Maroc - STOREYS.COM - A La Une - 22/Jul 19:22

Canadian Cities Are Moving Into Buyers’ Markets, But Experts Say That Buyers Aren’t Biting

In major Canadian real estate markets like Toronto, Vancouver, and the Fraser Valley, inventory levels are surging. It appears that last month’s interest rate cut was enough (or not enough for those in need of a bigger cut) to coax many sellers back into the market, giving would-be homebuyers more choice and pushing conditions towards buyers’ market territory.There’s one major caveat, though: buyers aren’t really biting. The latest figures from the Toronto Regional Real Estate Board, released earlier this month, showed that sales slumped 16.4% on a year-over-year basis in June, with just 6,213 transactions recorded. Things were similarly quiet in Vancouver and the Fraser Valley, where there were just 2,395 and 1,317 sales recorded respectively in the month, representing annual declines of 19% and 30%. By contrast, new listings surged to 17,964 in Toronto, 5,723 in Vancouver, and 3,418 in the Fraser Valley. Taking all of those figures into account, the sales-to-new-listing ratio — calculated by dividing the number of homes sold by the number of new listings recorded — clocked in at around 34.6% in Toronto, 41.8% in Vancouver, and 38.5% in the Fraser Valley. Anything under 40% suggests a buyer-friendly market, while a ratio between 40% and 60% indicates that buying and selling conditions are more balanced. Conversely, a ratio that’s 60% or higher indicates a sellers’ market. While, “in theory” we’re either already in or on the cusp of a buyers’ territory in these major Canadian markets, John Lusink, President of Right at Home Realty and Property.ca points out that “for a buyers’ market to truly exist, you need to have real buyers.”Underscoring how slow things are these days, Lusink points to “COVID times,” when his brokerages were seeing half amount of listings, but around 25% more transactions. His take on the matter is that there is plenty of pent-up demand — buyers do want to buy — but in many cases, they aren’t able to qualify in the current interest rate environment. And despite the fact that interest rates are finally starting to come down, he warns that it will take mortgage rates some time to catch up. “The question is: at what point will buyers then be able to return to the market? Is that going back to when mortgage rates were in that 3.5% to 4% range? Yeah, that probably would help. We're sort of in the low- to mid-sixes at the moment, depending on what product you choose,” Lusink says. “I think the sense also is that prices need to come down for buyers to say, ‘okay, I'm stepping up.’”Although Lusink’s thinking is that the BoC will lower the policy interest rate again this week — the next announcement is on Wednesday the 24th — he doesn’t think that will be enough to entice buyers to, well, buy. Not yet, anyways. Ross McCredie, President and CEO of Sutton Group, is in the same camp, telling STOREYS that while he thinks a rate cut would have an effect on market sentiment, he doesn’t think it will open the floodgates, so to speak, as far as actual home sales go. Interest rates are just one piece of the larger housing in-affordability puzzle, McCredie says. “You’ve had interest rates go up very, very fast… and then you’ve also had your property insurance go up, your HOA fees go up. When you add all [those costs] up, people are seriously thinking, ‘well, maybe I don't need to buy a house, maybe I should rent a condo or something like that.’”Even so, McCredie anticipates that home-buying activity will pick up to an extent in the fall and winter, which is when many mortgage holders will be up for renewal. “People are going to start having to really cut back or consider selling their home and moving into something smaller,” he says. “And so you'll see people that have probably been sitting on the fence wanting to buy, who will step forward and buy.”“Demand is still there,” McCredie adds. “I mean, we had a million new people come to Canada this year — that's an extraordinarily high number, and it's putting a lot of pressure on housing.”For the time being, Lusink urges those in the market to purchase a home to take advantage of the emerging buyers’ market conditions, including more choice, and the luxury of time. “You finally have a little bit of time to study what's out there, get pre-approved, put in your conditions… all of that good stuff,” he says. “There are also opportunities in the new construction area where, unfortunately, people aren't able to close or maybe closed but really aren't able to hang on. I think there's just lots more opportunity.”