I’m always reluctant to draw any conclusions about housing markets based on seasonally low data. More specifically, July-August and December-January typically have suppressed sales volume, so using them to guide decision-making can lead us astray.

Source: TRREB

With that being said, there are a few key things to be mindful of in Toronto Regional Real Estate Board (TRREB)’s most recent Market Watch release:

Home sales are down by 5.3 per cent compared to August last year. This is relatively in line with the declines we’ve seen each month in 2024. As well, homes are taking much longer to sell (40-57 per cent increase in days-on-market).

As a result, inventory continues to accumulate in the absence of absorption, so active listings are up significantly (46.2 per cent). Nominal prices are down slightly (0.8 per cent), so when adjusted for current inflation, real house prices are down over 3.0 per cent since last year.

The fourplex pump

Source: TRREB

When you unpack these data points a little further, you can get a better understanding of the market.

Some things stand out here:

1. Area code 416 detached home sales is the only category posting a YoY increase in number of units sold in August, up 8.3 per cent. It’s also the only category posting a YoY increase in price, up 3.2 per cent.

2. Area code 416 condominiums and townhouses have both seen double-digit drops in volume.

Presumably, the municipality’s upzoning of residential neighbourhoods in Toronto to four units has had some positive impact. A floor on area code 416 detached homes would be established by the last buyer in the market — an investor looking to tear down the home and rebuild a multiplex there. Their output value has now gone from one or two units to four units, as a purchaser can now build a fourplex on detached lots.

In the 905 area code, detached sales appear to be resilient, but less optimistic than in 416. The 905 area code’s detached sales number saw a 3.3 per cent decrease.

The cooling condominium market

Condominium units are a very different story from the detached market. We’ve been hearing alarming reports of condominium volume piling up, with product exceeding 12 months of inventory at some periods.

Condominium apartment sales continue to decline, currently at a rate of 11.4 per cent across the GTA compared to August of last year. This decline is reflected further in the preconstruction condominium sales market, where sales are 50 to 75 per cent below the long-term average.

Declining rents and increasing interest rates have created a difficult cash flow scenario for condominium investors. As a result, many are looking to offload assets, and very few are looking to purchase these assets.

Source: TRREB

Pricing

Prices are down across the board on TRREB. Notably, beyond condominiums, recipients of the pandemic’s urban exodus are seeing a steeper recoil from peak pricing, which seems to correlate heavily with the magnitude of price increases during the exodus.

Source: TRREB

Moving forward

With another 25 basis point rate cut from the Bank of Canada, some pressure has been eased for financial stress on certain sellers. Fixed rates are declining, so there’s a little more light at the end of the tunnel for those facing a steep mortgage payment increase upon renewal in 2025 and 2026.

The bigger question is when interest rate cuts will have a material impact on bringing purchasers back to the market. So far, the impact of 75 bps rate cuts has been relatively muted, as the weight of financial stress seems to outweigh the benefit of lower rates.

Canadian housing prices per square foot have generally remained stable in the first half of the year, with exceptions highlighting families are moving to more affordable communities, both close by and in other provinces, Century 21 Canada’s eighth annual Price per Square Foot survey found.

The survey compares prices in nearly 50 communities from January 1 to June 30, revealing data trends dating back to 2018 for both larger centres and smaller communities.

Regional insights

In Ontario, British Columbia and Atlantic Canada, prices remained steady, with some gains in smaller markets and suburbs. Downtown condominium prices declined, indicating continued migration away from metropolitan cores.

Significant price jumps were seen in Alberta markets including Calgary and Edmonton, though prices per square foot remain below those in B.C., Quebec and Ontario. Prairie provinces saw more moderate price increases.

Major condominium markets

In Alberta, Calgary condominium prices rose by over 17 per cent, and those in Edmonton by nearly 10 per cent. High River topped increases with more than 22 per cent, but remains affordable at $285 per square foot. Condominiums in Vancouver (the highest priced in Canada), Toronto and Montreal saw modest dips in price per square foot.

