While it\u2019s no secret that real estate remains out of affordable reach for many young Canadian adults, the majority still aspire to own a detached home one day \u2013 even if it\u2019s just a pipe dream.<\/p>\n
Only 36 per cent of \u201cpeak\u201d millennials \u2013 those aged 25 \u2013 30 \u2013 feel owning a house will ever be a reality, according to a Royal LePage study that surveyed 1,000 aspiring buyers. It found that only a third of this age group own their homes, as 50 per cent remain in the rental market, and 14 per cent live with their parents.<\/p>\n
That\u2019s having a profound impact on traditional homeownership trends, says Royal LePage President and CEO Phil Soper, as the huge\u00a0size of this demographic \u2013 which will grow by 17 per cent in 2021, compared to 2016 \u2013 puts pressure on the supply of affordable\u00a0housing.<\/p>\n
\u201cThe pent-up demand for housing is enormous, with only a third of this large demographic currently owning a property and an overwhelming majority desiring to become homeowners,\u201d he says.<\/p>\n
\u201cWhether they choose to buy or rent, peak millennials will inevitably shape the housing market due to their sheer volume. We expect demand from this demographic to put additional pressure on entry-level housing and investment properties being used to supplement the limited inventory of purpose-built rental buildings.\u201d<\/p>\n
Peak millennials face challenges their \u201cbaby boomer parents never encountered\u201d, including stiffer mortgage qualification rules, limited home supply, and high prices in the best job markets. That\u2019s prompted 52 per cent of them to consider moving to the suburbs to improve their affordability, especially when it comes time to raise a family (59 per cent). A full 69 per cent say they can\u2019t afford a home in their region at all, while 24 per cent say they can\u2019t qualify for a mortgage.<\/p>\n
A flurry of recent reports show\u00a0the Toronto real estate market is in the midst of a sales and price downturn – but brand\u00a0new data\u00a0states values\u00a0are actually up 28 per cent year over year!<\/p>\n
The fresh findings from\u00a0\u00a0Teranet\u2019s July Home Price Index<\/a>\u00a0also\u00a0report month-over-month price increases of 2.1 per cent in the city, and up 2 per cent across Canada as a whole. But why do these numbers differ so wildly from Toronto Real Estate Board data, which says\u00a0prices dropped 6 per cent from June\u00a0to July<\/a>?<\/p>\n In an attached research note, Teranet explains their report, which measures repeat sales of single-family homes, is a three-month rolling average, which they refer to as a \u201csmooth\u201d index. That means it averaged activity in May, June and July, not capturing the downturn reflected by other indexes, such as\u00a0TREB\u2019s literal measure.<\/p>\n However, their index does support TREB\u2019s report that the detached segment is faltering, as \u201cnon-condo\u201d homes declined 1.6 per cent, indicating \u201cweakness\u201d in the market.<\/p>\n \u201cWhile this looks strong given the current context in the GTA, note that a weakening is occurring in the unsmoothed index for \u2018dwellings other than condos\u2019, which is down 1.6 per cent,\u201d states Teranet\u2019s report. \u201cThis abrupt trend reversal in the index of Toronto\u2019s lease affordable type of dwelling is consistent with the recent loosening reported in the home resale market.\u201d<\/p>\n The National Composite also found indexes were stronger than usual in Victoria and Vancouver (+2.8 per cent), Hamilton (+2.1 per cent), Ottawa-Gatineau (+2 per cent), and Montreal (+1.6 per cent).<\/p>\n Average home sale prices continue to rise across British Columbia, despite slowing sales in Metro Vancouver, its biggest region \u2013 but that could moderate, as new supply comes to market, says their chief economist.<\/p>\n In a statement from the British Columbia Real Estate Association, Cameron Muir states that strong fundamentals may be supporting demand and price growth, but that balance may shift as more listings pop up across the province. \u201cStrong economy growth, an expanding population and lack of supply continue to drive B.C. home sales and prices this summer,\u201d he says. \u201cHowever, home sales have edged back 4 per cent since May with active listings beginning to bounce back from a 20-year low.<\/p>\n \u201cIf these trends continue, it may signal that more balanced market conditions could emerge before the end of this year.\u201d<\/p>\n Province-wide, sales fell 6.3 per cent with 9,275 homes sold. In Vancouver, sales were down 8.8 per cent, at an average price of $1,029,786, a 2.2-per-cent increase from last year.<\/p>\n Strong price growth was also experienced in the following regions:<\/p>\n Prices fell across Canada for the first time since 2013 in July, according to the latest report<\/a> from the Canadian Real Estate Association. The national average cost of a home moderated to $478,696 \u2013 a decrease of 0.3 per cent. Sales also softened by 2.1 per cent \u2013 dropping for the fourth month in a row \u2013 and down 12 per cent year over year.