Housing market risk low despite some short-term contraction in values and recessionary pressures, says RE/MAX® Canada

Key indicators combined with lender risk mitigation measures shore up expectations of resilience

TORONTO, Jan. 31, 2023 /CNW/ -- While interest rate hikes served to destabilize most major Canadian housing markets beginning in 2022, homeowners are well-positioned to ride out the coming storm in large part due to lower loan-to-value ratios on new mortgages, according to a report released today by RE/MAX Canada.

The RE/MAX Canada 2023 Canada Housing Barometer Report examined average price and new mortgage values published by CMHC-Equifax Canada in 12 major markets from British Columbia to New Brunswick, to compare loan-to-value (LTV) ratios between Q3 2012 and Q3 2022. The report found that LTV ratios had declined in 67 per cent of markets (eight) over the past decade, with the greatest drops noted in London and Moncton (21 per cent), Halifax (15 per cent), Hamilton (14 per cent), Toronto (10 per cent) and Ottawa-Gatineau (nine per cent). Four markets, including Calgary, Edmonton, Saskatoon, and Regina, were up over 2012 levels, a trend that is set to reverse in the years ahead as Alberta and Saskatchewan's economic engines gain momentum and drive homebuying activity. The lowest loan-to-value ratios were found in the most expensive markets, including Vancouver (50 per cent), Toronto (53 per cent), and Hamilton (54 per cent) while the highest loan-to-value ratios were found in Regina (88 per cent) and Edmonton (83 per cent). Nationally, loan-to-value ratios hovered at 57 per cent.

"While challenges certainly exist in today's high interest rate environment, risk factors for the overall housing market are greatly reduced when homeowners own a larger proportion of their homes," says Christopher Alexander, President, RE/MAX Canada. "With half of loan-to-value ratios within the 50- and 60-per cent range in Canadian markets, homeowners are better able to withstand downward pressure on housing values and fewer will find themselves underwater, carrying upside down loans."

LOAN TO VALUE RATIO BY MAJOR CANADIAN CENSUS METROPOLITAN AREA-- Q3 2022 vs. Q3 2012
	2022	2012	Y/Y %	2022	2012	Y/Y %	LTVR	LTVR
Area	Average Price	Average Price	Change	Average New Mortgage	Average New Mortgage	Change	2022	2012
Vancouver **	$1,121,866	$602,264	86.3 %	$562,823	$357,738	57.3 %	50 %	59 %
Calgary	$503,450	$425,821	18.2 %	$371,202	$300,869	23.4 %	74 %	71 %
Edmonton	$388,915	$337,021	15.4 %	$322,469	$277,554	16.2 %	83 %	82 %
Regina	$321,738	$312,412	3.0 %	$283,151	$244,348	15.9 %	88 %	78 %
Saskatoon	$358,286	$311,330	15.1 %	$288,786	$242,900	18.9 %	81 %	78 %
Winnipeg	$364,612	$248,740	46.6 %	$286,061	$197,722	44.7 %	78 %	79 %
London	$642,711	$234,570	174.0 %	$379,030	$187,858	101.8 %	59 %	80 %
Hamilton	$859,998	$343,988	150.0 %	$464,145	$234,693	97.8 %	54 %	68 %
Toronto	$1,079,957	$483,900	123.2 %	$567,441	$305,776	85.6 %	53 %	63 %
Ottawa-Gatineau*	$593,654	$337,519	75.9 %	$343,649	$227,123	51.3 %	58 %	67 %
Moncton	$314,416	$158,188	98.8 %	$226,745	$146,423	54.9 %	72 %	93 %
Halifax	$492,406	$267,854	83.8 %	$303,968	$207,006	46.8 %	62 %	77 %
National	$634,855	$352,891	79.9 %	$363,654	$223,074	63.0 %	57 %	63 %
Source: CMHC-Equifax Canada Average Value of New Mortgage Loans; Canadian Real Estate Association; Fraser Valley Real Estate Board; Calgary Real Estate Board; Toronto Regional Real Estate Board; Quebec Professional Association of  Real Estate Brokers; RE/MAX Canada
Notes regarding average prices: *Ottawa-Gatineau contains blended data to reflect the Ottawa-Gatineau CMA. Earliest statistics available for the Gatineau region are from 2014, creating an eight-year history for the CMA.
** Greater Vancouver contains data blended with Fraser Valley to reflect Vancouver CMA

Three factors were largely responsible for the downward pressure on loan-to-value ratios over the past decade, according to the Canada Housing Barometer Report: equity gains, the pandemic facilitating the ability to work remotely in smaller markets, and the transfer of intergenerational wealth, particularly in the latter half of the last decade and the early 2020s.