Historical pricing and sales levels

Even with some declines, pricing has not fallen below 2021 levels in any market. Sales volumes across Canada have declined from 2021 and 2022, particularly in larger cities.

“A number of our brokers are experiencing a slower market when compared to the conditions of just two years ago,” says Todd Shyiak, executive vice president of Century 21 Canada.

What’s next

“While across the Prairies and Atlantic provinces the market is quite active and balanced, increasing inventory and hesitant buyers in the GTA and the Lower Mainland (Vancouver and area) are resulting in a ‘wait and see’ market,” Shyiak notes. “With the next possible rate cut coming on July 24 buyers may be extending their ‘wait and see’ approach until the fall.”

He explains that inventory and interest rates will likely be major factors influencing future prices.

“Ultimately, we don’t know what the next six months holds for our housing prices, but it’s important not to get too focused on any single year and look at each data point within the larger context of ever-evolving trends. That’s why this survey becomes more valuable year-over-year, because it allows us to see the big picture of Canadian housing.”

Review the full report, including regional summaries, here.

Saskatchewan saw 1,675 home sales in June, marking a one per cent decrease from last year but nearly 10 per cent above the 10-year average, the Saskatchewan Realtors’ Association (SRA) reports. Sales of properties priced above $400,000 improved, nearly balancing out the decline in homes priced below $300,000, as inventory shortages continue to limit stronger sales figures.

Above average sales for 12 consecutive months despite inventory issues

New listings in June dropped by 14 per cent year-over-year and were down 21 per cent compared to the 10-year average, contributing to a 19 per cent annual decrease in inventory and a more than 40 per cent decline from long-term trends. Despite these challenges, Saskatchewan has reported above-average sales for 12 consecutive months.

“While the recent Bank of Canada rate decision was welcome news, higher lending rates and rising home prices continue to spur demand for more affordable housing options,” notes SRA CEO, Chris Guérette. “This demand, when paired with falling supply in lower price ranges, limits options for prospective buyers and prevents even stronger monthly sales figures. There simply isn’t enough inventory to service this segment of our market right now.”

The residential benchmark price in Saskatchewan reached $343,300 in June, up from $340,400 in May and nearly 5% higher than June 2023. Notably, Humboldt ($272,500), Martensville ($398,800), Melfort ($250,100), Prince Albert ($251,700), Saskatoon ($403,500), and Warman ($463,500) reported record benchmark prices, with Saskatoon surpassing the $400,000 mark for the first time.

“Housing demand remains strong in Saskatchewan, despite ongoing supply challenges placing significant stress on the more affordable segment of our market, especially in our two largest centers,” Guérette noted. “While real estate is local and market conditions vary by region, it can be incredibly challenging for prospective buyers right now.”

Price trends

The province’s residential benchmark price last month was $343,300, an increase of $2,900 from May and almost five per cent from the same time last year.

Home prices rose across many regions in June, with the largest monthly gains in the Saskatoon-Biggar (seven per cent year-over-year) and Swift Current-Moose Jaw (5%) regions. Melfort reported the highest year-over-year price gain for the second consecutive month, with prices over 12 per cent higher than last year.

Saskatoon passed the $400,000 mark for the first time, while Regina, Estevan, Weyburn, Moose Jaw, Swift Current, Humboldt, Meadow Lake, North Battleford and Prince Albert also saw year-over-year price increases.

Regina

Regina had 380 sales in June, up 4 per cent from last year and 14 per cent above the 10-year average.

Inventory levels slightly improved month-over-month, resulting in 2.06 months of supply, up from 1.69 in May, though still down 30 per cent year-over-year and nearly 50 per cent below long-term trends. The benchmark price in Regina was $318,100 in June, down from $320,000 in May, and 0.5 per cent above June 2023.

Saskatoon

Saskatoon had 540 sales in June, matching last year’s figures and 15 per cent above the 10-year average.

