{"id":4539,"date":"2018-01-05T05:04:48","date_gmt":"2018-01-05T10:04:48","guid":{"rendered":"https:\/\/www.zolo.ca\/news\/?p=4539"},"modified":"2022-06-07T19:13:13","modified_gmt":"2022-06-07T23:13:13","slug":"2018-better-opportunities-for-canadian-home-buyers","status":"publish","type":"post","link":"https:\/\/www.zolo.ca\/blog\/2018-better-opportunities-for-canadian-home-buyers","title":{"rendered":"2018 Offers Better, More Saner Opportunities: Realtors"},"content":{"rendered":"\n

Even before the latest mortgage rule change was announced\u2014in late October 2017\u2014the Canadian Real Estate Association made some bold predictions on where the nation’s real estate markets were heading in 2018.<\/p>\n\n\n\n

As the national trade association that represents real estate brokers, agents and salespeople, CREA announced last September that home sales would drop in 2018. The dip would be the lowest in three years\u2014the primary reason was a lack of affordability, particularly in the hottest market. As a result, CREA predicted an average 5.3% drop in transactions across Canada, while Ontario and B.C. could expect a bigger hit with an anticipated 10% decline in homes sales in 2018.<\/p>\n\n\n\n

Despite talk of price drops and a decline in home sales, most real estate agents across Canada feel quite optimistic about the 2018 market and the opportunities for Canadian home buyers this year. It’s the silver-lining approach to a national housing market that, at times, has felt like a runaway train. “It’s been crazy hard for buyers, particularly in the last few years,” explains Dylan Nihte<\/a>, a growth manager at Zolo. Now, however, with more than half of Canada’s housing markets either in balanced territory or heading that way, it could mean better, saner opportunities for buyers.<\/p>\n\n\n\n

What to Expect for 2018:
More Home Buying Opportunities<\/h2>\n\n\n\n

Agents across Canada seemed to say that although they expect some busier months than others \u2014 the market should be balanced compared to the rocky adventure that was 2017. As CREA predicted with price decline, they agree \u2014 although the demand from home buyers will stay strong.<\/p>\n\n\n\n

\u201cI\u2019m constantly optimistic, but I\u2019m not an economist and I don\u2019t have a crystal ball,\u201d says Mike Stewart<\/a>, an award-winning Vancouver, B.C., real estate agent. Based on his experience, Stewart finds that even when prices soften “it just creates more buying opportunities and more people getting involved.\u201d Add in employment growth and the desire of first-time and move-up buyers and there’s always going to be a busy real estate market somewhere in Canada.<\/p>\n\n\n\n

Real Estate Outlook 2018:
Ontario’s Housing Market Will Get Busy in the Spring<\/h2>\n\n\n\n
\"Brian
Brian Persaud, Toronto Realtor<\/figcaption><\/figure><\/div>\n\n\n\n

In the Greater Toronto Area and, in particular, in metro Toronto condo prices are going up “like crazy,” explains Brian Persaud<\/a>, a Toronto-based real estate agent. \u201cIn a lot of buildings, we have passed the $1,000 per square foot benchmark.\u201d<\/p>\n\n\n\n

On the whole, condo prices have increased by 16%, year-over-year, says Persaud. The general lack of affordability in major urban centres, like Toronto, combined with the convenience condo-life offers, prompts agents, like Persaud, to think that 2018 will offer more of the same.  “It will be another steady year for the Toronto condo market in 2018,” says Persaud.<\/p>\n\n\n\n

Ontario’s detached home segment, however, is another beast. David Fleming, a licensed Realtor who writes the popular Toronto Realty<\/a> Blog, isn’t optimistic about the future of detached homes in markets, like Toronto. “Everyone in the perfect world would own a home with a driveway and a backyard,\u201d says Fleming. “But I think 25 years from now, only the city’s elite will actually own freehold, single-family detached homes.\u201d<\/p>\n\n\n\n

He’s also cautiously optimistic about what to expect in 2018. He points out that at some points during the 2017 selling year, the Toronto market was up 25%, yet at other times during that same year it was down 25%. In an odd way, it creates a zero-sum game overall, says Fleming. As a result, and based on recent regulatory changes, Fleming expects the GTA housing market to be more balanced in 2018 market. But balance doesn’t mean flatline, as Fleming points out with the crazy 2017 activity. As a result, he actually anticipates a very busy spring season\u2014or Q2, in financial speak\u2014for the Ontario housing market.<\/p>\n\n\n\n

Real Estate Outlook 2018:
B.C.’s Housing Market is Ready to Find Balance<\/h2>\n\n\n\n
\"Mike
Mike Stewart, Vancouver Realtor<\/figcaption><\/figure><\/div>\n\n\n\n

