Some markets are bouncing back, but buyers aren't sold on lower-calibre inventory
Canada’s housing market hasn’t exactly come roaring back over the summer, but green shoots are emerging for some provinces even as activity remains sluggish elsewhere.
The outlook for the months ahead remains one of “significant unevenness” across the country, according to a recent analysis by Royal Bank of Canada (RBC), with some regions posting signs of recovery and others likely to see the current market downturn stretch on for a while yet.
The main factors continuing to weigh against the housing outlook across many areas haven’t changed much over the past year and a half: ongoing economic uncertainty, stubborn interest rates, unease about the trade war with the US, and an affordability picture that’s still grim for many buyers despite falling prices.
The good news is that homebuying activity hasn’t fallen off a cliff and the economy remains resilient despite the enormous headwinds it’s faced since the beginning of last year. The labour market added 75,000 jobs last month, a much better return than expected, as the unemployment rate slipped to its lowest level for two years.
And while the Canadian Real Estate Association (CREA) has downgraded its forecast for national home sales, some mortgage industry members are reporting a brisk pace of activity even with prospective buyers facing steep challenges.
Sarah Albert (pictured top), a New Brunswick-based broker with Premiere Mortgage Centre, told Canadian Mortgage Professional activity was muted in spring after an encouraging start to the year, partly because of the outbreak of the US-Iran war and huge question marks over its likely economic impact.
“When that war started, our fixed rates all went up,” she said. “Clients were like, ‘Hey, I could get 3.79% and now it’s 4.09%. What’s going on?’ It was really busy in January and February and then it just fell off a ledge. And now it’s on fire again.”
Competition remains strong for higher-quality product
For many markets, demand is also concentrated in higher-quality properties, with inventory of a lower calibre or wrong price point often taking much longer to shift.
That’s certainly the case in New Brunswick, according to Albert. “If a client has a house that’s a really good product in a really good area and they’ve staged it well, those places are still getting multiple offers,” she said. “But if you’ve got a [bad] product those things are sitting on the market.”
The fact that competition is still fierce for many listed properties, Albert said, means it’s wrong to say the market is currently skewed in favour of buyers, even if overall activity isn’t as high as it could be.
“Buyers have a lot more choice right now and are very, very prepared. It’s a good balanced market,” she said. “If people say it’s a buyer’s market, it’s because the product sucks that the person’s trying to sell.”
First-time buyers to the fore
Among the cohort of Canadians finding new opportunity in the current market are first-time buyers, many of whom were priced out of the market during the COVID-19 pandemic because of rampant price appreciation and bidding wars.
Affordability remains a challenge across many markets, and some younger Canadians remain doubtful they’ll ever be able to afford a home – but Albert said others are pushing ahead and enlisting the help of brokers to help them achieve their homebuying goals.
“They’ve actually really educated themselves to the point where AI is helping them answer questions, but they’re smart enough to know that they need a teammate,” she said. “The ones that are deciding to buy houses are really hunkering down. These kids are thrifting and they’re being very careful.
“It’s not a ‘Woe is me.’ It’s, ‘I’m responsible for this and I’m going to work hard for it.’ There’s a shift happening. We’ve got to give some kudos to our first-time buyers right now. I’m really impressed with them.”
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