Limited supply options are likely preventing stronger sales in the city, with inventory levels reaching their lowest point since June 2007. The city saw a 26 per cent year-over-year decrease in inventory, remaining over 53 per cent below the 10-year average. Saskatoon reported a record benchmark price of $403,500 in June, up from $397,200 in May and over 7 per cent higher than June 2023.

Review the full report, including by province, city, CMA/CA, economic region and census division.

Last month, Saskatchewan reported 1,642 sales, an increase of 32 per cent year-over-year, the Saskatchewan Realtors Association (SRA) reports. It was the fourth consecutive month of above-average sales, making year-to-date sales almost 17 per cent above 2023’s.

New listings up but total inventory 40% below 10-year trends

Though new listings were up slightly, total inventory was down 16 per cent year-over-year and 40 per cent below 10-year trends. This was especially the case for properties priced below $300,000.

“Economic growth, employment gains and record population numbers continue to support strong housing demand in Saskatchewan, resulting in a tenth consecutive month of above-average sales in April,” SRA CEO, Chris Guérette, notes.

“These factors are, without question, boosting housing demand — as evidenced through rising sales in the resale market and falling vacancy rates in the rental market.”

‘Approaching uncharted territory’ in Regina and Saskatoon

The province’s residential benchmark price reached $339,800 in April, up from $334,500 in March and almost five per cent higher than the year prior. Prices rose across all property types in April, by five per cent in detached and semi-detached property types and by 13 per cent in apartment-style properties.

“With just over three months of supply provincially, our market continues to experience significant supply challenges. However, the conditions are far tighter in Saskatoon and Regina, with both markets reporting under two months of supply in April,” says Guérette.

“We’re approaching uncharted territory in our two largest markets right now — it’s an incredibly challenging time for prospective buyers out there. If supply challenges persist, as expected, we will likely see further price gains in these markets.”

Regina

Regina reported 424 sales in April, a year-over-year gain of over 50 per cent and 52 per cent above long-term trends. Inventory conditions were tight, with a 30 per cent year-over-year decline and levels over 46 per cent below 10-year trends. The city’s benchmark price was $319,800, up from $313,100 in March and nearly three per cent from April 2023.

Saskatoon

Saskatoon reported 522 sales in April, a year-over-year gain of almost 29 per cent and 34 per cent above 10-year averages. Inventory levels decreased by 21 per cent year-over-year and are close to 50 per cent below 10-year trends. The city’s benchmark price was $398,600, up from $394,300 in March and nearly seven per cent from April 2023.

Review April data by province, city, CMA/CA, region or census division.

Real estate firm Engel & Völkers says mom-and-pop house flippers have entirely left the market, blaming rising costs from construction, interest rates, taxes and elevated housing prices.

Those costs, which have cumulatively escalated in recent years, have literally priced small investors out of a market that for years was thriving.

That’s left this particular aspect of the market in the hands of bigger players and developers. 

Much market uncertainty means more education needed

Andrew Carros, chief operating officer of Engel & Völkers Vancouver, says people today have to be more educated if they’re going to be house flippers because they’re taking a higher risk with the uncertainty in the market and the rising costs and taxes. “There’s a lot of uncertainty in our economy. There’s a lot of uncertainty in every market.”

Carros explains that, of course, the effects of COVID have changed people’s perspectives on what they’re looking for. “I think people made their lives a lot more personal but in Vancouver, in particular, we started noticing a real trend moving away from casual house flippers. We’re not talking about your developers here. We’re talking about people that are doing it as a hobby, or a way to make some extra income or do something fun with their family.”

Change with foreign buyers’ taxes

He notes the change happened when the foreign buyers’ taxes came into Vancouver in 2017. “There were opportunities in other cities, but if you look at Vancouver’s market we’re usually first in and first out when it comes to how the market trends.”

Carros continues, “When that happened, the manipulation from the government to try to force prices to come down obviously changed the tone of the economy quite drastically, and in Vancouver, I think the narrative that anything can happen really scared people, the casual consumer. 

