBC shares the findings of its recent survey, which polled 9,000 respondents from several countries on their home buying intentions. Canadians polled reveal a third of millennials own their home, and that of those who don’t, 82% plan to over the next five years. The problem – they’re not quite sure how they’ll pay for their home purchases. A full 73% of those who plan to buy say they don’t yet have a down payment saved, while 25% say they haven’t even set a budget. And, those already ensconced in the market admit they had some help, with 37% relying on the “bank of mom and dad” to swing their purchase. Another 21% say that they’d also turn to their parents to help pay for unexpected costs after buying a home.
And That Makes Three – Scotia CEO Raises Market Concerns
(March 1) Brian Porter, CEO of Scotiabank, shares his thoughts on Toronto real estate while on a Q1 earnings conference call, saying the market is poised for correction and that recent government measures were smart moves.
“Trees don’t grow to the sky and markets will correct at some stage here,” he said. He added that the impact of new rules introduced for borrowers, which include the recently introduced mortgage stress test, will take some time to come to fruition – and that reckoning will happen as the spring market heats up.
Townhouses Needed for Vancouver’s Missing Middle
(March 2) There are changes to come for the west-coast city’s single family neighbourhoods, announced mayor Gregor Robertson – and they include higher density housing such as townhomes, duplexes, and rowhouses. In a speech made at Vancouver’s Pinnacle Hotel, he told a crowd of developers to shift their focus from condos, saying the “time is right to advance a conversation” about improving the supply of single-family homes to address the beleaguered “missing middle”. He added that currently, 70% of all new slated developments are for high-rise condo units, rather than low-rise options.
“…At this point, we need to see change, we need to see new homes, new supply in our single-family neighbourhoods,” he said. While no concrete recommendations have been made, Robertson alluded to more details to come over the next few weeks, and that more must be done to free up city land for development, increase housing around transit stations, and improve the condition of existing aging apartments.
Related Read: Priced Out of the Detached Home Market? Try Townhouses
TREB and REBGV
(March 3) Speaking of Toronto’s ultra-hot housing market, it has officially outpaced Vancouver’s in the detached home segment. February numbers released by the Toronto Real Estate Board and Real Estate Board of Greater Vancouver reveal the average house in Toronto now sells for $1,573,622, compared to a benchmark of $1,474,200 in Vancouver. And it’s not just houses within city limits hitting new heights – suburban detached homes surpassed the $1-million mark for the first time last month. Meanwhile, in Vancouver, the MLS Housing Price Index Composite slid 1.2% year over year to $906,700, with sales plunging 41.9% to 2,425 units sold during the month – 7.7% below the city’s 10-year average.