Immigration will play huge role in housing recovery Bow Valley Crag & Canyon - July 22, 2020·06:20am
New listings increase, based on recent activity, Royal LePage says inventory will rise, relieving upward pressure on home prices that characterized the second quarter of 2020 in some Canadian markets."Uncertainty clouds Canada's real estate outlook as a lengthy recovery. The negative impact on home prices should be muted by the balanced nature of Canadian housing, as housing supply shortages offset dampened medium-term demand," says a Royal LePage report.
Royal LePage forecasts national aggregate prices to end 2020 up 2.3 percent in the fourth quarter compared to the same period in 2019.
In Calgary, the company sees a 1.5 percent decline by year's end, from $470,066 to $463,000.
A factor that will weigh heavily on recovery is immigration levels.
"Immigration has been disrupted by pandemic travel restrictions, with the impact to real estate markets varying across regions and housing segments. Royal LePage's 2019 Newcomer study showed that upon arriving in Canada, only 15 percent of newcomers purchase their first home. The average time period after which newcomers will purchase a property is three years after arriving in Canada," says Phil Soper, president and CEO of Royal LePage. "Our research shows that many of the newcomers to our nation who intended to buy a home this year have already been living in Canada for three or more years. A short-term drop in the number of new immigrants and international students will not directly impact home sales in the current year, as most newcomers will rent their first home.
"We may feel the impact of fewer new Canadians in our residential investment market with less demand for rental units. Mitigating the impact of this trend is a surge in first-time buyer interest. Some landlords may choose to sell to eager millennial families if rental demand softens."
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On a month over month basis, both actual and seasonally adjusted sales in May 2020 were up substantially compared to April 2020, with an actual sales increase of 55.2%. New listings were up by 47.5% in May compared to April and active listings were up by almost 9%. Prices in May also held up - regaining the drop experienced in April, increasing year over year by 3% and being only 5% off the February pre-pandemic high point this year. With the Bank of Canada’s new Governor, Tiff Macklem, keeping the key interest rate unchanged at one-quarter per cent on June 3, and trimming previous estimates for the economic downturn, there is reason to be optimistic that April was the bottoming out of COVID-19’s impact on the market.
Most Canadian First-Time Home Buyers Anxious They Will Miss Out Because of an Insufficient Down Payment
Most Canadian First-Time Home Buyers Anxious They Will Miss Out Because of an Insufficient Down Payment While Vancouver has higher home prices, first-time home buyers in Montreal are more worried about their down payment (58% vs. 60%) First-time home buyers in Toronto had the highest anxiety that their down payment would not stretch enough to buy the home they wanted (68%) Of first-time home buyers who lived with their parents before buying, almost one-fifth said that remaining at home delayed parents’ decision to downsize Despite higher median home values, Toronto (59%) and Vancouver (54%) respondents are most likely to prefer proximity to work over square footage than new home buyers in other regions studied TORONTO, May 9,2019 – A survey released by Genworth Canada, the country’s largest private residential mortgage insurer, in collaboration with Royal LePage, Canada’s leading real estate services provider, analyzed key trends among first-time home buyers who purchased a home within the last two years. Fifty-seven per cent of respondents nationwide said that before buying their home they worried they might miss out on a property they wanted because of an insufficient down payment. While Montreal’s median home price is one third of that in Vancouver, respondents in Montreal reported being more worried (60%) than respondents in Vancouver (58%). Toronto respondents had the most anxiety (68%) . “While interest rates remain historically low, it is not surprising that first-time home buyers in Montreal are increasingly concerned about their down payment,” said Phil Soper, president and chief executive officer, Royal LePage. “Montrealers have been watching home values escalate over the past three years. Many are wondering if they have time to grow their down payment or if they should get in the market now as prices continue to rise.” When asked to describe their housing situation before purchasing a first home, 25 per cent of respondents nationwide lived with parents or relatives. Forty-three per cent of those living at home paid rent to their families and of those paying rent, 30 per cent paid less than the market value. One-fifth of respondents