"Government implemented measures to reduce risk to the country's housing markets, including the much-maligned stress test, have also gone a long way in maintaining the overall health of the Canadian market," explains Elton Ash, Executive Vice President, RE/MAX Canada. "The housing market in Canada has a reputation for stability relative to other international markets, and prudent policy plays a substantial role."

Canadian buyers are much better qualified than a decade ago as a result, according to the RE/MAX report. A recent CMHC-Equifax Canada report confirmed a significant reduction in the number of buyers with credit scores under 660 in the past decade. Nationally, that number fell to 4.7 per cent in the third quarter of 2022, down from eight per cent a decade earlier. Ottawa-Gatineau, at 3.9 per cent, had the lowest share of new mortgage holders with credit scores below 660, while Winnipeg had the highest at 6.4 per cent. The loan-to-value ratio in all markets was down from decade-ago levels.   

Mortgage delinquency rates have also fallen in most markets across the country, with the national percentage sitting at just 0.14 per cent – down just over 63 per cent from levels reported in 2012. The lowest rates can be found in Ontario and British Columbia, where the delinquency rates are below 0.08.

Share of new mortgage holders with credit scores below 660
Q3 2022 vs. Q3 2012
	2022	2012	Y/Y %
CMA	Percentage	Percentage	Change
Vancouver	4.2	7.4	-43.2 %
Calgary	5	7.7	-35.1 %
Edmonton	6	8.3	-27.7 %
Regina	4.9	7.1	-31.0 %
Saskatoon	4.8	8.0	-40.0 %
Winnipeg	6.4	8.7	-26.4 %
London	5	8.4	-40.5 %
Hamilton	4.5	9.1	-50.5 %
Toronto	5	8.0	-37.5 %
Ottawa	3.9	6.8	-42.6 %
Moncton	5.1	11.5	-55.7 %
Halifax	4.7	9.5	-50.5 %
National	4.7	8.0	-41.3 %
Source: CMHC-Equifax Canada

Canadian Mortgage Delinquency Rates (%)
Q3 2022 vs. Q3 2012
	2022	2012	Y/Y %
CMA	Delinquency	Delinquency	Change
Vancouver	0.08	0.29	-72.4 %
Calgary	0.35	0.59	-40.7 %
Edmonton	0.19	0.6	-68.3 %
Regina	0.57	0.28	103.6 %
Saskatoon	0.34	0.26	30.8 %
Winnipeg	0.17	0.2	-15.0 %
London	0.06	0.39	-84.6 %
Hamilton	0.05	0.29	-82.8 %
Toronto	0.06	0.24	-75.0 %
Ottawa	0.07	0.21	-66.7 %
Moncton	0.16	0.64	-75.0 %
Halifax	0.14	0.37	-62.2 %
National	0.14	0.38	-63.2 %
Source: CMHC- Equifax Canada

Rapid population growth was identified as a primary catalyst in driving home-buying activity over the past decade, with the quarterly population estimate rising 12.1 per cent nationally from Q3 2012 to Q3 2022. Interest rates also played a starring role over the 10-year period, with the overnight rate dropping to 0.25 per cent in May of 2009 and maintaining relatively low levels throughout the 2010s, climbing in 2018 and 2019 only to fall again to 0.25 per cent in 2020.

Population growth is expected to continue in the years ahead, given the federal government's commitment to increase immigration levels, but interest rates will likely remain relatively high in the foreseeable future, which should temper home-buying activity to some extent, particularly in the first half of the year.

