Market Watch - Buyers Are Starting to Take Advantage of More Affordable Market Conditions

Buyers were starting to take advantage of more affordable market conditions brought about by interest rate cuts and lower home prices. As borrowing costs trend lower, home sales are steadily increasing compared to previous months.

Ontario - Buyers are Starting to Take Advantage of More Affordable Market Conditions

Toronto, October 7, 2024 -- Greater Toronto Area (GTA) home sales increased year-over-year in September. Buyers were starting to take advantage of more affordable market conditions brought about by interest rate cuts and lower home prices.

“As buyers take advantage of changes to mortgage lending guidelines and borrowing costs trend lower, home sales will steadily increase in relation to population growth. With every rate cut, a growing number of GTA households will afford a long-term investment in home ownership, including first-time buyers,” said Toronto Regional Real Estate Board (TRREB) President Jennifer Pearce.

GTA REALTORS® reported 4,996 home sales through TRREB’s MLS® System in September 2024 – up by 8.5% compared to 4,606 sales reported in September 2023. New listings entered into the MLS® System amounted to 18,089 – up by an even greater 10.5% year-over-year. On a seasonally adjusted basis, September sales increased on a monthly basis compared to August, along with new listings.

The MLS® Home Price Index Composite benchmark was down by 4.6% year-over-year in September 2024. The average selling price, at $1,107,291 was down by a lesser 1% compared to the September 2023 average of $1,118,215. On a seasonally adjusted basis, the average selling price edged up slightly compared to August.

“The annual improvement in September home sales was more than matched by the increase in new listings over the same period. This resulted in a better-supplied market and increased negotiating power for buyers re-entering the market. The ability to negotiate on price, led to moderate year-over-year price declines, particularly in the more affordable condo apartment and townhouse segments, which are popular with first-time buyers,” said TRREB Chief Market Analyst Jason Mercer.

“We are pleased with the positive changes to mortgage lending guidelines announced over the past month. The ability for existing mortgage holders to shop around for the best rate without facing the stress test will result in more affordable renewals. Longer amortization periods and the ability to insure mortgages for purchases over $1 million dollars will give home buyers more options as the GTA housing market recovers. TRREB has long been calling for these changes to give buyers more flexibility as they navigate their home-buying journey,” said TRREB CEO John DiMichele.

Ottawa’s MLS® Home Sales Healthy Amid a Shifting Market

Ottawa, October 7, 2024 -- The number of homes sold through the MLS® System of the Ottawa Real Estate Board (OREB) totaled 1,047 units in September 2024. This was an 11.4% increase from September 2023.  

Home sales were 17.4% below the five-year average and 15.4% below the 10-year average for the month of September.  

On a year-to-date basis, home sales totaled 10,485 units in September 2024 — an increase of 6.4% from the same period in 2023.  

“As we navigate a shifting housing market, Ottawa’s fall outlook is healthy,” says OREB President Curtis Fillier. “Activity is robust with an uptick in sales and prices remaining steady. Meanwhile, both buyers and sellers are rethinking their purchasing power amidst news about additional interest rate cuts on the horizon, longer amortizations, and increased price caps for insured mortgages.” 

“There have been encouraging policy developments recently that will stimulate demand,” says Fillier. “But Ottawa’s market does not typically have demand problems — we have chronic supply issues. We’re not building enough homes in the city, and we’re not building enough of the right homes to address the ‘missing middle.’”  

The Canada Mortgage and Housing Corporation (CMHC) recently reported that Ottawa’s “population-adjusted construction is at its lowest level in nearly 10 years.” A City of Ottawa progress report shows that Ottawa is only at 22% of its annual housing target at the end of August.  

The MLS® Home Price Index (HPI) tracks price trends far more accurately than is possible using average or median price measures. 

The overall MLS® HPI composite benchmark price was $642,800 in September 2024, an increase of 0.2% from September 2023.  

The benchmark price for single-family homes was $729,000, up 0.5% on a year-over-year basis in September.  

By comparison, the benchmark price for a townhouse/row unit was $500,000, down 1.7% compared to a year earlier.  

The benchmark apartment price was $414,200, down 1.3% from year-ago levels. 

