Capreit CEO on Canadian housing supply: The worst crisis "in a generation"
With two kids under the age of six living in a two-bedroom, one-bathroom household, Jacquelin Forsey and her husband have long known it would only be a matter of time before their family outgrew their beloved home.
Long hours in the small space while Forsey was pregnant and toiling away from home during the COVID-19 pandemic, along with a visit to a neighbour who was selling their "beautiful" place that was "the perfect size," convinced the couple to start their new home hunt recently.
"If there was any way to make this place bigger, we would never leave," said Forsey, a PhD student, of the home her family owns in the Leslieville area of Toronto.
"We love it. We love the neighbourhood, we love our house, but we just can't all be in this tiny house forever."
The couple has spent recent months scouring listings and put in at least one failed bid, but Forsey has her fingers crossed that their fortunes will change this spring as economists and brokers predict activity to return to Canada's housing market.
The market has been sluggish since last year, when prospective buyers started putting off plans to purchase homes as the Bank of Canada aggressively hiked interest rates eight consecutive times.
The quick succession of increases eroded buying power as borrowing costs rose and sent prices falling, discouraging sellers from listing their homes.
With Canadian Real Estate Association data showing average prices have dropped 19 per cent from their February 2022 peak of $816,578 to $662,437 last month and BMO Capital Markets' chief economist predicting they will bottom out after falling 20 to 25 per cent, realtors see many edging toward a purchase once more.
"We got a flood of buyers in January, in February and we still are getting more and more and we started seeing multiple offers return and bully offers return," said Michelle Gilbert, a Toronto broker with Sage Real Estate Ltd.
"We've started getting calls where buyers are just like 'I think I'll just adjust what I want, but I don't want to miss my opportunity."
These clients are a mix of people who have to move because they are relocating for work or growing their families and also first-time homebuyers keen to not let lower prices pass them by.
Many first-time buyers are finding it harder to qualify for mortgages, but still want to make a purchase, so they are compensating by adjusting their expectations, said Gilbert.
"Maybe they can't get the square footage they thought they could get because they can't qualify for as much but they still really want to get a good deal," she said.
Over in Vancouver, Coldwell Banker Prestige Realty agent Tirajeh Mazaheri has also seen a resurgence in buyers.
Weeks after the Bank of Canada signalled further interest rate hikes were unlikely, she said properties started selling quickly and with multiple offers.
She spotted a condo listed for $699,000 garner 11 offers and a house listed for $2.8 million snag five bids last month.
Others aren’t wading into the market just yet but are preparing to do so soon.
“Everyone who wasn't pre-approved is getting themselves pre-approved because people want to jump on buying something because they're worried that prices are going to start going way too high again,” said Mazaheri.
Despite such sentiment, she doesn’t see the market returning to the frenzied pace of 2021, largely because of the lack of properties available.
February’s new listings totalled 51,366, down 26 per cent from a year ago, the Canadian Real Estate Association recently revealed. On a seasonally-adjusted basis, they hit 57,535, down nearly eight per cent from January.
If a sharp drop in new listings continues along with tightening demand-supply conditions, a moderation in prices will materialize over the coming months, RBC Economics' assistant chief economist Robert Hogue said in a recent report.
If those conditions are sustained, he forecasts prices will bottom sometime in the summer or shortly thereafter.
Sellers will be watching what direction prices move in closely.
“A lot of sellers are beginning to want to list, but most of them, I am noticing, are a little bit cautious,” Mazaheri said.
“They're noticing the shift in the market as well and they want to get top dollar for their property, so they're thinking maybe let's wait until the spring or the summer.”
For Forsey, there is no rush to buy a home, but she admits the pause on interest rates is giving her family some confidence in its decision to look for a new place.
While her engineer husband has been crafting spreadsheets calculating what they can afford, their amortization and the effects of potential interest rates, she said they've accepted "that we can't time the market and we just have to do the best we can do and what we're comfortable with and then hope it works out."
"We can stay here until the right opportunity comes and we don't have to rush out and we don't have to make a rash decision," she said.
"And if it doesn't work out for a long time for us, that's OK because what we've got is pretty great."
This report by The Canadian Press was first published March 22, 2023.