"As we head into 2023, there are likely to be challenges, but a healthy number of homebuyers are expected to continue to enter the country's housing markets from coast to coast," says Ash. "The trend toward smaller markets should continue to play out in Atlantic Canada, Ontario and Western Canada —areas where in-migration from more expensive markets has occurred recently. Major centres in Alberta and Saskatchewan are expected to see strong growth in the year ahead as provincial economies continue to operate on all cylinders. However, there could be some tough times ahead for larger markets that are seeing an uptick in over-extended buyers, as well as increased financial hardships for parents who helped their kids into homeownerships by taking out Home Equity Line of Credit (HELOCs). While most chartered banks are typically willing to work with homeowners in distress situations, buyers that chose to work with private lenders are having a different experience, as evidenced in recent stories in the media."

While overall risk to the Canadian housing market remains low, risk mitigation remains top of mind for regulators, given real estate's impact on the Canadian economy. The sector has accounted for 10 to 17 per cent of GDP growth in recent years. The government's OSFI stress test is among the additional measures aimed at reinforcing the country's real estate market going forward. While still in development, it would look at addressing three key factors: mortgage size and debt load, new debt service ratios, plus a new interest rate stress test. Given the success of the Stress Test to date (qualifying buyers at two per cent above posted rates since 2018), it's clear some constraints can prove invaluable. That being said, further measures that would make it increasingly difficult for Canadians to realize home ownership, while well-intentioned, may potentially cause more harm than good.

"At the end of the day, what's evident by the loan-to-value ratios and by policies to discourage speculation and over-extension is that real estate is and will always be a long-term hold," explains Alexander. The Canada Housing Barometer Report shows that most purchasers are aligned with that philosophy, as demonstrated by their tenacity to get into the market and hold steady. Savvy homebuyers and homeowners are looking to offset carrying costs by reducing their footprint—choosing smaller homes, as reported in Ottawa, or renting out basement suites in their homes, a trend noted across the board, but especially apparent in London and Saskatoon. Some buyers are purchasing duplexes and other multi-unit properties and living in one of the units. Multi-generational sales are also happening with increasing frequency across Canada, whereby two or three generations live together. This trend was strong in Toronto's 905 region, as well as in Winnipeg and Saskatoon.

"The bottom line is that the dream and desire for home ownership is unmistakable," says Alexander. "The mechanisms in place to underpin stability are working, and although more challenging conditions in 2023 may cause some to temporarily take pause, the longer-term outlook remains positive. Once the Bank of Canada has signalled that it is done with quantitative tightening, the market is expected to return to more normal levels of homebuying activity overall."

REGIONAL SUMMARIES

Vancouver, British Columbia
Despite higher interest rates, a flurry of homebuying activity occurred in the first few weeks of 2023 in the Vancouver Area. Acclimatized buyers looking at creative financing alternatives were behind the push, with most taking advantage of options to blend and extend existing mortgages. Many are move-up purchasers, set to trade in on significant equity gains realized over the past decade. Between Q3 2012 and Q3 2022, average price almost doubled in the Vancouver CMA – representing a compounded annual growth rate of 6.42 per cent. While the average mortgage has increased accordingly, rising to $562,823, the loan-to-value ratio in Vancouver remains the lowest in Canada, sitting at 50 per cent in the third quarter of 2022, down from 59 per cent in Q3 2012. Population growth has been a major driver over the 10-year period, with the population in British Columbia climbing 16.5 per cent to 5,319,324 in Q3 2022, according to the Statistics Canada's Quarterly Population Estimates by Province. British Columbia ranked second in terms of growth, falling just behind Alberta at 17.3 per cent. In the past year alone, population in the Vancouver CMA has edged up 2.2 per cent. Well-priced, single-family homes are generating the greatest interest at present, while rental properties in premium locations are sought after by investors, given the substantial increases in rental rates over the past year. Inventory levels remain low in comparison to years past, with a shortage of good homes available for sale. Most buyers are coming to the table with higher down payments to offset carrying costs. In terms of new mortgages, buyers are choosing shorter, fixed terms, hoping to ride out the higher interest rate environment and renew when rates have come down. Sellers are also getting into the action, with some offering assumable mortgages with lower interest rates and vendor take-back loans. New rules regarding the three-day cooling off period and the foreign buyer ban have complicated deals in recent weeks, but business has remained steady. 

