Even bigger home price drops seen looming as interest rate forecasts rise
Canada's expected 20% price drop deepest among advanced economies except New Zealand
The higher expectations for interest rate hikes climb — and they are climbing — the bleaker the outlook for global housing markets gets.
Capital Economics has revised its forecast for the peak in interest rates for major developed markets upwards by 50 to 100 basis points, and now expects rates to peak at between 3 and 5 per cent.
Even higher rates will put more pressure on housing markets, and Capital now expects bigger price drops in some of the more vulnerable markets, including Canada.
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Canada's expected 20% price drop deepest among advanced economies except New Zealand
The higher expectations for interest rate hikes climb — and they are climbing — the bleaker the outlook for global housing markets gets.
Capital Economics has revised its forecast for the peak in interest rates for major developed markets upwards by 50 to 100 basis points, and now expects rates to peak at between 3 and 5 per cent.
Even higher rates will put more pressure on housing markets, and Capital now expects bigger price drops in some of the more vulnerable markets, including Canada.
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Here Capital predicts a peak to trough price drop of about 20 per cent, the deepest among advanced economies except for New Zealand.
Economists at TD are also raising their rate forecasts and downgrading their housing outlook.
They now see home sales bottoming out 20 per cent below pre-pandemic levels by early 2023 and staying subdued for the rest of the year.
They have also downgraded their housing price forecast and see prices falling by more than 11 per cent in 2023.
Evidence that the bottom for housing markets is still a ways away showed up in early reports from local real estate boards as sales and prices fell broadly across Canada in September.
Sales in Toronto fell 11 per cent from the month before to the lowest level since 2009, excluding the lockdown in the spring of 2020, said RBC assistant chief economist Robert Hogue in a report last week.
And in Montreal the market correction is gaining speed, he said. Sales were down 10 per cent in August from the month before and an estimated 6 per cent in September, compared with an average drop of 1.7 per cent per month between February and July. September’s sales were the lowest in seven years, excluding the spring 2020 lockdown.
Some areas of the country, however, are holding their own, Hogue said. Calgary stands out amid the weakness seen in other markets, with sales remaining above pre-pandemic levels and close to the previous all-time peak. RBC expects the province’s strong economy, a rebound in in-migration and the relative affordability of the market, to continue to fuel housing demand here for the time being.
While weakening housing markets are unlikely to bring an early halt to rate hikes, economists agree, they could be a reason for central banks to quickly pivot to rate cuts once inflation is under control, says Capital.
“In those countries where inflation falls back most rapidly, including for the U.S., Canada, Australia and New Zealand, we expect rates to be falling by end-2023,” wrote Vicky Redwood, Capital’s senior economic adviser.
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Economists at TD are also raising their rate forecasts and downgrading their housing outlook.
They now see home sales bottoming out 20 per cent below pre-pandemic levels by early 2023 and staying subdued for the rest of the year.
They have also downgraded their housing price forecast and see prices falling by more than 11 per cent in 2023.
Evidence that the bottom for housing markets is still a ways away showed up in early reports from local real estate boards as sales and prices fell broadly across Canada in September.
Sales in Toronto fell 11 per cent from the month before to the lowest level since 2009, excluding the lockdown in the spring of 2020, said RBC assistant chief economist Robert Hogue in a report last week.
And in Montreal the market correction is gaining speed, he said. Sales were down 10 per cent in August from the month before and an estimated 6 per cent in September, compared with an average drop of 1.7 per cent per month between February and July. September’s sales were the lowest in seven years, excluding the spring 2020 lockdown.
Some areas of the country, however, are holding their own, Hogue said. Calgary stands out amid the weakness seen in other markets, with sales remaining above pre-pandemic levels and close to the previous all-time peak. RBC expects the province’s strong economy, a rebound in in-migration and the relative affordability of the market, to continue to fuel housing demand here for the time being.
While weakening housing markets are unlikely to bring an early halt to rate hikes, economists agree, they could be a reason for central banks to quickly pivot to rate cuts once inflation is under control, says Capital.
“In those countries where inflation falls back most rapidly, including for the U.S., Canada, Australia and New Zealand, we expect rates to be falling by end-2023,” wrote Vicky Redwood, Capital’s senior economic adviser.
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Hoping for a crash or praying for a boom? The housing debate that’s dividing Toronto
The fight over the fate of the Toronto housing market is pitting stressed-out homeowners against fed-up renters
From her Parkdale apartment, 51-year-old Daphne Vasquez is watching Toronto’s housing situation closely.
She sees new condos being built around her and wonders who can possibly afford them — not to mention the multimillion-dollar homes in the neighbourhood. If her rent of just over $1,000 a month goes up, she worries about how she will afford it, or anything else in the city.
“I’m hoping that there will be a crash,” she said. “And landlords will have no choice but to lower the rent.”
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The fight over the fate of the Toronto housing market is pitting stressed-out homeowners against fed-up renters
From her Parkdale apartment, 51-year-old Daphne Vasquez is watching Toronto’s housing situation closely.
