Prices down but activity on the rise in Toronto, Vancouver housing markets: RE/MAX

Aug 18 2022, 9:26 pm

Detached home values grew substantially year-over-year at the start of 2022, but rising interest rates kept prices at bay in Q2 in Greater Vancouver and the Greater Toronto Area.

These findings are courtesy of RE/MAX Canada’s recently released 2022 Hot Pocket Communities Report.

The report compared unit sales and prices in 60 districts within the Toronto Regional Real Estate Board (TRREB), 16 in the Real Estate Board of Greater Vancouver (REBGV), and six in the Fraser Valley Real Estate Board (FVREB).

In the GTA, prices held up “relatively well” in central Toronto and the West End, but Durham, Peel, York, Halton, and Dufferin lost some of the gains enjoyed in recent years.

West Vancouver and Howe Sound reported moderate price increases, while Q2 median prices in Squamish and the Sunshine Coast were “comparable” to those seen in Q1.

“Buyer sentiment changed virtually overnight as growing geopolitical concerns and spiralling inflation destabilized global markets, leaving the Bank of Canada little option but to raise interest rates,” said Christopher Alexander, president of RE/MAX Canada.

“Those fast and furious incremental increases placed downward pressure on housing sales and prices, improving affordability on one hand, but eroding it on the other.”

Between Q1 and Q2, home values fell by 10% to 15% in parts of the GTA, including Durham, which experienced a 14.6% decline, and York, which saw prices drop by 12.9%. Halton (-12.7%), Dufferin (-12%), and Peel (-11.2%) experienced sizable declines as well.

Just 15% of GTA markets saw home prices increase in the second quarter compared to the first, RE/MAX said.

“Given that the core has traditionally been more resilient, bolstered by strong demand, a finite supply of homes available for sale, higher household incomes, and greater equity at the top end of the market, the results are not unexpected,” Alexander said.

“The price softening was clearly more evident in suburban areas and the outer perimeters of the 416, most of which experienced strong upward momentum during the height of the pandemic as buyers sought to leave the city.”

RE/MAX Canada

Following the price peak of Q1, 75% of markets in Greater Vancouver saw median prices fall in the second quarter. Contrary to the downward trend, though, Vancouver West and Howe Sound both saw median home values rise in Q2, by 2.4% and 8.2%, respectively.

The majority of declines in the region were below 10%, RE/MAX said, with the exception of Whistler/Pemberton, where prices fell by just over 16% quarter-over-quarter.

In the Fraser Valley, quarterly price declines ranged from just over 3% in Langley to nearly 13% in Delta-North.

“While we have seen some easing in prices, the sky is nowhere near falling,” said Elton Ash, executive vice president of RE/MAX Canada.

“In fact, there is relative stability in terms of market conditions, so buyers shouldn’t expect big bargains. Sales-to-active listings remain squarely in balanced territory overall and even tight in some areas. This trend will likely keep prices fairly stable moving forward.”

RE/MAX Canada

Despite falling prices, housing market activity remained strong in the second quarter.

Year-over-year, detached home sales were up in 40% of GTA markets and in 31% of Greater Vancouver markets, RE/MAX Canada said.

Toronto’s West End saw a flurry of sales in the second quarter, while Vancouver’s most resilient markets include Burnaby, Coquitlam, and Port Coquitlam.

Alexander noted that easing prices and the threat of further interest rate rises spurred many would-be homeowners to act in the second quarter.

“Buying intentions overall are expected to remain healthy, even if some buyers pause temporarily,” Ash said.

“While interest-rate hikes have edged up carrying costs, we can’t discount the effect of the tight rental market, which has seen average rents increase by double-digits year-over-year in the GVA and GTA. As potential buyers face those realities, many will still conclude that the benefits of ownership make better financial sense.”

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