Speed read – TL;DR:
⚡Multiple Offers are Back! Buyer’s Confidence has Returned!
⚡Low-Rise Homes are Competitive, Especially Those in the $800k-1M Price Range.
⚡BoC Expected to Hold Interest Rates on Wednesday, April 12.
⚡ Competition and Prices Will Continue to Climb.
⚡ Why Can’t We Just Build More Homes?
Buyer’s confidence has returned while sellers are holding strong.
The first quarter of has been quite the change of pace from the second half of 2022. Despite the 7% stress test, buyers and bidding wars are back! With 44% fewer listings in March compared to March 2022, the increase in demand has sparked fierce competition out there for low-rise housing. Many buyers that took a wait-and-see approach in the second half of last year are now back in the market.
TRREB found March’s composite benchmark price was $1,118,500, a 16.2% drop on a year-over-year basis, but up month-over-month on both an actual and seasonally adjusted basis.
Buyers don’t want to be in a situation where they have waited for too long and the prices get out of reach again.
On the other hand, sellers aren’t returning as quickly. They are not content with that 15% year-over-year price decline. Many are holding off and waiting for the market to return to its peak.
The number of active listings in March was only 10,120. And the average number of active listings in March from 2000 to 2019 was 17,155, that’s 70% higher than this year.
6,896 homes sold in the GTA in March, that’s just below the volume we saw in 2018/19
New listings last month came in at 11,183
The last time we saw anything close to that LOW number of new listings was in March was in 2002
— John Pasalis (@JohnPasalis) April 10, 2023
TD Economics economist Rishi Sondhi now forecasting quarterly sales gains with stronger growth headed into the year’s second half.
Low-Rise Homes are Hot!
Inventory levels have been plummeting since the start of the year. The GTA market had 3 MOI in Jan and by the end of March there was just 1.47 MOI. This level of inventory puts us well into a seller’s market.
The demand for low-rise housing has been leading the way, with less than 1.3 Month-of-Inventory. Condo apartments have been the only segment with over 1.5 MOI (1.85 to be exact). 
Lower the MOI, higher the competition.
Low-rise home prices are trending up. Avg prices bounced around $1.08M since July but hit $1.11M in March. Both avg and median prices in March hit their highest level since July 2022.
On the ground, most of the action is happening in the $800k-1M price range, many of these low-rise homes are receiving 10-25 offers. What’s important to note is that even with the amount of offers each home is receiving, the sold prices aren’t jaw dropping like they were last year during the peak. Buyers are still limited by the higher interest rates as to how much they can stretch to buy these homes.
While the condo market is also seeing inventory levels fall dramatically compared to last year, prices have not seen any material increase since the July of last year. The condo market is busy but far less competitive than the low-rise market.
This might be a good time to downsize if you want to move from any low-rise housing into a condo apartment or any first-time buyers looking to get into the condo market.
BoC will Hold Interest Rates on April 12.
It is expected that the BoC will hold interest rates where they are at their next announcement on April 12.
The increase in oil prices may lead to a resurgence of inflation. Following a one-year low, oil prices surged by approximately 10% after OPEC’s unexpected decision to reduce daily output by 1.15 million barrels, with further reductions possible if prices do not rise significantly. This development is bad news for us all (unless you work in the oil industry…), as it leads to a surge in pump prices, and potentially worsens inflation.
When Will Homes Become Affordable Again?
With the lack of new home starts and new listings, paired with the consistent influx of immigrants, prices are on the way up.
Canada’s population grew by over a million people last year alone 🤯! Over the past 5 years, Canada has welcomed 2.8 million new residents but built only 881,000 new housing units.
Why doesn’t Canada just build more houses you may ask… Well, here are three major reasons:
1. Lack of Skilled Labour
Our tradespeople are getting old. Over 700,000 skilled tradespeople are expected to retire by 2028. And Canada will need an estimated 256,000 new apprentices to meet construction demands, to say nothing of electrical, plumbing, etc. Moreover, the labour shortage could get worse, since young folks aren’t as interested in these jobs as they used to be. The pandemic didn’t help: Statistics Canada indicate that overall apprenticeship registrations across Canada dropped 43% in 2020 and certifications declined by nearly 49%.
2. High Materials and Fees
Construction expenses have increased due to the persistence of high material costs. Additionally, government permit fees have skyrocketed by up to 878% in certain areas of GTA since 2004.
3. Zoning Law in the City
Most Canadians desire to reside in major cities which are often subject to zoning regulations that prohibit constructing anything other than single-family houses. Consequently, high-density housing doesn’t get approved and built. (Sidenote, BC provincial government made the announcement on Monday that up to four homes to be allowed on single-family lots across British Columbia. Will Ontario follow its footstep? We shall see.)
At this moment, we have no true solution in sight as there is no way to build enough homes to keep up with immigration growth. (Ontario passed Bill 23, “More Homes, Built Faster” Act, last year aiming to fight this issue, but can it actually solve Ontario’s housing Crisis? Read my thoughts here.) As a result, competition and prices will only climb.
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📱Phone: 647-504-0690
📧Email: steven@mistersauga.ca
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