Coming out of 2017, the Greater Vancouver Area<\/a> had a “nuclear hot condo market,” says Nihte, a Realtor at Zolo’s Vancouver office. However, because of regulatory changes introduced in 2016 and 2017, the Lower Mainland had a more balanced market when it came to townhouses and detached homes.<\/p>\n\n\n\n

Going into 2018, Nihte believes the projected population growth for the Greater Vancouver Area will have a strong impact. “More people looking for homes will put more strain on supply,” says Nihte, “and this could lead to another strong seller’s market in the Spring of 2018.”<\/p>\n\n\n\n

There are always some concerns and wariness when predicting real estate trends in a housing market. But given recent developments, most agents in the B.C. market concede that the barring any major economic shock, the hottest topics in 2018 will be the impact of the newly implemented regulations, the balance between supply and demand and whether or not fluctuating prices will finally stabilize.<\/p>\n\n\n\n

Both Nihte and Stewart agree that in order for prices to stabilize in the GVA, the supply of homes needs to increase.<\/p>\n\n\n\n

\u201cVancouver is a place where people want to live and they\u2019re going to continue to do so,\u201d says Stewart.\u201cThat makes a market that is characterized by very high demand, both locally and from people outside of Vancouver,\u201d said Stewart. \u201cThese are the type of market conditions that put a strain on supply.\u201d<\/p>\n\n\n\n

Add in employment growth and move-up buyers, and GVA agents will always be busy. “We\u2019re cautiously optimistic going into 2018,\u201d says Stewart.<\/p>\n\n\n\n

Agents from smaller B.C. cities are predicting that 2018 will offer a more balanced market with smaller and more gradual price increases.<\/p>\n\n\n\n

Real Estate Outlook 2018:
The Prairies’ Housing Market Will Find Equilibrium<\/h2>\n\n\n\n
\"opportunities
Micheal Smith, Calgary Realtor<\/figcaption><\/figure><\/div>\n\n\n\n

In both Calgary and Winnipeg, agents are expecting only a slight increase in both activity and pricing, when compared to 2017 numbers. That said, when the numbers are finalized for 2017, agents fully expect the final tally to be lower than expected.<\/p>\n\n\n\n

Part of the problem is an oversaturated condo market\u2014a situation that’s not expected to change until the end of 2018 unless the economy picks up and vacancies are decreased.<\/p>\n\n\n\n

What’s helping the markets to remain close to balanced territory is the activity around detached homes and townhomes. Historically speaking, these units appear to be selling at a steady pace, says Calgary-based realtor, Michael Smith<\/a>.<\/p>\n\n\n\n

As a result, Smith predicts that in 2018, “sales of detached homes will increase, followed by a 2% to 3% increase in prices.” This moderate growth, particularly in cities like Calgary<\/a> that saw the bottom of the oil barrel just a few years ago, is great news.<\/p>\n\n\n\n

Winnipeg-based Realtor, Mark Chubey, is looking forward to 2018. \u201cWe\u2019re definitely expecting sales to be better than 2017.\u201d<\/p>\n\n\n\n

Both Chubey and Smith are pensive but positive at what 2018 brings to the real estate markets in Alberta, Saskatchewan and Manitoba. “Overall it should be a little bit more balanced compared to last year,\u201d says Smith.<\/p>\n\n\n\n

New Regulations Will Impact Only a Small Number<\/h2>\n\n\n\n
\"opportunities
David Fleming, Toronto Realtor<\/figcaption><\/figure><\/div>\n\n\n\n

Despite the new mortgage qualifying rules taking effect January 1, 2018\u2014and potentially knocking prospective buyers out of the market\u2014and even with the threat of further interest rate hikes, many real estate agents are not concerned about a dramatic reduction in the number of buyers going into 2018.<\/p>\n\n\n\n

\u201cIf you were to take a random sample of 100 people right now and ask them about the mortgage stress test, I think more than half would believe that this affects everybody,\u201d explains Fleming. \u201cWhen in fact, this only affects the buyers purchasing a home for over $1 million.\u201d Fleming points out that mortgage lenders were already forced to stress-test all mortgages under the $1 million mark starting back in August 2016, when the federal government closed loopholes that allowed some uninsured mortgages borrowers to circumvent mortgage stress-testing.<\/p>\n\n\n\n