who lived with family said that living at home delayed their parents’ own decision to downsize (17%), while a further 15 per cent said that younger siblings would have to leave the nest before parents can downsize. Sixty-four per cent said their parents had no plans of downsizing when they become empty nesters. These results support findings in Royal LePage’s 2018 Baby Boomer release that revealed although many Boomers still have children living at home, 17 per cent of them are expected to purchase a property by 2023, representing 1.4 million potential buyers and sellers. As affordability continues to challenge many first-time home buyers across Canada, 48 per cent of respondents would rather have a smaller home and live close to work, compared to 32 per cent who value larger properties despite a longer commute. Findings were similar in Calgary and Montreal, where 53 and 52 per cent of first-time home buyers also preferred less time commuting between home and work. While Toronto and Vancouver are home to some of the highest home prices in the country, the majority of those surveyed in both cities responded that proximity to work was more valued than square footage (59% and 54%, respectively). This may be influenced by longer work commutes, with Toronto and Vancouver residents reporting 34 minute and 30 minute one-way travel times both to/from work. “Even in cities where first-time home buyers have to push themselves to get on the property ladder, cost isn’t the only consideration when buying a first home,” said Soper. “While some young people are relocating to more affordable cities, those who stay value shorter commutes and access to the benefits of city life.” Regional Insights ONTARIO Sixty per cent of respondents in Ontario expressed anxiety about their down payment stretching enough to get the home they wanted, compared to 68 per cent of respondents in Toronto. “Buying a property can be stressful for anyone, but for first-time home buyers, the anxiety is magnified by the unknowns,” said Caroline Bailey, broker, Royal LePage Your Community Realty. “A good starting place is to dene your wish list and focus on your priorities.” Shorter commutes were valued more than square footage in Toronto as 59 per cent of respondents in the region preferred a more expensive and smaller home located closer to where they or their spouse work — the highest regional percentage in Canada.    5/30/2019 Most Canadian First-Time Home Buyers Anxious They Will Miss Out Because of an Insufficient Down Payment | Royal LePage https://www.royallepage.ca/en/realestate/news/most-canadian-first-time-home-buyers-anxious-they-will-miss-out-because-of-an-insufficient-down-payment/ 2/4 “There is a large portion of first-time home buyers in Toronto who will sacrifice size for location. Time is important — as are childcare, schools, and proximity to work,” said Bailey. “Sometimes that means purchasing a condo in the city within walking distance of work, or even living with parents a little longer to position themselves better to get the home they want.” Thirty per cent of respondents in Ontario and 34 per cent in Toronto lived with parents or other relatives before buying their rst home, surpassing the national average (25%). QUEBEC Fifty-one per cent of respondents in Quebec (excluding Montreal) expressed anxiety about their down payment stretching enough to get the home they wanted, compared to 60 per cent of respondents in Montreal. “While those who live in other parts of the province have the convenience of time and can shop around, we are seeing that first-time home buyers in Montreal are feeling the pressure to make quick decisions to enter the market,” said Dominic St-Pierre, vice president and general manager, Royal LePage, for the Quebec region. “Low inventory and high demand have encouraged an increase of multiple offers in the city in favour of more experienced buyers. First-time home buyers have to be prepared and secure financing prior to making an offer, with a sufficient down payment and mortgage pre-approval if they are serious about a purchase.” Nearly one quarter of Montrealers (23%) lived with family prior to buying their first home, compared to 16 per cent elsewhere in Quebec. Compared to the rest of the country, Quebec is the province with the most significant gap between the largest urban centre compared to the rest of the province when it comes to first-time buyers paying rent to their parents before purchasing their own home. Seventy-four per cent of respondents in Montreal said they did not pay rent to their family or relatives compared to only 53 per cent of Quebecers (outside Montreal). BRITISH COLUMBIA Fifty-six per cent of respondents in British Columbia expressed anxiety about their down payment stretching enough to get the home they wanted, 5/30/2019 Most Canadian First-Time Home Buyers Anxious They Will Miss Out Because of an Insufficient Down Payment | Royal LePage