The average price of homes sold in September 2024 was $685,551 increasing 1.4% from September 2023. The more comprehensive year-to-date average price was $679,082, increasing by 0.9% from September 2023.  

The dollar volume of all home sales in September 2024 was $717.7 million, up 12.9% from September 2023. 

OREB cautions that the average sale price can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The calculation of the average sale price is based on the total dollar volume of all properties sold. Prices will vary from neighbourhood to neighbourhood.  

The number of new listings saw an increase of 3.9% from September 2023. There were 2,343 new residential listings in September 2024. New listings were 4.7% above the five-year average and 11.6% above the 10-year average for the month of September. 

Active residential listings numbered 3,529 units on the market at the end of September 2024, a gain of 16.9% from September 2023. Active listings were 43.3% above the five-year average and 4.6% above the 10-year average for the month of September. 

Months of inventory numbered 3.4 at the end of September 2024, up from 3.2 in September 2023. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity. 

British Columbia - Buyers Remain Cautious to Begin the Fall Market

Metro Vancouver, 14 Oct 2024 -- Home sales registered on the MLS® in Metro Vancouver1 declined 3.8% year over year in September, suggesting recent reductions in borrowing costs are having a limited effect in spurring demand so far.

Greater Vancouver REALTORS® (GVR)2 reports that residential sales in the region totalled 1,852 in September 2024, a 3.8% decrease from the 1,926 sales recorded in September 2023. This was 26% below the 10-year seasonal average (2,502).

"Real estate watchers have been monitoring the data for signs of renewed strength in demand in response to recent mortgage rate reductions, but the September figures don’t offer the signal that many are watching for.

Sales continue trending roughly 25% below the ten-year seasonal average in the region, which, believe it or not, is a trend that has been in place for a few years now. With the September data, sales are now tracking slightly below our forecast however, but we remain optimistic sales will still end 2024 higher than 2023."

There were 6,144 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in September 2024. This represents a 12.8% increase compared to the 5,446 properties listed in September 2023. This was also 16.7% above the 10-year seasonal average (5,266).

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 14,932, a 31.2% increase compared to September 2023 (11,382). This is 24.2% above the 10-year seasonal average (12,027).

Across all detached, attached and apartment property types, the sales-to-active listings ratio for September 2024 is 12.8%. By property type, the ratio is 9.1% for detached homes, 16.9% for attached, and 14.6% for apartments.

Analysis of the historical data suggests downward pressure on home prices occurs when the ratio dips below 12% for a sustained period, while home prices often experience upward pressure when it surpasses 20% over several months.

“With some buyers choosing to stay on the sidelines, inventory levels have sustained the healthy gains achieved over the course of this year, providing much more selection to anyone searching for a home,” Lis said.

With all these choices available, prices have trended sideways for the past few months. The September figures, however, are now showing modest declines across all segments on a month-over-month basis. This downward pressure on prices is a result of sales not keeping pace with the number of newly listed properties coming to market, which has now put the overall market on the cusp of a buyers’ market. With two more policy rate decisions to go this year, and all signs pointing to further reductions, it’s not inconceivable that demand may still pick up later this fall should buyers step off the sidelines.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,179,700. This represents a 1.8% decrease over September 2023 and a 1.4% decrease compared to August 2024.

Sales of detached homes in September 2024 reached 516, a 9.8% decrease from the 572 detached sales recorded in September 2023. The benchmark price for a detached home is $2,022,200. This represents a 0.5% increase from September 2023 and a 1.3% decrease compared to August 2024.

Sales of apartment homes reached 940 in September 2024, a 4.9% decrease compared to the 988 sales in September 2023. The benchmark price of an apartment home is $762,000. This represents a 0.8% decrease from September 2023 and a 0.8% decrease compared to August 2024.

Attached home sales in September 2024 totalled 378, a 7.4% increase compared to the 352 sales in September 2023. The benchmark price of a townhouse is $1,099,200. This represents a 0.5% decrease from September 2023 and a 1.8% decrease compared to August 2024.