The idea behind the mortgage stress-test<\/a> is to prequalify the Canadian home buyer at a higher interest rate, thereby ensuring that the buyer can afford rate increases, which are anticipated to occur in future years. Potentially over-stretched buyers are knocked out of the market based on the more stringent mortgage qualification rules. Prior to January 2018, a buyer could qualify for a mortgage based on the discounted rate (which currently hovers near 2.85%), as long as they had more than 20% saved up for a down payment. Now, going forward, these same buyers will no qualify for the same mortgage amount as they will now have to use the posted rate, which currently hovers around 4.85%. That 2% increase in the qualifying rate can shave as much as 25% off the maximum mortgage a borrower can qualify for, based on the same income and equity.<\/p>\n\n\n\n

That doesn’t mean Fleming doesn’t anticipate some impact of latest mortgage stress-test, he just believes that these new regulations won’t stop people from buying. Instead, he believes people will proceed to get into the housing market but with more control over their maximum housing-purchase spend. <\/span><\/strong><\/p>\n\n\n\n

In Winnipeg, where there is a more affordable housing market, Realtor Mark Chubey says it\u2019s hard to predict whether past buyers have over-stretched in order to get into the market. He expects the new mortgage stress test will have some impact, but he doesn’t anticipate a noticeable impact for most Manitoba buyers.<\/p>\n\n\n\n

\"opportunities
Dylan Nihte, Vancouver Zolo Realtor<\/figcaption><\/figure><\/div>\n\n\n\n

Over in B.C., Nihte is confident the new regulations will affect the Vancouver market, but he says predictions are virtually impossible to make.  \u201cWe\u2019ve never had a market where they introduced all of these regulations concurrently, one right after another,\u201d says Nihte.<\/p>\n\n\n\n

Take, for instance, the crazy disparity between homes priced between $1 million and $2.5 million and homes priced over $2.5 million. Both segments will end up at the sharp end of the new mortgage stress test stick, but in the $1 million snack bracket homes are sitting on the market for fewer days in November 2017 (24 days) than in November 2016 (36 days). On the flip side, homes listed at over $2.5 million sat for 42 days in November 2017, compared to 32 days in November 2016.<\/p>\n\n\n\n

\u201cIt\u2019s hard to predict precisely how the mortgage stress what will impact the 2018 real estate market,\u201d says Nihte, “as we are still adjusting to other regulations and market movements.”<\/p>\n\n\n\n

The 2018 Buzz Word is…<\/h2>\n\n\n\n
\"opportunities
Mark Chubey, Winnipeg Realtor<\/figcaption><\/figure><\/div>\n\n\n\n

But the real question on everyone’s mind is where are the buyers heading in 2018?<\/p>\n\n\n\n

In major cities, such as Vancouver and Toronto, the desire for condos is still extremely high. The still-present and, at times, heated conversations about how these metropolis\u2019 will keep up with demand, shows that 2018 will probably show no signs of a condo slowdown in the nation’s two hottest markets. In fact, the buzz word of for most real estate agents is \u201csupply.\u201d The consensus among agents in Toronto and Vancouver is that there is not enough supply to cover demand.<\/p>\n\n\n\n

\u201cMy heart goes out to first-time homebuyers that were pre-approved for $300,000 in the summer of 2017,” says Nihte. “Not only will they qualify for less in 2018, but they may find there is a tremendous amount of competition in their price category.”<\/p>\n\n\n\n

Fleming firmly believes there is never enough supply in Toronto. \u201cIt\u2019s easy for a cynic or a real estate bear to point to the sky and say ‘Look at all these cranes, they\u2019re building so many’\u2014but, truth be told, there is demand for it.\u201d And more.<\/p>\n\n\n\n

As a result, virtually every Toronto and Vancouver agent expects condo and multifamily units to continue to sell well in 2018\u2014sell well, and sell fast.<\/p>\n\n\n\n

The Prairie market is a bit different with most buyers heading right towards detached homes in the $350,000 to $400,000 range, while condos sit vacant in what has been described as an oversaturated market.<\/p>\n\n\n\n

\u201cThere has been an increase in new listings,\u201d said Chubey of homes. \u201cWhich will moderately affect pricing.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The nation’s real estate roller-coaster ride is about to pull into the station, with a soft landing for most markets in 2018<\/p>\n","protected":false},"author":22,"featured_media":4571,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[110],"guide":[],"class_list":["post-4539","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-trends","tag-outlook-2018"],"acf":[],"zolo_excerpt":"","_links":{"self":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/posts\/4539","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/comments?post=4539"}],"version-history":[{"count":21,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/posts\/4539\/revisions"}],"predecessor-version":[{"id":21252,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/posts\/4539\/revisions\/21252"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/media\/4571"}],"wp:attachment":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/media?parent=4539"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/categories?post=4539"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/tags?post=4539"},{"taxonomy":"guide","embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/guide?post=4539"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}