https://www.royallepage.ca/en/realestate/news/most-canadian-first-time-home-buyers-anxious-they-will-miss-out-because-of-an-insufficient-down-payment/ 3/4 Forty-two per cent of those surveyed in Calgary said their home location represents a similar commute for both spouses/partners, representing the highest percentage compared to other regions. The national average is 36 per cent. ATLANTIC CANADA The Atlantic Canada region bucks the trend for anxiety in relation to their down payment. Fifty-four per cent of those surveyed said they were not worried about their down payment compared to 41 per cent nationally. “Home prices are not outside the reach of younger Canadians in Atlantic Canada. We still see buyers getting help from ‘the bank of Mom and Dad’ but there’s fantastic affordability and opportunity here,” said Marc Doucet, broker of record, Royal LePage Atlantic. Seventy-four per cent of those surveyed in Atlantic Canada rented before purchasing their rst home. Twenty per cent of respondents in Atlantic Canada lived with family before buying a home; 54 per cent paid rent to relatives, while 17 per cent paid market rates. Among those respondents who lived at home before buying, 20 per cent reported their parents delayed plans to downsize until the respondents moved out of the family home. PRAIRIES Fifty-seven per cent of first-time home buyers in the Prairie provinces were worried about their ability to get the home they wanted with their down payment. When it came to proximity to work, 39 per cent of respondents in Manitoba and Saskatchewan preferred a relatively more expensive, smaller home in exchange for a shorter commute. “Where you live dictates how you live,” offered Michael Froese, broker and managing partner, Royal LePage Prime Real Estate. “A lot of first-time home buyers are looking at their purchase not just as a home, but as an investment as well. When it comes to resale value, choosing a good neighbourhood is part of the decision. You can always improve the house; you can’t change the location. Good advice for new home owners is to budget for some renovation and repairs.” Among those living with family before buying a home, 71 per cent said their parents did not have plans to later downsize. Thirteen per cent of respondents said staying in the home did delay their parents’ decision to downsize while 7 per cent indicated they had siblings who would need to move before parents could downsize. Thirty-six per cent of respondents in the Prairies paid rent to families at below market rates before purchasing their own home, slightly higher than the national average of 30 per cent. Need an image or b-roll? Visit Royal LePage’s media room for a selection of branded and unbranded royalty-free assets. About the Survey A total of 1,893 interviews were conducted by Environics Research with Canadians aged 25-40 who had purchased their rst home within the prior two years. Online interviewing was completed between February 15 and March 15, 2019. Quotas were set to oversample in urban regions with weighting to bring them back into overall national proportions for reporting. About Genworth MI Canada Inc. Genworth MI Canada Inc. (TSX: MIC) through its subsidiary, Genworth Financial Mortgage Insurance Company Canada (“Genworth Canada”), is the largest private residential mortgage insurer in Canada. The Company provides mortgage default insurance to Canadian residential mortgage lenders, making homeownership more accessible to first-time home buyers. Genworth Canada differentiates itself through customer service excellence, innovative processing technology, and a robust risk management framework. For more than two decades, Genworth Canada has supported the housing market by providing thought leadership and a focus on the safety and soundness of the mortgage nance system. As at December 31, 2018, Genworth Canada had $6.9 billion total assets and $4.1 billion shareholders’ equity. Find out more at www.genworth.ca . About Royal LePage 5/30/2019 Most Canadian First-Time Home Buyers Anxious They Will Miss Out Because of an Insufficient Down Payment | Royal LePage https://www.royallepage.ca/en/realestate/news/most-canadian-first-time-home-buyers-anxious-they-will-miss-out-because-of-an-insufficient-down-payment/ 4/4 Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of more than 18,000 real estate professionals in more than 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting women’s and children’s shelters and educational programs aimed at ending domestic violence. Royal LePage is a Brookfield Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE. For more information visit: www.royallepage.ca .
Reference; written by Natalka Falcomer; July 31, 2018
Real estate pundits point to the average sale price to conclude whether the market is crashing or hyper-inflating. Some go as far as to use the average sale price as an indicator of a recession or a healthy economy. The problem is that averages don’t tell much of a story.