She sees new condos being built around her and wonders who can possibly afford them — not to mention the multimillion-dollar homes in the neighbourhood. If her rent of just over $1,000 a month goes up, she worries about how she will afford it, or anything else in the city.
“I’m hoping that there will be a crash,” she said. “And landlords will have no choice but to lower the rent.”
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On the other side of town. Rhonda Starkman is also on edge, but for a different reason. She’s worried about a downturn in the housing market, and interest rate hikes.
The 59-year-old teacher has owned her semi-detached home for 24 years. This month when her mortgage comes up for renewal, her payments will jump by about $1,000 a month. “And I can’t afford it.”
Welcome to Toronto in 2022: a city divided on the fate of housing, arguably more than ever before, with livelihoods and living standards on the line.
While homeowners are dreading rate hikes and imagining their retirement plans evaporating along with house values, many renters are cheering for a crash, waiting for a steep drop in prices so that they can get a foothold in the market, or at least some rent relief.
It’s a debate that nearly every Torontonian has a stake in or an opinion on — one that’s likely to play out at Thanksgiving dinner tables across the city — and it can pit friend against friend and neighbour against neighbour.
Tenants are a growing group in the city. The number of households who rent jumped by 25 per cent in the Toronto Census Metropolitan area, a large region that includes most of the GTA, over the last decade. Renters now make up about 35 per cent of total Toronto households, according to the 2021 census.
The home ownership rate was about 65 per cent, down 3.2 percentage points from its peak in 2011.
Both groups are feeling squeezed this fall. Rents are rising at the fastest pace in more than a decade, according to a recent report from Urbanation.
Meanwhile, the average detached home price in Toronto is down about 11 per cent from this time last year, to $1,585,589, according to the Toronto Regional Real Estate Board, after several recent interest rate hikes. Some forecasts predict more price declines this year.
Starkman is already renting out space to four international students (two of them share the basement) and can’t raise their rent because they’ve agreed on a set price through an agency. She doesn’t want to sell — she loves her Mount Pleasant East neighbourhood — but also feels she “can’t move out” when prices are dropping.
“The thought of losing my house, it’s just ridiculous,” she said. “Emotionally I’m a wreck. I can’t do anything. I don’t even know how to describe how emotionally devastating it is.”
She does sympathize with the plight of renters. Her student tenants have told her that when they try to get their own apartments, they get outbid by young professionals who can pay hundreds of dollars over the asking price. And she knows that if she did sell, she’d have a hard time finding an affordable rental anywhere in Toronto right now.
Fifty-two-year-old Phil Surette has been on both sides of the divide — as a homeowner in Ottawa and now as a renter in Toronto.
“The sticker shock on how much it costs to rent in Toronto is pretty surprising to me,” said Surette, who’s recently separated and lives in the city to be closer to his current partner.
He makes “good money” working remotely in the tech sector. But he’s “absolutely” looking for a drop before he could buy. He’s seen home prices go down a bit in Toronto, but “it would need to be more like a 40 per cent” drop.
“That could happen, I don’t know, but more likely I would move somewhere.
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The 59-year-old teacher has owned her semi-detached home for 24 years. This month when her mortgage comes up for renewal, her payments will jump by about $1,000 a month. “And I can’t afford it.”
Welcome to Toronto in 2022: a city divided on the fate of housing, arguably more than ever before, with livelihoods and living standards on the line.
While homeowners are dreading rate hikes and imagining their retirement plans evaporating along with house values, many renters are cheering for a crash, waiting for a steep drop in prices so that they can get a foothold in the market, or at least some rent relief.
It’s a debate that nearly every Torontonian has a stake in or an opinion on — one that’s likely to play out at Thanksgiving dinner tables across the city — and it can pit friend against friend and neighbour against neighbour.
Tenants are a growing group in the city. The number of households who rent jumped by 25 per cent in the Toronto Census Metropolitan area, a large region that includes most of the GTA, over the last decade. Renters now make up about 35 per cent of total Toronto households, according to the 2021 census.
The home ownership rate was about 65 per cent, down 3.2 percentage points from its peak in 2011.
Both groups are feeling squeezed this fall. Rents are rising at the fastest pace in more than a decade, according to a recent report from Urbanation.
Meanwhile, the average detached home price in Toronto is down about 11 per cent from this time last year, to $1,585,589, according to the Toronto Regional Real Estate Board, after several recent interest rate hikes. Some forecasts predict more price declines this year.
Starkman is already renting out space to four international students (two of them share the basement) and can’t raise their rent because they’ve agreed on a set price through an agency. She doesn’t want to sell — she loves her Mount Pleasant East neighbourhood — but also feels she “can’t move out” when prices are dropping.
“The thought of losing my house, it’s just ridiculous,” she said. “Emotionally I’m a wreck. I can’t do anything. I don’t even know how to describe how emotionally devastating it is.”