Alberta - New Listing Growth Driven by Higher-priced Homes

Calgary, October 1, 2024 – Rising sales in the upper price ranges were not enough to offset the pullback occurring in the lower price ranges, as sales in September were 2,003, 17% below last year's record high. Despite the decline, sales this month were still over 16% higher than levels traditionally achieved in September.

“We are starting to see a rise in new listings in our market. However, most of the listing growth is occurring in the higher price ranges,” said Ann-Marie Lurie, Chief Economist at CREB®. “While demand has stayed strong across all price ranges, the limited choice for lower-priced homes has likely prevented stronger sales in our market. While the challenges in the lower price ranges are not expected to change, improved supply combined with lower lending rates should keep demand strong throughout the fall, but without the extreme seller market conditions that contributed to the rapid price growth earlier this year.” 

New listings in September rose to 3,687 units, the highest September total since 2008. This rise in new listings compared to sales did support some inventory growth. September inventory levels pushed up to 5,064 units, nearly double the exceptionally low levels reported in the spring, but remain below the 6,000 units we typically see in September.

Improving inventory levels compared to sales is continuing to shift our market toward more balanced conditions. In September, the months of supply reached 2.5 months. While this is a gain over last year’s record low, conditions are still tilted in favour of the seller.

Additional supply in the market has taken some of the pressure off home prices over the past few months, following stronger-than-expected gains throughout the spring. In September, the unadjusted benchmark price was $596,900, slightly lower than last month but over five% higher than last year’s levels. Year-over-year gains ranged from nearly nine% growth for detached homes to nearly 14% gains in the apartment condominium market. The gains for each property type outpaced the growth in total residential prices, mostly due to the shifting composition of sales.

Detached - The nine% growth in sales over $700,000 was not enough to offset the steep pullbacks reported for homes priced below $600,000, causing September sales to total 942 units, a 17% decline over last year. Improved sales for higher-priced homes were possible thanks to rising new listings, as that segment of the market is starting to demonstrate more balanced conditions for homes priced above $700,000.

As of September, the unadjusted detached benchmark price was $757,100, a slight decline over last month, but nearly nine% higher than levels reported last year. It is not unusual to see some monthly adjustments in the fall, especially following stronger gains in the spring. With tighter conditions being experienced for lower-priced products, price growth has also ranged within the detached sector. The North East and East districts continue to report the largest year-over-year price gains.

Semi-Detached - September reported 299 new listings and 182 sales, causing the sales-to-new listings ratio to trend up over last month to nearly 61%. Despite the gain over the past several months, the improvements in new listings relative to sales have supported rising inventory levels. However, with less than 400 units available, inventory levels remain nearly 33% below long-term trends for September. 

Like the other property types, recent gains in new listings are causing the months of supply to improve over last year's levels. However, with just over two months of supply in September, conditions continue to favour the seller. Following strong gains in the spring, in September, the unadjusted benchmark price eased slightly over last month, but at a price of $678,400, levels are over 9% higher than last year at this time.

Row - Over 600 new listings came onto the market in September, where over 70% of the new listings were priced above $400,000. While new listings improved across most districts, 34% of the new listings were in the North and South district, likely a reflection of the new home activity occurring in those areas. Sales in September totalled 377 units, slightly lower than last year's levels.

Inventories in September rose to 747 units, a significant improvement over the previous two years, but still below long-term trends. Nonetheless, the rise in inventory relative to sales did cause the months of supply to increase to nearly two months. Conditions continue to favour the seller, but improved choice did slow the pace of price growth. The unadjusted benchmark price in September was $459,200, 10% higher than September 2023 levels.

Apartment Condominium - Strong gains in new listings continued into September, with 993 units entering the market. At the same time, sales dropped to 502 units, causing the sales-to-new listings ratio to drop to 50% and inventories to rise to 1,623 units. Of the inventory in the market, over 72% was priced above $300,000, a significant shift compared to last year, where less than 58% of the listings were above that range. 

Gain in supply compared to sales caused the months of supply to rise to 3.2 months, the highest level seen since the end of 2021. Improving supply in the new home market is likely contributing to the rise in supply and has taken some of the pressure off home prices. In September, the unadjusted benchmark price was $345,000, 14% higher than last year at this time. Year-to-date prices are still averaging a year-over-year gain of 17%.