Investors who snapped up a 'bargain' after first-quarter price drops unlikely to have seen much gain so far
The Canadian housing market continues to provide both bright spots and concerns for the wider economy as affordability and supply issues disrupt the market.
A new report from RE/MAX Canada looks at the detached homes market in the Greater Toronto, Greater Vancouver, and Fraser Valley and found that, after prices declined in the first three months of 2023, there was a buying rally from investors and others seizing on improved affordability.
While this activity helped push prices up, close to 93% of detached homes posted a decline in values in the first six months of the year overall, compared to the same period in 2022. These decreases were generally in single digits.
"Anxious homebuyers were quick to identify the bottom of the market and jumped in with both feet in the second quarter of the year," says Christopher Alexander, president of RE/MAX Canada. "The short burst of home-buying activity clearly underscored the resilience of the housing market, but the lack of inventory available for sale curtailed any real momentum from building.”
There were some markets that managed to buck the trend and post price gains in the first six months of 2023 compared to a year earlier including four in Toronto’s downtown core that gained 16% and Gulf Islands, BC, that gained 13%.
“The uber-luxe market segment was also active, given the uptick in the number of homes changing hands over $7.5 million in the GTA,” added Alexander. “While the impetus was short-lived, it was not due to a lack of willing buyers."
Challenging conditions
Inventory remains a significant barrier to housing market activity.
Of the 60 markets in the GTA, nearly half reported a decline in new listings in June 2023, compared to June of 2022 and in Greater Vancouver, nine of the 16 markets survey experienced a shortage of inventory in June.
Affordability remains a challenge too and is the most significant factor influencing buying activity and forcing potential buyers to adjust their choices.
"Today's purchasers are focusing on value-added properties and communities, given new market realities," says Elton Ash, EVP of RE/MAX Canada. "Listings that offer a short or long-term benefit –be it a basement apartment that allows homeowners to offset their mortgage costs now or homes that hold long-term potential in a future renovation or sale to a builder—are most sought-after. Location, while still an important aspect, has been replaced by value and necessity. A growing number of buyers are willing to travel further afield to get the best bang for their buck."