Calgary, Alberta
Alberta's strengthening economic engine continues to fuel robust homebuying activity in the province's largest centre. Calgary is one of few markets in the country reporting an increase in home sales in 2022, with the number of properties sold in the city proper climbing by just over seven per cent, while prices rose close to five per cent year-over-year. Inventory levels continued to dwindle down, falling 21 per cent from 2021 levels. Despite the higher interest rate environment, multiple offers are occurring yet again, with the greatest activity reported in the $450,000 to $650,000 price range for single-detached homes and $240,000 to $270,000 for condominiums. The rebound in the oil and gas sector has greatly contributed to the overall health of the housing market. Over the past decade, challenges in the resource sector cast a shadow over housing performance throughout the province, which was reflected in the 10-year stats. Average price in the Calgary CMA in Q3 2022 rose just 18.2 per cent to $503,450 over the past decade, up from $425,820 during the same period in 2012. The loan-to-value ratio edged up to 74 per cent in 2022, an increase of three per cent over the 71 per cent reported in 2012. The market's trajectory changed during the pandemic, coming alive as the province's economic destiny changed course. In-migration has gained momentum in lockstep in recent years, as evidenced by the uptick in population. According to Statistics Canada Quarterly Population Estimates by Province, Alberta experienced a 2.7 per cent increase between the first and fourth quarter, welcoming more than 118,929 people to the province. Buyers from the country's most expensive markets in British Columbia and Ontario are arriving almost daily, attracted to the city's affordable housing stock and well-paying job opportunities. With Alberta expected to lead the country in terms of economic growth in the year ahead, homebuying activity in Calgary should remain strong for the foreseeable future. 

Edmonton, Alberta
While strong economic growth provincially has propelled homebuying activity in Edmonton's residential housing market in recent years, the impact of a struggling oil and gas sector throughout the last decade is evidenced in the city's loan-to-value ratio. According to the CMHC/Equifax, the average value of new mortgages in Edmonton sat at $322,469 in the third quarter of 2022, 16 per cent ahead of the $277,554 reported in Q3 2012, while housing values rose proportionally during the same period. The loan-to-value average has increased by one per cent, currently hovering at 83 per cent. Unlike other major centres, home sales in Edmonton matched year-ago levels in 2022, with prices edging up slightly. An influx of interprovincial buyers from British Columbia and Ontario have been behind the push for the city's affordably priced housing stock, with Statistics Canada reporting interprovincial migration into Alberta between July and October of 2022 from those provinces sitting at just over 23,000. Despite higher interest rates, trade-up buyers are also on the move, with most seeking larger suburban homes with bigger yards or acreage. The luxury market has also come to life in Edmonton, with demand for properties in older, established communities close to the city core on the upswing. Buyers are increasingly creative with their financing, with some choosing shorter-term mortgage terms in anticipation of lower rates down the road while others are porting or assuming existing mortgages. Baby boomers are also playing a role, helping their children and/or grandchildren to break into the housing market with financial gifts. Against this backdrop, Edmonton's residential housing market is ideally positioned to weather the storm. Alberta and neighbouring Saskatchewan are expected to lead the country in terms of GDP growth in the year ahead, which should serve to continue to bolster homebuying activity, equity gains, and ultimately bring loan-to-value ratios down.

Regina, Saskatchewan
More balanced conditions have returned to Regina's residential real estate market in recent years as the resource sector rebounds from the oil and gas downturn in 2014-2020. First-time buyers, move-up and move-over purchasers are fueling homebuying activity in the city and suburban areas, with single-family detached homes between $300,000 and $500,000 experiencing the greatest demand. While higher interest rates have had an impact on the market, buyers have pivoted, adjusting expectations and opting for shorter mortgage terms. Affordability is a key factor in the city where the average price hovered at $321,738 in the third quarter of 2022, up just three per cent from the same period in 2012. Loan-to-value ratios are 10 per cent higher than in Q3 2012, a trend that is expected to reverse as Saskatchewan's economic engine gains momentum. Several new initiatives are planned for the year ahead, including the construction of a $360 million integrated agricultural complex by Federated Co-operative Limited and AGT Food and Ingredients and the construction of SaskPower's Foxtail Grove Solar Project in Regina. Unemployment levels have also been falling, hitting four per cent in November 2022. An influx of buyers from Ontario and British Columbia, has also helped stimulate homebuying activity in Regina, many arriving flush with cash from the sale of more expensive homes. Inventory levels continue to dwindle, which may place some upward pressure on housing in the future. 

