Inventory and sales activity is down in many markets across the country. According to the Canadian Real Estate Association (CREA), 60% of local markets saw sales fall month-over-month in September, with some of the largest markets including Greater Vancouver, Calgary, and the Greater Toronto Area (GTA) experiencing the biggest dip in sales. So, where are all the buyers? We asked and you answered. According to a recent survey of more than 1800 Zoocasa readers, Canadians still want to buy, but not until spring or summer of next year.
Interest Rates are Giving Buyers Cold Feet
Historically, Canadian markets do slow down in the fall and early winter, but in many cities, the year-over-year slowdown has been substantial. According to CREA, sales in Fraser Valley are down 52.3% year-over-year. London and St. Thomas, and the GTA aren’t far behind, with declines in sales of 40.6% and 44.3% respectively. Our survey results indicate that the interest rate hikes are giving buyers cold feet, with 35.8% of respondents strongly agreeing that the increase in rates has had a negative impact on their interest in the real estate market.
Demand Will Grow, Especially for Detached Suburban Homes
Aside from the rate hikes, those surveyed indicated that they do have plans to buy, and big ones! 60% of respondents said that they plan to buy a home in the near future, 61.8% of which are planning to buy a detached house and 40.3% of readers are looking to buy in the suburbs. It seems that the trend for larger homes outside of city centres hasn’t fully fizzled out since the pandemic. 35.3% of those surveyed are looking to buy a bigger house and they may be crossing their fingers that affordability will improve so they can secure their dream detached home. Detached properties have experienced some of the biggest price drops. In Toronto, average prices are down 11% year-over-year, currently hovering around $1,585,589. Detached homes in the GTA are following suit, with average prices declining 9.5% year-over-year to an average of $1,310,639. However, even though home prices are coming down in certain cities and experts are predicting they may continue to do so, increased rates will put downward pressure on buying power. Read more on that impact here.
Despite rate hikes and historically high inflation numbers, the demand for housing continues at a rapid pace in Canada. Year-over-year rental prices have grown significantly in Canada’s major markets. Rent prices have grown by 21% year-over-year in Toronto and the GTA. Read more about the rental strain here. Canada has also set a target and aims to welcome over 1.3 million new immigrants to the country between 2022-2024, according to Statistics Canada. Most of these newcomers will need housing and push demand higher, especially in larger city centres.
16.4% of readers said they were looking to buy a condo/apartment. In Toronto, condo apartments have seen the highest number of sales each month this year and are holding their value better than any other property type. Many other cities, including Edmonton, are seeing the same demand for condo apartments, ultimately being driven by the fact that this property type is generally more affordable than detached, semi-detached, or townhouses.
If you’re dreaming about a detached home and considering entering the market next year, it’s a great time to secure a pre-approval now. If interest rates continue to rise, a pre-approval could ensure that you lock down a rate for next year’s market. Give us a call to discuss your home-buying plans and how to prepare now.