A way to move on and up

He says that mom-and-pop house flipping was a nice way for people to live in a home for a few years, do a renovation and then move their family to another property by taking the assets from what they built in the flipped property to “keep moving forward and moving up in the market.”

“It’s stalled out a little bit, unfortunately,” says Carros. “In the last two years, we’ve noticed that shelter costs have gone way up, energy costs have gone way up, holding costs on interest rates have gone way up.”

The gap: Shrinking and unpredictable

A severe lack of inventory in the market has increased the prices of lower-end homes, Carros explains. This means the gap between what someone pays to purchase and renovate a home, and the higher price they get once it’s flipped isn’t big enough anymore when you consider all the rising costs. 

Plus, “The government has made it very clear that their mandate is to try to stop people from inflating the price of real estate, so they’ve come down hard on capital gains, flipping homes, taxes you have to pay when you come in and out,” he notes. 

“And I think the bigger, greater concern is that the predictability of what might happen in the time that you own that property to when you flip it is unknown. With elections, they just keep throwing out policies that are meant to help affordability but unfortunately, when we look at what’s happening, I don’t think it’s having its greatest effect.”

What makes a successful flipper today?

Carros says the first thing a potential house flipper needs is cash — and that’s the hardest thing for most people as they don’t have the money to put into a house project. If they’re borrowing, with interest rates elevated, it just becomes harder to do. 

To control costs, flippers must also be very organized. If people can put work into their own property, it helps with cost savings. They have to have a plan and target the areas that make sense to get the most on their return.

Patrice Grouleau, with Engel and Völkers in Montreal, adds that today’s flippers are the pros: professional builders navigating a market where hiring a general contractor can quickly eat into your profit margins.

Higher rates and uncertainty = fewer mom-and-pop flippers

Christopher Alexander, president of Re/Max Canada, says as soon as interest rates started going up, the market saw fewer and fewer mom-and-pop investors getting in, whether it was to acquire more for their portfolio or to start flipping.

“And it makes sense,” he notes. “Because a lot of times, people will buy a house whatever the cost is and then go out and borrow (money) to pay for the materials to do the flip. So when rates started rising, the margins on those projects got smaller and smaller,” he explains. 

In addition, he points out the uncertainty added to the mix. “It was hard to determine how long it would take for a property to sell or what price it would sell at, but for so long in much of the country you had pretty decent predictability. It’s impossible to have a crystal ball in this business, but there was a good chance if you bought a house today, fixed it up and renovated it, you could sell it for more tomorrow. That’s disappeared since the spring of 2022.”

Making a comeback in Calgary with economies of scale

Joel Semmens, a realtor with Re/Max Real Estate (Central) in Calgary, says the local market in the past decade has been fairly stagnant with house prices. 

“There just weren’t many people flipping houses because the market was declining; it was not on an incline. (Now), this is the type of market where you start seeing that kind of activity again because we’re in a buoyant, upwardly mobile trajectory of a market,” he explains.

Semmens is seeing groups of people working on multiple properties at once. “I see the guys that are like mom-and-pops in a way because they’ve got their whole family working for them, three to five at a time.” He notes, “They’re doing five (properties) at a time, so there’s an economy of scale in terms of getting the trades, and they pick the same stuff (for renovating the homes).”

Government deeming rule for flipped properties

The 2022 federal budget introduced a new deeming rule, effective January 1, 2023, for flipped residential properties, including rentals. The Government of Canada’s website says this is “to ensure that profits from the disposition of flipped property are taxed as business income” and “profits are subject to full income inclusion”. 

About the rules for reporting profits from flipping, it goes on to say: “The profit from property flipping is fully taxable as business income and does not qualify for the 50 per cent capital gains inclusion rate or the Principal Residence Exemption.”

With a home supply shortage, increased interest rates and a high cost of living, owning a home is not in many Canadians’ foreseeable future. Thanks to fewer homes available for sale, interprovincial and international migration and other factors, competition between buyers is fierce, which drives prices up.