She does sympathize with the plight of renters. Her student tenants have told her that when they try to get their own apartments, they get outbid by young professionals who can pay hundreds of dollars over the asking price. And she knows that if she did sell, she’d have a hard time finding an affordable rental anywhere in Toronto right now.
Fifty-two-year-old Phil Surette has been on both sides of the divide — as a homeowner in Ottawa and now as a renter in Toronto.
“The sticker shock on how much it costs to rent in Toronto is pretty surprising to me,” said Surette, who’s recently separated and lives in the city to be closer to his current partner.
He makes “good money” working remotely in the tech sector. But he’s “absolutely” looking for a drop before he could buy. He’s seen home prices go down a bit in Toronto, but “it would need to be more like a 40 per cent” drop.
“That could happen, I don’t know, but more likely I would move somewhere.
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Eagles May Symbolize Freedom From Monthly Payments
There are many ways that homeowners used to celebrate the full payment of their mortgage, including the “house warming”. But one of the more popular (and deeply American) ways was to put a cast iron eagle on the outside of a home. This announced to the world that the house was owned free and clear and that the owner was free from mortgage payments!
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There are many ways that homeowners used to celebrate the full payment of their mortgage, including the “house warming”. But one of the more popular (and deeply American) ways was to put a cast iron eagle on the outside of a home. This announced to the world that the house was owned free and clear and that the owner was free from mortgage payments!
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Housewarmings Come From Burning Mortgage Paperwork
In the early days of the mortgage, interest rates were pretty high (sometimes up to 15% or 20%), and the loans would often culminate with a “balloon payment,” similar in size to today’s down payment. This made paying off a mortgage an even more momentous occasion, and homeowners would celebrate by throwing a big party and burning their mortgage documents.
Guests would bring gifts to help commemorate the home being owned free and clear, and this tradition has since evolved into what we now know as the housewarming party.
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In the early days of the mortgage, interest rates were pretty high (sometimes up to 15% or 20%), and the loans would often culminate with a “balloon payment,” similar in size to today’s down payment. This made paying off a mortgage an even more momentous occasion, and homeowners would celebrate by throwing a big party and burning their mortgage documents.
Guests would bring gifts to help commemorate the home being owned free and clear, and this tradition has since evolved into what we now know as the housewarming party.
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A Canadian Company Owns the Mall of America
The largest mall in the United States, the Mall of America, is not American-owned. It’s owned by the Triple Five Group - Ghermezian Family (Iranian Immigrants), a real estate conglomerate based in Edmonton, Alberta, Canada. It also has its own ZIP code (55425). As of right now, there are no plans to replace the mall cops with Mounties or Starbucks with Tim Hortons, but if that changes, we’ll (politely) let you know.
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The largest mall in the United States, the Mall of America, is not American-owned. It’s owned by the Triple Five Group - Ghermezian Family (Iranian Immigrants), a real estate conglomerate based in Edmonton, Alberta, Canada. It also has its own ZIP code (55425). As of right now, there are no plans to replace the mall cops with Mounties or Starbucks with Tim Hortons, but if that changes, we’ll (politely) let you know.
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بازار راکد املاک و قدرت چانهزنی خانه اولیها
بازار املاک و مستغلات کانادا در خدمت خریداران اولین خانه درآمده است
بازار راکد املاک در کانادا قدرت کم نظیری را برای چانه زنی به خریداران خانه و بخصوص خانه اولیها داده است. در این گزارش آمده فروش مسکن در سراسر کانادا به طور میانگین نسبت به آگوست سال پیش در حدود ۲۵ درصد کاهش داشته است.
دوری از شرایط استرس زا موقع آفر دادن، از میان رفتن جنگ قیمت پیشنهادی، و نیز بهره بردن از زمان آزاد مشاوران املاک برای بهترین انتخاب از جمله مزایایی است که خریداران اولین خانه این روزها از آن بهرهمند میشوند. همچنین امکان بازدید از صدها ملک و لیستینگ موجود در بازار فرصت خوبی را در اختیار خانهاولی ها قرار داده است.
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بازار املاک و مستغلات کانادا در خدمت خریداران اولین خانه درآمده است
بازار راکد املاک در کانادا قدرت کم نظیری را برای چانه زنی به خریداران خانه و بخصوص خانه اولیها داده است. در این گزارش آمده فروش مسکن در سراسر کانادا به طور میانگین نسبت به آگوست سال پیش در حدود ۲۵ درصد کاهش داشته است.
دوری از شرایط استرس زا موقع آفر دادن، از میان رفتن جنگ قیمت پیشنهادی، و نیز بهره بردن از زمان آزاد مشاوران املاک برای بهترین انتخاب از جمله مزایایی است که خریداران اولین خانه این روزها از آن بهرهمند میشوند. همچنین امکان بازدید از صدها ملک و لیستینگ موجود در بازار فرصت خوبی را در اختیار خانهاولی ها قرار داده است.
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