A what’s what of Canada’s fast-moving real estate sector from real estate expert and founder of Crescendo Equity, Mathew Moxness. For more news and insights on Canadian real estate and the factors that shape the sector, explore the Crescendo Equity blog.
Following peak activity in March, Canada’s housing market is cooling down rapidly. According to a report by TD economist Rishi Sondhi, this decline owes to tighter stress test rules, sinking bond yields, and eroding affordability. That said, home sales are still remarkably strong and are on track to surpass 2020’s numbers.
Buying and Selling
In spite of the fact that conditions are cooling in Canada’s overall housing market, real estate is booming in small cities and towns throughout the country. Big-city-dwellers migrating to smaller cities and towns is a trend that was spurred by the pandemic, but experts expect that the trend will persist as people continue to seek better affordability and value when it comes to real estate.
According to a survey by Royal LePage, 13 percent of homeowners in the Greater Toronto Area, 14 percent in Greater Vancouver, and 12 percent in the Greater Montreal Area own more than one property. And 64 percent of those secondary property owners in the GTA, 65 percent in GV, and 35 percent in the GMA are collecting rental income. Royal LePage’s findings also revealed that young buyers are more inclined than ever to capitalize on the real estate market by investing in property.
In Canada, the annualized inflation rate was 3.1 percent in June, down from 3.6 percent in May. Despite the slight decrease, a 3.1 percent rate is still above the Bank of Canada’s target. Moreover, analysts say that abnormally high inflation rates could be here to stay given Canada’s slower rate of economic recovery following the COVID-19 pandemic.
Toronto-based startup, Promise Robotics, is bringing emerging technologies to the home building industry. The company is tapping into the modular construction method, using automation, advanced manufacturing, cloud computing, and artificial intelligence (AI) to speed up the home building process and add affordable housing to the market faster.
Though the word unprecedented has been thrown around an awful lot lately, real estate conditions during the pandemic were, in fact, unprecedented. But what goes up must come down. We are now in the midst of a steep decline, but this is not necessarily cause for concern if you have a vested interest in Canada’s housing sector. For some context, let’s refer back to Rishi Sondhi’s housing update. He writes that: (a) less demand in the interim will give the supply side a chance to catch up, (b) population growth (fuelled by immigration) will pick up very shortly, which will play a part in driving demand back up, and (c) it’s estimated that Canadian households have over $240 billion in excess savings and the latest Bank of Canada Survey of Consumer Expectations suggests roughly ten percent of these excess funds will be used towards down payments. In the meantime, Canada’s real estate market is in a good place to weather the descent.