A panel of 17 experts in Finder’s Bank of Canada interest rate forecast report foresee real estate prices trending downward throughout the year, with most believing there will be another 10 to 20 per cent decline from prices seen in November last year.

This past December, the Canadian Real Estate Association reported the average home price was $626,318, a year-over-year decline of more than 12 per cent. According to Finder’s panel of economists, the most effective action the Bank of Canada can take to improve housing affordability greatly depends on interest rates.

“[The Bank can] stay the course through tightened monetary policy in order to dampen inflation by reigning in interest-sensitive sectors like housing,” said Derek Holt, vice-president and head of capital markets economics at Scotiabank. “If it eases up too quickly, then house prices may rip higher again and damage affordability once more.”

“The only thing the Bank can do to help housing affordability is keep interest rates so high that it pushes some Canadian households to default on their mortgages…and other Canadian households into a fire sale as they cash out their remaining equity,” added Moshe Lander, a senior economics lecturer at Concordia University. “The solution to Canada’s “unaffordable” housing situation is looser zoning laws and that is a municipal issue not a provincial or federal issue, and certainly not a Bank issue.”

The Bank of Canada hiked the interest rate by 25 basis points on Monday. Over the next six months, all economists do not foresee another hike April, but 18 per cent project one in March, while 12 per cent see a hike coming in June.

Bryan Yu, chief economist lecturer at Central 1 Credit Union, anticipates a pause through 2023 “as higher rates curb economic performance and inflation.”

The majority of  experts (78 per cent) anticipate that Canada would go into recession between now and 2025. One-third believe the country is currently in a recession, or on the verge of one in Q1 2023. Another 6 per cent expect a recession at the end of the year in Q4 2023, while 39 per cent  believe a recession will come at some point in the near future.

“The downturn will create slack in the economy and help lower inflation back to the Bank’s 2 per cent target. After averaging 6.8 per cent in 2022, we expect inflation will fall to 3.8 per cent in 2023 and further to 2.3 per cent in 2024,” says Tony Stillo, director of Canada Economics, detailing a forecast Oxford Economics.

Article By: reminetwork.com

In the second week of January, a two-bedroom semi-detached home in Toronto’s east end hit the market with the pleasantly low asking price of $349,000. One week later, it had done something that properties all around the city had seemingly been struggling to do: bring in offers — and lots of them. A whopping 33 aspiring buyers put in a bid on the Emmott Avenue home, with the lucky winner paying $250,000 over asking.

Toronto-based realtor Anya Ettinger took notice of the sale, recognizing it as part of what seemed to be a pattern of reasonably priced starter homes experiencing a significant influx of demand over the last few weeks. She points to another two-bedroom home, this time at 107 Roseheath Avenue, that sold on January 10 for $976,000 — $177,000 over asking — after garnering 18 offers. Although Ettinger says she began to notice the uptick in market activity in the city’s east end, she’s now seen it all across Toronto.

“One of my colleagues listed a house in Lakeside yesterday and they’ve already had 31 showing requests and an offer, so I think it’s starting to pick up generally across the board,” Ettinger tells STOREYS. “It’s showing in showing activity, open house activity, and offers. One of my colleagues had an open house last weekend for a starter home in the west end, in Corso Italia, and they had about 200 people through the open house and they got 11 offers.”

John Pasalis, President of Toronto-based brokerage Realosophy, has similarly observed an increase in market activity, pointing to a house in East York that, on January 29 — one week before it was scheduled to start taking bids — received six bully offers in one day, as a prime example of this.

“The last week or two is really when we noticed a lot of showings, bully offers, houses with five, six, seven, eight offers, and some aggressive sale prices,” Pasalis said. “It’s obviously still early in the year but this is how the year is starting, and my instinct is it’s going to be like this probably for the next month or so because this is the period when listings are usually low. We’ll see if that slows down as we move to the spring.”

Pasalis notes that because of the limited number of listings — December saw just 4,074 homes come on the market across the entirety of the GTA, a 21.3% year-over-year drop — the increase in demand has not necessarily translated into an increase in sales. And although activity certainly appears to be up, Pasalis says it’s nowhere near the ultra-competitive levels seen early last year.

Like Ettinger, he says the highest levels of competition can be seen in the sub-$1M market, but it’s by no means limited to that segment.

“One of our agents competed on a $2M home in Richmond Hill that had six offers and 60 showings,” Pasalis said. “There are homes that are not as desirable that are sitting on the market, but the ones that are nice are getting a lot of interest.”

This is a big change from the dreary market outlook that plagued Toronto — and much of Ontario — in the later half of 2022 as buyers’ purchasing power continually shrunk thanks to rate hike after rate hike from the Bank of Canada (BoC).