This issue persists on different levels across the country, and no single government is responsible for the answer — it must be a collective effort. With this in mind, Zoocasa reports on each political party’s proposals for addressing Canada’s housing challenges.

The Liberal Party

The Liberals are championing the Housing Accelerator Fund, a $4-billion plan to stimulate housing supply in major cities. The fund encourages streamlined zoning and permitting processes, aiming for 100,000 new middle-class homes by 2024-2025. Several Ontario cities, including London, Vaughan and Burlington, have joined the program.

The Liberals also promise to eliminate GST on new rental housing and identify vacant properties for conversion. The party’s Canadian Mortgage Charter is proposed to aid homeowners in accessing relief measures.

The Conservative Party

In contrast, the Conservative Party aims to boost homebuilding by penalizing cities not meeting annual construction targets. The plan requires a 15 per cent increase in homebuilding annually, with the risk of losing federal funding for non-compliance.

The Conservatives also pledge to eliminate GST on affordable apartment housing, targeting properties with below-market median rent. Their approach involves removing bureaucratic hurdles and necessitates pre-approved permits for dense housing near transit stations.

The New Democratic Party

The New Democratic Party (NDP) prioritizes affordable housing by proposing fast-start funds for co-ops, and social and non-profit housing. They advocate repurposing vacant buildings for student housing and requiring post-secondary institutions to have housing plans for study permits.

The NDP suggests a student housing funding plan with contributions from the federal government, provinces, territories and educational institutions.

The Green Party

The Green Party focuses on a “people-first” housing approach, proposing a guaranteed minimum income to address poverty and enhance affordability. They aim to double the social housing stock, emphasizing the right to safe and affordable housing for all Canadians.

The Green Party of Ontario specifically targets affordable housing in gentrified areas, supporting renters on the path to homeownership, reducing speculation and promoting 15-minute neighbourhoods.

Read the full report here.

TD Economics reports a bigger and longer downturn in Canadian home sales and average prices than projected in June.

Home prices and sales to go down

They say home prices and sales will likely go down from Q2 levels during this year’s last quarter (Q4) and the early part of next – by 6 per cent and 8 per cent, respectively.

Population change and appropriate supply increase from previously low levels are at the root of the decline.

This doesn’t compare to the 20 and 40 per cent drops in prices and sales that happened – thanks to Bank of Canada rate hikes – from Q1 of 2022 to the same period this year. The group believes that the Bank of Canada will stop raising rates and lower the policy rate as of Q2 next year.

Bond yield decline, population growth, tight job market should boost Q2 2024 prices

By the end of this year, Canadian bond yields should go down from their current multi-year peak. TD Economics says this, plus healthy population growth and tighter job markets, should help to raise home prices and sales as of Q2 next year.

However, the increase will be slower-paced in most markets due to affordability challenges – we may not see national home sales stay above pre-pandemic levels until 2025.

Regional speculations

The highest price drops and sales in the near term are expected in Ontario and British Columbia, which is what we saw since the Bank of Canada boosted rates in June. Smaller decreases will likely happen in Quebec, Nova Scotia, New Brunswick and Prince Edward Island. 

Each of these provinces should see a limited bump in prices and sales by mid-2024, TD Economics believes. They point out that throughout the next few quarters, affordability in each market except New Brunswick will hover near record lows (back to 1988).

On the other hand, Newfoundland and Labrador and the prairie provinces will probably see prices and sales rise during the same period, because of better relative affordability. Sales-to-listings ratios have climbed in favour of sellers in the prairies since early 2023.

Of note is that, as of August, Newfoundland and Labrador’s ratio was 30 per cent higher than its long-term average, and Alberta has seen a huge influx of migrants from other provinces, contributing to its activity.

Canada’s weaker-than-expected economy will likely affect demand poorly and cause forced selling, creating an overall negative housing outlook.

Rates might stay higher than forecasted if inflation remains at higher-than-expected levels. At the same time, as the country’s population keeps growing, housing shortages will likely continue and raise prices higher than anticipated.

Read the full outlook from Rishi Sondhi here.