For example, Canada has experienced five recessions of varying degrees between 1972 and 2018, yet the average sale price never dipped below the previous year, except between 1995 to 1996.
The odd thing is that there was no recession in 1995 to 1996, but there were recessions in the mid 1970s, early ’80s, early ’90s and 2008; yet, the average sale price didn’t dramatically crash during these times. Rather, it increased. To put it another way, if you relied upon “the average”, you’d be led to believe that: (a) we never had a recession until 1995; (b) recessions last only a year and (c) you’ll always make a profit house flipping if you simply just wait a year.
If you bought a home right before the 1974 crash, the early 80s or 90s crash, you know this is not the case. You also know that house flipping isn’t always a guaranteed success – costs in maintaining the property, construction, changing zoning bylaws and even changes in demographic tastes can certainly make a flip a financial disaster.
When you peel back the layers of the “average” provided, you discover a more complex story. Averages mislead when a distribution is heavily stacked at one end, with a small number of unusual outliers weighing the average in their favour. It also misleads if you don’t know the story behind how that number came to be.
Consider the example provided by New York Times guest columnist Stephanie Coontz, When numbers mislead: “In 2011…the average income of the 7,878 households in Steubenville, Ohio, was $46,341. But if just two people, Warren Buffett and Oprah Winfrey, relocated to that city, the average household income in Steubenville would rise 62 per cent overnight, to $75,263 per household.”
The same logic can be applied to our housing market. Take, for example, the GTA’s average sale price to date in 2018 ($805,230) versus 2017 ($862,149). Some people conclude that the average price has decreased because we are in the throes of a housing crash. Nobody wants to buy. And, if they buy, they’re buying it for less than what they would’ve paid for the same property last year because there’s no demand and because last year’s prices were completely unsubstantiated.
Any millennial trying to buy a condo in South Riverdale, Mount Pleasant or Little Italy, however, would beg to differ. Condos in these areas saw an increase in sale price and most condos have sold above asking. Dig deeper and you find an even more complex story.
Those who want to buy larger homes in Toronto – young families or couples – cannot afford the millions that such homes command. And those who can afford it already live in those homes and aren’t interested in buying another multi-million-dollar home.
This more affluent (and older) demographic doesn’t want to sell because they know that demand for their properties isn’t as great as it was in our anomalous record setting-market of 2017 (the multi-million-dollar homes are still selling, it’s just taking slightly longer than it did during the hype of the market; nonetheless, our market turnover is still much faster than in other high-demand markets such as London and Paris). And for those who are looking to downsize, they’re not necessarily selling their primary home. Rather, they’re holding onto their primary homes and buying a cheaper and smaller second home, putting more pressure on the same market in which the millennials are competing for some territory (literally). This has the obvious outcome of creating more competition in the cheaper market than in the multi-million-dollar market. The average is skewed because it is heavily stacked with lots of smaller rather than larger price points.
Purchasing power has further eroded not because of an economic crash or lack of demand, but because of changes in the law. Young families or young couples – the backbone of house purchases – were most affected by the changes in mortgage rules. This means that, due to bad luck, today’s buyers can afford less than they could’ve afforded last year. In turn, people are buying cheaper and smaller homes even if it isn’t the best fit for their lifestyle (large bedrooms for each child, play room). Again, it’s not that demand is down or that prices are plummeting, it’s that the type of demand has shifted because who is buying has changed and how much they can spend has changed.
Digging beyond the average shows that this is a supply problem, not a demand problem. Perhaps our government is focused too much on the average and should re-shift its focus from curtailing demand to increasing supply.
Since this space was small (approximately 8x5), I had to figure out a plan that would accomodate most importantly, a bigger shower. So I decided on a smaller vanity, a repositioned toilet and the removal of the closet.
The flare of course, for those who know me well had to be somewhat of a nature theme. I shopped around until I had well-coordinating supplies and decor. I am a big believer that you don't have to break the bank in order to have a finished product styled to match YOUR perfection.
We love the finished product and most of all, enjoying the bigger shower! Oh .. and behind the door to the right is a smaller corner storage cabinet appropriately sized for this small bathroom.