And it’s not just agents who are seeing a shift in activity. Mortgage broker Drew Donaldson says January brought in an influx of clients looking to make a purchase. “Compared to Q4, it was a noticeable uptick in business for us,” Donaldson said.

The Interest Rate Effect

The change in activity, Donaldson believes, is in large part thanks to the belief that the BoC is taking a pause on what has been an extremely aggressive rate hike schedule. The bank itself confirmed this belief — one that had been held by economic experts for several weeks — during its January 25 policy rate announcement. The central bank said it “expects to hold the policy rate at its current level” as it assesses the impact of its eight consecutive rate increases.

What the rate-related jolt in market activity comes down to, Donaldson says, is two things: certainty and confidence.

“Both were lacking the last six to nine months, with plenty of uncertainty on how far rates would rise, which left people with a lack of confidence in the market and a non-willingness to take on any risk to their circumstances,” he explained. “We see this as a shift and our firm is expecting a strong spring market ahead. This doesn’t mean we are suddenly in a bull market again, but it does mean the worst for high interest rates is likely over and the ‘fear’ is dissipating, which leaves me optimistic.”

According to Ettinger, the potential BoC pause is now giving homebuyers a chance to feel more comfortable in their home search, and is drawing out would-be buyers who’ve been sitting on the sidelines for the past few months.

“Previously, people had to reevaluate pretty much every month when rates went up, and they got a new budget and their purchasing power dropped,” Ettinger said. “Now, people have kind of adjusted to their new purchasing power and are starting to feel a bit more comfortable with what’s happening.”

Pasalis also notes that there’s a feeling among some buyers that the market has reached its bottom, and they want to take advantage of those lower prices.

“Obviously we don’t know if that’s the case,” Pasalis said. “But this is the sentiment among them.”

It’s not just Toronto that’s seeing more interest in listed properties. Over in Vancouver, Realtor Steve Saretsky says he’s also noticing busier open houses and multiple offers coming in, but he’s not so sure it’s due to a jump in demand, per se.

“[The] market has picked up for many of the listings simply because there is an acute shortage right now,” Saretsky said. “Sales are running at their lowest levels since 2009 and new listings are hovering around multi-decade lows, so I’m not sure I would call the increased activity a result of surging demand but perhaps more of an inventory issue. We will get more clarity in the spring once listings pick up.” 

A Tougher Time For Buyers

Although renewed market activity may be music to sellers’ ears, it’s posing some inevitable challenges for buyers. Bidding wars, which were a hallmark of the early 2022 market, are popping back up, as are listings with offer presentation dates.

Offer conditions, which were virtually non-existent during the market boom in 2021 and early 2022 but made their way back as the market started to slow in March, are starting to slip as well. Although they’re still entertained for homes that have been sitting on the market for a while, Pasalis says “it’s certainly not happening for the [homes] that are competitive.”

Ettinger says she’s still seeing multi-offer situations where a conditional offer wins out, but notes that whether the market will go back to no-condition offers as the norm is something to keep an eye on.

“I think we’re getting to a point where buyers need to be prepared to do due diligence ahead of time in the case that they are competing and they need to waive their conditions,” she explained. “We want to make sure they’ve had everything done beforehand.”

Article By: Laura Hanrahan

In many ways, your home’s exteriors are the first impression when people stop or walk by your property!

As such, you’ll want to ensure that its appearance — from the house itself to the landscaping — is pristine and inviting. According to Realtor Magazine, homes with excellent curb appeal usually sell for 7% more than listings that need some work. Whether you’re looking to sell or just want to take more pride in your dwelling, these six upgrades can help you revamp your home exteriors.

Update the Siding

Weathering and age can make your home’s siding peel or warp. Some homeowners might be able to give their home a fresh coat of paint, while other conditions may call for drastic measures.

Installing brand new siding might be the ticket for the ultimate home exterior makeover. According to Remodeling magazine’s 2020 Cost vs. Value report, homeowners can see a 74.7% return on investment (ROI) when they replace their vinyl siding. Additionally, fiber cement siding accrues a 77.6% ROI.

If done correctly, new siding can make an older home look like new construction. 

Enhance Outdoor Lighting

Make your home exteriors sparkle with nighttime lighting. On average, homeowners can expect to spend $2,000–$6,000 on outdoor lighting features, depending on how intricate the lighting design is and whether they install smart lighting, such as solar, motion sensors, or smartphone-operated technology. 

Outdoor lighting —and the necessary wiring and electrical components — must withstand varying weather conditions and extreme temperatures. Often, landscape lighting comes with several warranties and water-resistant specifications that might also boost the price.

Consider walkway lights, spotlights on trees or bushes, and colorful, ornamental lights for a distinctive design.

Upgrade Your Garage Door

In most cases, the garage door is the first part of a home that people see — meaning any upgrades can dramatically improve your curb appeal. 