Saskatoon, Saskatchewan
After an extended period of soft market conditions, Saskatoon's residential real estate market is on the rebound. Demand for housing is strong, with single-detached homes generating the greatest interest. Average price is on a steady, upward trajectory, with inventory levels falling across the board. Immigration and, to a lesser extent, in-migration are adding to the mix, fueling demand for newer construction in the city suburbs. While price growth over the past decade has been tempered by challenges in the oil and gas sector, loan-to-value ratios have edged up three per cent to 81 per cent over the 10-year period. This trend is expected to reverse itself as Saskatchewan's resource-based economy gains serious momentum in the years ahead. Early in the pandemic, construction of single-detached homes ground to a halt as builders shifted to more profitable projects such as condominiums. As such, upward pressure on single detached housing values has increased over the past year, with supply expected to fall significantly by year end 2023. Construction of single-detached homes has picked up over the past year, with new pricing reflecting increased cost of building materials, but it will take time before completed product comes to market. While the most popular housing type is the single-detached home, especially at the $350,000 to $400,000 price point, the most affordable route to home ownership is through older condominiums close to the city's core, starting at just over $100,000. In spite of greater affordability, buyers in Saskatoon are growing increasingly sensitive to higher interest rates, and many are looking for innovative ways to offset carrying costs. Some are choosing to rent out basement suites or the occasional short-term rental of an extra room. Multi-generational families living under one roof are growing increasingly commonplace in the Saskatoon suburbs. Dual-income young professionals are also exercising caution when it comes to buying as well—although they qualify for a mortgage of $600,000, most will come in well under that amount. The typical first-time buyers are coming to the table with a five to 10 per cent down payment and have their own savings. Buyers who were born and raised in Saskatoon are driving demand for older bungalows in established neighbourhoods. Although many of the homes are dated, buyers are willing to renovate due to the large lot sizes and proximity to the city. Infill is also occurring in these areas as custom builders target affluent baby boomers. Pricing tends to run on the high side, typically ranging between $550,000 and $900,000. With Alberta and Saskatchewan expected to lead the country in GDP growth in 2023, real estate markets in these two provinces are set to out-perform all others in the year ahead.

Winnipeg, Manitoba
Steady homebuying activity in Winnipeg over the past decade has resulted in a close to 50 per cent increase in average price, with values rising to $364,612 in Q3 2022. Loan-to-value ratios have decreased marginally over the 10-year period, falling from 79 per cent to 78 per cent. Equity gains and buyers taking advantage of prepayment options on their mortgages have likely contributed to the decline. Balanced market conditions currently exist in Winnipeg after a roller coaster 2022, where sellers dominated the first half of the year and buyers dominated the second half. Interest rate sensitivity was largely responsible for the shift with seven successive increases in a nine-month period. Foreclosures have been few and far between as banks typically try to work with owners. The OSFI Stress Test has helped to keep the market on track, but with each rate hike, pre-approved buyers have had to requalify, and a certain percentage of buyers have been knocked out of the market. There is a contingent of buyers sitting on the fence, most waiting for the market to bottom out. As a result, days on market have been steadily increasing, with a healthy supply of product currently available for sale. Approximately 60 per cent of today's buyers are first-time purchasers and newcomers to Canada, while move-up and downsizing buyers have equal representation in the remaining 40 per cent. Many first-time buyers are looking to the Bank of Mom and Dad, although that trend is winding down. During the pandemic, help from parents allowed younger buyers to enter the market with higher deposits and down payments. Newer Canadians are also accessing overseas resources to achieve home ownership. Almost all buyers are looking at short-term financing, but occasionally, there are those who will lock into five-year terms for greater security. New trends are emerging in the marketplace, with a recent uptick in multigenerational families living together. As a result, there has been greater demand for homes that include a main floor bedroom and full bathroom. Some movement of out-of-province buyers to the Winnipeg market has been noted. Many are investors attracted to the affordability aspect of the city and the return on investment. With quantitative tightening expected to come to a close, stability is expected to return to Winnipeg's residential real estate market, with homebuying activity set to climb in the latter half of 2023 and early 2024.