<\/p>\n The majority of the downturn occurred in the Greater Toronto Area, which has seen considerable softening since the introduction of the Ontario Fair Housing Plan, though sales were down in two thirds of all markets since June.<\/p>\n The good news? While sales are slowing, they\u2019re doing it at a less rapid pace, says CREA, with the downturn\u00a0only a third of what was seen in May, though still 15.3 per cent below the March market peak.<\/p>\n Could it be a sign that the initial rush to list following rule changes may be subsiding? \u201cTime will tell,\u201d according to CREA\u2019s Chief Economist Gregory Klump, who says buyers who needed to act on pre-approved mortgage rates may have given the market a temporary boost in July.<\/p>\n The practice of \u201cdouble-ending\u201d \u2013 when a real estate agent represents both a buyer and a seller in a transaction and collects commissions from each \u2013 has come under hot scrutiny this past year for being a misleading tactic that puts sellers at a disadvantage. Following media reports of agents abusing the practice, the Ontario government has pledged to ban it altogether, with the Real Estate Council of Ontario opening a proposal for public review<\/a>.<\/p>\n However, an outright ban would be too extreme, argues the Ontario Real Estate Association, and would make transactions needlessly complicated in certain instances. Instead, OREA recommends a model that will allow agents to still rep both sides, but in a \u201cneutral facilitator\u201d role, meaning they can\u2019t provide guidance on offer pricing, strategy, or sale conditions.<\/p>\n This kind of hands-off approach wouldn\u2019t be for your typical buyer and seller, and would mostly apply to corporate deals, sales within families, and other specialty transactions, as long as both clients agree to it. Should they not, the agent must refer one side of the transaction to another agent on their realty team.<\/p>\n Phil Soper, member of OREA and CEO of Royal LePage, told the Globe and Mail<\/a><\/em> that he feels consumers should retain the choice, and to put more onus on agents in terms of fees should they abuse the system.<\/p>\n \u201cIt is better to make it the law to need independent representation, but allow the consumer the ability to contract out of that with clear disclosure and high penalties for those who don\u2019t follow the rules,\u201d he says. \u201cYou put it in the hands of people are actually paying the fees, rather than making it very difficult for them in the rare circumstances where it makes sense for them.\u201d<\/p>\n However, not all industry experts agree a more moderate approach is the way to go – Lauren Haw, Broker of Record at Zoocasa Realty,\u00a0has been a strong advocate for removing the practice altogether,<\/a>\u00a0saying it\u2019s impossible for agents to act ethically when they have such potential for monetary gain. \u201cAgents \u2013 including those that are on the same team \u2013 who have any monetary connection to the sale whatsoever should not be able to represent both the buyer and seller of a property, ever. Anything less than a blanket restriction on multiple representation is not enough,\u201d she says.<\/p>\n Related Read: Is Your Real Estate Agent Double-Ending Your Deal?<\/a><\/strong><\/p>\n When the Ontario government revealed its 16-part Fair Housing Plan in April, included in the measures was the empowerment of Toronto City Council to introduce a tax on vacant homes, similar to what has been passed in Vancouver<\/a>. The intention of such a tax would be to help combat investment properties sitting empty, and return badly-needed units to rental stock.<\/p>\n One of the most accurate ways to track whether a home sits empty is to gauge its water and hydro usage – but privacy laws prevent this data collection in Ontario. Instead, the City is proposing three options for assessing a home’s vacancy status:<\/p>\n Want to have your say on the vacant homes tax? The City invites the public to fill out a survey<\/a>, or attend its consultation meeting on August 22.<\/p>\n Despite slowing sales, home prices are rising across Canada each year, and that\u2019s encouraging current homeowners to tap into\u00a0their built-up equity.<\/p>\n A report from National Bank correlates high home prices with consumer spending and debt accumulation, especially in the form of Home Equity Lines of Credit, revolving loans that can be taken out against a home\u2019s equity, and don\u2019t need to be paid back until the home is sold.<\/p>\nPrices Strong\u00a0in B.C. \u2013 But Is It Temporary?<\/h2>\n
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CREA: Sales Decline Slows in July<\/h2>\n
Realtors Say Double-Ending Ban Goes Too Far<\/h2>\n
Have Your Say on Toronto’s Empty Homes Tax<\/h2>\n
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HELOC Use Rising with Real Estate Prices<\/h2>\n