You might want to consider replacing a garage door over 20 years old, as simple fixes might not be enough to enhance the overall appearance.

Otherwise, you could decide to paint it, add new side lighting, or install new windows to give it the modern touch you’re going for — a surefire way to increase your home’s market value and impress passersby.

Spruce up Your Landscaping

The obvious way to create a beautiful home exterior is to spruce up your landscaping. Your options are endless, from perfectly manicured lawns to stylish hardscaping and elaborate garden beds to unique yard decor. 

Although most home improvement shows make landscaping seem like a straightforward DIY project you can finish over a weekend, nothing could be further from the truth. Achieving a beautiful outdoor oasis takes time — and a budget.

Homeowners should allocate 10%-15% of their home’s value to their landscaping budget. About 65% should go toward fixing the backyard, while 35% is best spent in the front. 

Add a Water Feature

Consider adding a water feature, such as a fountain or pond, to turn your home exterior into a tranquil outdoor sanctuary while improving the look and biodiversity on your property.

Studies show that water sounds significantly affect positive mental health outcomes over other biological sounds found in nature.

Water features are ideal for creating a particular focal point for a restful, meditative atmosphere. Aside from traditional fountains, bird baths and ponds— you might choose to install a small channel for water movement, formal pools, a built waterfall, or a water sculpture.

Build a Patio, Porch, or Deck

American homeowners love a gorgeous outdoor space for spending time in nature and entertaining. According to Fixr.com, patio additions accounted for 20% of outdoor renovations in 2018, while 17% built a patio. Meanwhile, 32% of homeowners invested in both patios and porches for their homes.

Whether you prefer reading with the sounds of nature, sitting in a rocking chair, or barbecuing out back, building out these spaces is an excellent way to augment your home exteriors.

Create Beautiful Home Exteriors With a Few Upgrades

Improving your curb appeal doesn’t have to break the bank. Even simple fixes can make an enormous difference. Consider what would work best for the look you hope to achieve and your budget as you decide what to include in the changes.

Article By: Suzette

Despite the usual slump of the winter months, Canadian home sales jumped up slightly in December, sitting 1.3% above the previous month.

The Canadian Real Estate Association (CREA) released its latest market data on Monday, noting that despite the bump, the total number of December sales was down 39.1% from the near-record high seen one year prior.

“In 2022, we saw one of the biggest single-year shifts on record in Canadian housing activity, from record highs last winter to just below the 10-year average to end the year,” said CREA Chair Jill Oudil.

December also saw a drop in the number of new listings, falling 6.4% on a month-over-month basis, which was largely led by declines in British Columbia and Quebec. According to CREA, it was among the lowest December new supply levels on record.

With sales up and new listings down, the market tightened, raising the sales-to-new-listings ratio to 54.4%, compared to 50.2% in November.

“There were 4.2 months of inventory on a national basis at the end of December 2022,” the report reads. “This is close to where this measure was in the months leading up to the initial COVID-19 lockdowns, and still nearly a full month below its long-term average.”

The average (not seasonally adjusted) national home price hit $626,318 in December, down slightly from November’s $632,802.

Compared to November, the Aggregate Composite MLS Home Price Index edged down 1.6% in December, bringing it to 13% below its peak level. As is to be expected, price drops varied significantly from market to market. Ontario and parts of BC led the declines, while Calgary, Regina, Saskatoon and St. John’s were “barely off their peaks at all.”

Oudil notes, however, that “the market’s adjustment to higher rates may be mostly in the rear-view mirror at this point,” which means more buyers potentially entering into the market in the spring.

Looking into 2023, CREA has revised its forecast with additional data. The real estate association is expecting the market to remain “quite difficult” for many first-time buyers until mortgage rates begin to ease. But that being said, many buyers are expected to come off the sidelines next year, with CREA forecasting 495,858 home sales across Canada in 2023 — a small 0.5% drop from 2022.

“The housing market story of 2022 was about high inflation and rising interest rates. The 2023 market will depend on the timing and extent those factors move back in the other direction,” said CREA’s Senior Economist Shaun Cathcart. “Demand for housing continues to grow and supply remains the biggest issue across the entire spectrum. Whether that plays out in the rental market in 2023 or shifts back over into the ownership space is a matter of how quickly the Bank of Canada can get inflation under control and starts turning the dial back down on borrowing costs.”

Home prices are expected to continue falling next year, with CREA forecasting a 5.9% decline on an annual basis to $662,103.

By 2024, home sales are expected to start making a comeback — albeit still below 2020 and 2021 numbers — jumping 10.2% to 546,625. The national average price is expected to recover 3.5% to around $685,056, which is below 2022 but on par with 2021.

Article By: Laura Hanrahan