London, Ontario
London's residential housing market experienced the strongest growth in the country over the past decade, with the average price climbing 174 per cent to $642,711 in Q3 2022, up from $248,740 in Q3 2012. Strong equity gains and out-of-area buyers flush with cash from the sale of homes in more expensive markets played a significant role in the decline in the city's loan-to-value (LTV) ratio. LTV's have dropped 21 percentage points from 80 per cent in Q3 2012 to 59 per cent in the third quarter of 2022. New mortgage values have doubled in tandem, rising from $187,858 to $379,030 in the 10-year period. Robust demand from first-time, move-up, and out-of-area buyers propelled sales and values to new heights over the decade, particularly during the pandemic years. Low inventory levels further exacerbated the situation, creating one of the hottest housing markets in the city's history. While demand still exists, buyers have adopted a wait-and-see approach to home ownership, given the 400-basis point increase between March and December of 2022 and more expected to follow. The vast majority of sales in London at present are occurring on product under $750,000 and well-priced properties located in hot pockets. Investors can also be found in the London market as well, with most looking for income properties such as duplexes, given high rental rates. Financing has become a challenge, even for pre-approved buyers, as fluidity in values have prompted lower appraisals. The supply of overall homes listed for sale on the market continues to steadily increase. New home construction has been particularly impacted as closing dates loom, prompting a flurry of assignments coming to market. The Bank of Mom and Dad is active yet again in today's market, with an estimated 40 per cent of young buyers requiring parental co-signs on mortgage applications. An estimated 20 per cent of mortgages written in recent months were considered high-ratio and included both first-time and more experienced applicants. The stress test has been successful in bringing more qualified buyers to market, especially now when buyers are qualifying at close to seven per cent. Future trends are starting to take shape, with increasing demand for basement apartments and multi-unit properties expected in the year ahead as buyers try to offset carrying costs. While few power of sales have taken place so far this year, it's likely that more will follow as lenders start to make their moves.

Hamilton, Ontario
The run-up in Hamilton's residential housing market over the past decade propelled values to new levels between Q3 2012 and Q3 2022. Average price hovered at close to $860,000 in the third quarter of 2022, up 150 per cent from the $343,988 posted during the same quarter in 2012, while new mortgage amounts almost doubled. The loan-to-value ratio was down substantially from levels reported a decade ago, sitting at 54 per cent in the third quarter of 2022. Equity gains and movement from more expensive markets contributed to a 14-per-cent decrease in the loan-to-value ratios over the 10-year period. While interest rate sensitivity exists at virtually every price range, demand continues to drive homebuying activity at entry-level price points ranging from $600,000 to $850,000. Many first-time buyers, including those coming from the Greater Toronto Area and other parts of the province, who have purchased a home are typically looking at two-year fixed terms with the opportunity to renew at 18 months in the hopes that interest rates will fall. While the Bank of Mom and Dad is tapped out, home ownership is still top of mind, explaining the increase in parents co-signing on loans for their kids. Situational buyers remain active in the market – driven by life cycle events. Inventory remains extremely low in comparison to 2017/2018 when levels rose exponentially after the Ontario government introduced the Fair Housing Plan and the Foreign Buyer's tax, which should help keep prices relatively stable in the year ahead. Once the Bank of Canada signals an end to rate hikes, expected in mid-2023, and greater stability returns to the housing market, sales activity is expected to rebound.

Toronto, Ontario
While a volatile housing market triggered growing concerns over homeowner exposure to higher interest rates in 2022, third quarter loan-to-value ratios suggest the market may be better positioned than originally anticipated. Loan-to-value ratios in the Toronto CMA hovered at 53 per cent in Q3 2022, down 10 percentage points from the 63 per cent reported in the third quarter of 2012. Strong equity gains over the 10-year period – with a compounded annual growth rate of 8.36 per cent – coupled with the start of an intergenerational wealth transfer have contributed to the phenomenon of larger down payments that allowed first-time buyers to enter the market and move-up buyers to take their next steps. Prices have held relatively steady in the fourth quarter of 2022 as a continued shortage of available homes listed for sale served to prop up housing values. Given the Bank of Canada's commitment to quantitative tightening, which resulted in a 400-basis point hike over a nine-month period in 2022, banks are tightening their own lending practices and proceeding with caution when qualifying today's borrowers. Some bank appraisals are coming in lower than values paid in recent months, sending buyers scrambling to make up the difference. With overnight rates poised to climb on at least two more occasions the first half of 2023, market stability will undoubtedly be tested, but the latter half of the year is forecast to improve as homebuyers and sellers continue to acclimatize to new market realities. Several factors are expected to support the housing market in the year ahead, including a low supply of inventory listed for sale and a significant uptick in the provincial population, with the vast majority choosing to settle in Toronto. According to Statistics Canada's Quarterly Population Estimates by Province, Ontario's population rose by an estimated 2.2 per cent in 2022, representing an uptick of more than 321,000 people. 

