The report tracked average price and unit sales activity in 82 districts within the Toronto Regional Real Estate Board (TRREB), the Real Estate Board of Greater Vancouver (REBGV) and the Fraser Valley Real Estate Board (FVREB).
Close to 93 per cent of detached homes across the three markets posted a decline in values during the first six months of the year compared to 2022. The report also found fewer detached homes changed hands year-over-year, with 95 per cent of markets surveyed reporting a downturn in buying activity.
The surges and shortfalls
A handful of neighbourhoods outperformed the overall market, with the number of homes sold climbing in three neighbourhoods in the Greater Toronto Area, including Bayview Village, Don Valley Village, Henry Farm at 21.4 per cent; Bathurst Manor, Clanton Park at 1.4 per cent and Alderwood, Long Branch, New Toronto at 9.3 per cent.
Langley in the Fraser Valley also experienced an increase in sales of detached home sales, rising 7.9 per cent in the first six months of 2023 compared to the same period in 2022.
Christopher Alexander, president of Re/Max Canada, explains, “Demand was greatest for affordably priced detached homes under the $2 million price point in Q2, with sales more than doubling between the first and second quarter in key GTA, Greater Vancouver and Fraser Valley markets. 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. While the impetus was short-lived, it was not due to a lack of willing buyers.”
Alexander credits the short burst of home buying activity to the housing market’s resilience, “but the lack of inventory available for sale curtailed any real momentum from building.”
Inventory challenges persist
In many areas, Re/Max reports a shortage of properties continues to hamper buying activity. Of the 60 markets in the GTA, nearly half reported a decline in new listings in June 2023 compared to June 2022. The greatest decline was noted in High Park, North Junction, Bloor West Village, where listings were down 58.1 per cent, with just 26 properties available for sale.
In Greater Vancouver, nine of the 16 markets surveyed experienced a shortage of inventory in June, led by the Gulf Islands and Whistler, Pemberton, with new listings down 42.9 per cent and 23.1 per cent respectively, year-over-year.
Affordability and demand
Affordability emerged as a pivotal factor driving buying activity — the report credits “trade-up” activity for pushing the share of detached home sales up slightly.
“Despite more challenging conditions, step-up buyers recognized an opportunity to make a move amid lower overall values in the GTA, Greater Vancouver and the Fraser Valley,” the report states.
Elton Ash, executive vice president of Re/Max Canada, emphasized that today’s buyers prioritize value-added properties and communities, explaining that “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.”
The report cites York Region as an example, which saw a 104 per cent increase in detached home sales during Q2, compared to Q1, adding affordability played a pivotal role, especially in the 905 area code, where prices are lower than the neighbouring 416 area. The absence of Toronto’s land transfer tax further boosted demand.
Impact of land transfer tax
A survey conducted by Leger, and included in the report by Re/Max, revealed that over a quarter of Canadians indicated that the land transfer tax impacted their home buying decisions. Younger generations, such as Gen Z and Millennials, expressed greater concerns about this tax, indicating its influence on their pursuit of homeownership.
Inflation and rate hikes
“We’re at a crossroads, and the most pressing question we face is: where do we go from here?” reflect Ash.
The report highlights a striking resemblance to historical circumstances — in 1994, the Bank of Canada raised rates from 7.25 to 10.5 per cent in less than a year, yielding immediate effects on the GTA’s housing market.
Sales tapered, and average prices slid from approximately $209,000 to $198,000 by 1996. Parallel factors are at play today, with one notable difference: the market’s limited inventory currently available for sale.
With Canada’s inflation rate once again climbing in July, some economists are expecting yet another rate hike by the Bank of Canada in September. Ash notes, “If this holds true, home buying activity is likely to remain subdued in the near future. Nevertheless, we are confident that once the housing markets regain stability nationwide, momentum will reignite as buyers leverage improved affordability. The tide will turn — it’s the timing that remains uncertain.”