The ranking of Canada's best and worst cities for homebuyers has changed radically
Money August 22, 2018 1:28 pm The ranking of Canadaâs best and worst cities for homebuyers has changed radically
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After a rough start to 2018 amid rising interest rates and new federal and provincial housing rules, Canadaâs real estate market is bouncing back.
Home sales have been inching back up in May, June and July after falling off a cliff at the end of 2017. And prices are edging higher as well. The average price of a home in Canada was $481,500 last month, up 1 per cent from June.
But at a local level, the housing market looks very different than it did just a year ago, according to a new report by real estate website Zoocasa.
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Zoocasa took at look at the sales-to-new-listings ratio, a measure of whether a certain market favours home buyers or sellers. This metric is the ratio between the number of homes sold and the number of homes newly put up for sale over a specific time period.Story continues below
A ratio between 40 and 60 is usually seen as a balanced market, a tug of war where buyers and sellers have roughly equal power. Anything above that threshold is considered a sellersâ market, with homes moving quickly off the market and tight demand from buyers giving sellersâ the upper hand. Conversely, a ratio below 40 represents a buyersâ market, where for-sale signs tend to linger on lawns and hou se hunters have more bargaining power.
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Youâd think Vancouver and Toronto would top the chart as the worst place to be a homebuyer. But the latest data from July shows a different story, as the Zoocasa report highlights.
The Greater Vancouver and Greater Toronto area now in balanced territory, with the sales-to-listings ratio at 43 and 50, respectively. This isnât to say that housing there has suddenly become affordable. Prices havenât budged much despite significant swings in home sales volumes and remain firmly out of the reach of many. Still, the data does suggest that buyers may have a bit more leeway to negotiate, at least in the market for detached homes, which, unlike the condos segment, has seen a sizable slowdown in both cities.
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The opposite is true in London, Ont., Montreal and Ottawa, which rank as the top sellersâ markets right now. Prices here are still far from the heights touched in Vancouver and Toronto, but homes are selling fast and buyers donât have much sway.
âTepid growth in new listings has left Londonâs market drum-tight, resulting in robust price growth,â write TD economists Derek Burleton and Rishi Sondhi in a paper released Wednesday that notes many of the same trends that emerge from Zoocasaâs numbers.
Montreal and Ottawa have been on real estate watchersâ radar for a while now, as higher borrowing costs and tougher mortgage and housing regulations divert buyersâ interest from Vancouver and Toronto to these two relatively affordable markets.
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âWith the sales-to-listing ratio currently entrenched in sellerâs territory, prices likely have further room to run,â Burleton and Sondhi write of Montreal. While in Ottawa, benchmark prices are averaging âa robust 8% year-over-year gain so far in 2018.â
Still, perhaps the most surprising thing about the recent sales-to-listing numbers is whatâs happening in Atlantic Canada. Halifax and Saint John, N.B., are now firmly lodged in sellersâ territory, with a ratio of 66 and 64, respectively.
âIn a change from years past, markets in the Atlantic Provinces have outperformed Canada overall,â write Burleton and Sondhi, although Newfoundland and Labrador remains an exception.
Population growth and dwindling new listings make for a ârelatively tightâ market in Halifax. And sales in Saint John have increased âsolidly,â since May, although that may not last amid rising interest rates and lacklustre job creation and demograp hic trends, the two economists note.
As for what lies ahead, Burleton and Sondhi see a sustained but slow recovery.
Unlike previous instances when the market bounced back sharply after a new round of housing-rules tightening, âpent-up demand from some buyers and healthy income gains will face a stronger headwind this time around, particularly in the face of further gradual interest rate increases by the Bank of Canada.â
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