Ottawa-Gatineau
Solid equity gains have contributed to a notable decline in loan-to-value ratios in the Ottawa-Gatineau area, down nine per cent to 58 per cent between Q3 2014 and the third quarter of 2022. Over the past eight years, average price has climbed almost 76 per cent, rising more than $260,000 to $593,654 in Q3 2022. After almost two years of seller's market conditions, Ottawa's residential housing market is once again in balanced territory. While fewer first-time buyers are coming to market in recent months, move-up and downsizing buyers make up the lion's share of today's homebuying activity in the nation's capital. Many are choosing shorter, fixed-term mortgages between two and three years in length, in the hope that interest rates will start to decline at the end of 2023. Investors have also been active in the Ottawa area, with buyers from markets including Toronto and Vancouver typically looking for four-bedroom, detached homes under $500,000. Affordability remains top of mind in the city, given higher interest rates, with some homeowners who purchased in 2018 or 2019 looking to take advantage of equity gains by downsizing to smaller homes before renewal notices arrive on their five-year fixed terms. The pivot into smaller freehold townhomes keeps mortgage payments in line with previous payment schedules and prevents defaulting on mortgages. Stability remains the hallmark of the Ottawa-Gatineau real estate market, with the city's largest employer providing a level of job security that has certainly helped bolster homebuying activity in recent years. Once the Bank of Canada has determined that no additional rate hikes are necessary to cool the economy, the housing market in both Ottawa and Gatineau should start to rebound. 

Moncton, New Brunswick
Homebuying activity in Moncton's traditionally steady residential real estate market was turned on its head during the pandemic as out-of-province buyers discovered the natural beauty of the area and the city's undervalued housing stock. No longer tethered to an office, these buyers had the ability to work from home -- whether that home was in Oshawa or in Shediac overlooking the water. Recent Statistics Canada figures bear out the trend, with the provincial population climbing 2.7 per cent to 820,786 in 2022 alone. The average price in Moncton has almost doubled over the past decade to $314,416, with most of the gains experienced in the last three years. The city's loan-to-value ratio has contracted substantially with a 21 per cent decrease from 93 per cent in 2012 to 72 per cent in 2022 as serious equity gains sparked strong move-up activity from within and attracted cash buyers from other parts of the country such as Ontario, Alberta, and British Columbia. Affordability has been top of mind with today's buyers, with semi-detached properties located in Moncton North and neighbouring communities such as Dieppe and Riverview experiencing the greatest recent demand. With an average price of just under $300,000 in December and just 2.54 months of inventory, the semi-detached home remains a sought-after commodity, despite higher interest rates. Buyers in this segment will encounter seller's market conditions, while the market for single family detached is more balanced. In the last three weeks alone, agents with RE/MAX Avante in Moncton have had no fewer than 19 multiple offer situations, with the busiest price points between $200,000 and $350,000. While the market for higher-priced properties has softened somewhat in recent months, prices in Moncton are much easier to service than those in other parts of the country.

Halifax, Nova Scotia
While the Halifax CMA has experienced a steady stream of out-of-province buyers for many years, the pandemic greatly accelerated the trend, with an estimated one in four buyers in-migrating from larger Canadian centres during the height of Covid. Nova Scotia led the country in terms of population growth in 2022, according to Statistics Canada, with an increase of 2.8 per cent between the first and last quarters of the year, placing serious pressure on housing inventory and values. Average price in the area rose 83.8 per cent over the decade, settling at $492,406 in Q3 2022, representing a 6.28 compounded annual growth rate between 2012 and 2022. Loan-to-value ratios dropped by 15 per cent over the 10-year period to 62 per cent as serious equity gains, cash purchases, and gifts from the Bank of Mom and Dad fueled homebuying activity. While market conditions have tapered over the past nine months, limited supply has kept housing values stable. To illustrate, 750 homes were listed for sale in December of 2022 compared to 3,600 in December of 2012. Days on market have increased, but year-over-year, prices are still up considerably. The lion's share of activity is occurring for freehold properties, including detached and semi-detached housing. While demand for condos remains steadfast, many younger buyers are choosing freehold, given the narrow price differential. New home construction has picked up as more and more approvals and permits are granted. The high interest rate environment has sidelined some buyers while others are moving forward with their purchases. Halifax remains one of the most affordable markets in the country, and as such, carrying costs are decidedly lower. Those that take the plunge are typically coming to markets with five to 15 per cent down, and while some are looking at variable rate mortgages in the short term, most are locking in at one-, two-, and three-year terms. All segments of the market are active, including first-time, move-up and move-over buyers, although most trade-up buyers made their moves during the pandemic. There has been an upswing in creative financing trends in recent months, including assumable mortgages, vendor-take-back mortgages, and some blend and extend on portable mortgages. Given strong economic fundamentals, including the increase in both in-migration and immigration, Halifax's residential real estate market should continue to experience solid growth in the year ahead. 

¹Notes – New Mortgages:
Seasonal effects have not been removed from the data.                                                                                

Mortgage:
A loan designed to facilitate the purchase of a home, in which the home itself serves as security for the loan.

Census Metropolitan Areas (CMAs):
Equifax data aligns with Statistics Canada's definitions of Census Metropolitan Areas. All efforts were made by RE/MAX to ensure local real estate boards aligned with the definition, in some instances resulting in blended average prices (Ottawa-Gatineau, Vancouver-Fraser Valley)  

For further information on CMA definition consult this link:
https://www12.statcan.gc.ca/census-recensement/2011/ref/dict/geo009-eng.cfm

New Mortgage Loans:
The account's open date is within the past three months.

In the case of mortgage accounts certain cases could arise: (i) a new date is given when a new mortgage is financed, (ii) a borrower refinances their mortgage loan with a new lender, (iii) a borrower refinances with same lender at higher amount.

Credit Limit/Approved Value:
The maximum allowed home purchase price that a financial institution is willing to finance to a client at the time of origination of a mortgage loan.                                                                                                                    

About the RE/MAX Network
As one of the leading global real estate franchisors, RE/MAX, LLC is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than 140,000 agents in almost 9,000 offices with a presence in more than 110 countries and territories. RE/MAX Canada refers to RE/MAX of Western Canada (1998), LLC, RE/MAX Ontario-Atlantic Canada, Inc., and RE/MAX Promotions, Inc., each of which are affiliates of RE/MAX, LLC. Nobody in the world sells more real estate than RE/MAX, as measured by residential transaction sides.

RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. RE/MAX agents have lived, worked and served in their local communities for decades, raising millions of dollars every year for Children's Miracle Network Hospitals® and other charities. To learn more about RE/MAX, to search home listings or find an agent in your community, please visit remax.ca. For the latest news from RE/MAX Canada, please visit blog.remax.ca.

Forward looking statements
This report includes "forward-looking statements" within the meaning of the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project," and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions and the Company's results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include (1) the global COVID-19 pandemic, which has impacted the Company and continues to pose significant and widespread risks to the Company's business, the Company's ability to successfully close the anticipated reacquisition and to integrate the reacquired regions into its business, (3) changes in the real estate market or interest rates and availability of financing, (4) changes in business and economic activity in general, (5) the Company's ability to attract and retain quality franchisees, (6) the Company's franchisees' ability to recruit and retain real estate agents and mortgage loan originators, (7) changes in laws and regulations, (8) the Company's ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (9) the Company's ability to implement its technology initiatives, and (10) fluctuations in foreign currency exchange rates, and those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company's website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.

SOURCE RE/MAX Canada

For more information please contact: Danielle Scott, APEX PR: [email protected], 416-909-5185; Lydia McNutt, RE/MAX Canada: [email protected], 416-797-0473; Eva Blay-Silverberg, Point Blank Communications: [email protected], 416-505-0627