While Canadian homebuyers feel the impact of regulatory changes, the spring market forecasts brighter days ahead
New stress test regulations prompt Canadian homebuyers to increase budgets, re-evaluate home features or delay their purchase
TORONTO and KELOWNA, April 10, 2018 /CNW/ - A recent RE/MAX survey conducted by Leger found more than one in four Canadian homebuyers report feeling pinched by the stress test, which came into effect in January of this year. However, projections for the spring market show optimism with most markets expected to remain stable or improve.
The average residential sale price in the Greater Toronto Area dropped to $753,747, down almost 10 per cent from $834,144 in January and February of 2017. With move-up buyers driving the market — many of whom are making their second or third transition — alongside a booming condominium market, prices should continue to soften throughout the year. Areas surrounding the GTA, including Brampton and Durham region, continue to be viable options for young families seeking affordability. Not all regions in Ontario are being affected like the GTA. In Ottawa, the average residential sale price in January and February was $388,289, up four per cent from $373,841 during the same period in 2017.
At the same time, the average residential sale price in Western Canada continues to increase. Greater Vancouver saw prices increase almost 11 per cent in January and February to $1,051,513, up from $950,184 during the same period in 2017. Despite reduced unit sales, prices are expected to continue rising. While Victoria is mostly a seller's market compared to Greater Vancouver, it has also seen an increase in average residential sale price, which was $831,000 in January and February this year compared to $761,000 during the same period in 2017.
"While the stress test did not impact Western Canada's major markets as much as other parts of the country, the foreign buyer's tax and proposed speculation tax in B.C. have remained a concern for buyers," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "In recent weeks, the speculation tax has actually made some buyers hold off on purchasing which may affect the housing market in the next few months."
It is expected that government intervention and the stress test will continue to play a pivotal role in purchasing behaviour as we look to the months ahead. The Leger survey found that four in 10 buyers have had to compromise on their purchase, and almost one in three opted not to purchase altogether. One quarter of buyers compromised on the size of their home, while 18 per cent made concessions on the location of their home.
Despite these compromises, 55 per cent of homebuyers say they feel like they can purchase the type of home that suits their families' needs compared to 46 per cent last year.
"The stress test, along with rising prices over the last two years, has contributed to the evolution of the Canadian homebuyer, and has prompted them to change their perceptions of 'must-haves' such as size and location," says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX INTEGRA Ontario-Atlantic Canada Region. "Homebuyers impacted by regulatory changes beyond their control have adapted to the circumstances and still, more than half feel like they can purchase the right home to suit their needs."
In Alberta, first-time homebuyers looking for affordability in Calgary and Edmonton continue to drive the market forward, with single Millennials and young couples gravitating toward the relatively stable condominium market. The average residential sale price increased 1.4 per cent in Calgary to $481,775 in January and February of this year, up from $475,288 during the same period in 2017. Meanwhile in Edmonton, a wide variety of inventory offers good opportunities for buyers, resulting in a small increase in activity and stable year-over-year prices to start 2018. Interestingly, activity in Atlantic Canada experienced increased demand from first-time homebuyers, many of whom are young couples and families. At the same time, the condominium market is being driven by retirees who are looking to downsize. Prices continue to rise across most Atlantic markets, especially in Saint John where the average residential sale price in January and February this year was $201,328, compared to $168,956 during the same period in 2017.
New residential and commercial development projects in markets across the country are expected to fuel demand. Cities most impacted will include Edmonton, Kelowna, Victoria and Fraser Valley in the West and Windsor, London, Hamilton-Burlington, Barrie, Durham, Ottawa, Saint John and Halifax in Central and Eastern Canada.
Despite all of the factors involved, the spring market across most of the country is forecasted to strengthen as we head into the warmer months. Supply is still low in many markets, and while the prices may not reach the same levels as this time last year, we are expected to see continued healthy price appreciation from the earlier months of this year across many regions in the country.
For the full 2018 RE/MAX Spring Market Trends report with detailed regional summaries and buyer demographics, click here.
Data Table
| Market |
Average Residential Sale Price* |
YOY% |
Average |
Estimated |
|
| 2017 |
2018 |
2018/2017 |
2017 |
2018/2017 |
|
| Barrie |
$432,859 |
$414,604 |
-4.2% |
$535,670 |
0% |
| Calgary |
$475,288 |
$481,775 |
1.4% |
$500,219 |
0% |
| Charlottetown |
$270,666 |
$266,465 |
-1.6% |
$258,000 |
-4% |
| Cornwall |
$177,000 |
$193,000 |
9% |
$177,000 |
0% |
| Edmonton |
$358,851 |
$367,417 |
2.4% |
$383,334 |
0% |
| Fraser Valley |
$520,750 |
$645,267 |
23.9% |
$562,567 |
0% |
| GTA - Brampton |
$703,270 |
$674,932 |
-4% |
$732,757 |
-4% |
| GTA - Durham |
$636,711 |
$585,024 |
-8.1% |
$656,931 |
-15% |
| GTA - Mississauga |
$712,107 |
$644,834 |
-9.5% |
$755,726 |
-2.5% |
| GTA - Oakville |
$1,256,882 |
$1,054,433 |
-16.1% |
$1,214,608 |
-10% |
| Halifax |
$270,038 |
$284,612 |
5.4% |
$294,169 |
3% |
| Hamilton-Burlington |
$623,820 |
$588,824 |
3.9% |
$669,930 |
0.5% |
| Kelowna |
$511,466 |
$525,670 |
2.8% |
$556,375 |
0% |
| Kingston |
$317,645 |
$367,780 |
15.8% |
$337,368 |
6% |
| Kitchener-Waterloo |
$446,624 |
$469,291 |
5.1% |
$491,546 |
6% |
| London |
$307,600 |
$344,800 |
12% |
$340,600 |
10% |
| North Bay |
$224,713 |
$231,177 |
2.9% |
$229,299 |
4% |
| Ottawa |
$373,841 |
$388,289 |
3.9% |
$404,122 |
4% |
| Regina |
$301,000 |
$305,500 |
1.5% |
$224,000 |
1% |
| Saint John |
$169,956 |
$201,328 |
18.5% |
$191,091 |
2% |
| Saskatoon |
$322,794 |
$303,389 |
-6% |
$299,500 |
-5% |
| St. John's |
$260,686 |
$269,993 |
3.6% |
$270,942 |
0% |
| Sudbury |
$281,995 |
$255,936 |
-9.2% |
$270,060 |
2% |
| Thunder Bay |
$219,669 |
$231,357 |
5.3% |
$250,616 |
0% |
| Toronto |
$834,144 |
$753,747 |
-9.6% |
$852,000 |
-5% |
| Greater Vancouver |
$950,184 |
$1,051,513 |
10.7% |
$1,034,286 |
3% |
| Victoria |
$557,000 |
$638,000 |
14.5% |
$598,000 |
10% |
| Windsor |
$234,110 |
$272,080 |
16.2% |
$280,072 |
10% |
| Winnipeg |
$284,335 |
$293,398 |
3.2% |
$311,601 |
-1% |
| *Average residential sale prices listed are from January 1 to February 28 in 2017 and January 1 – February 28 in 2018. |
| **Average residential sale prices listed are from April 1 – June 30 in 2017. |
| ***Estimated percentage moves are for April 1 – June 30, 2018 estimates compared to the previous year. |
Key findings from the 2018 RE/MAX Spring Market Trends Omnibus Survey
1. More than half (55 per cent) of Canadians currently feel like they can purchase the type of home that suits their family's needs. This is up nine per cent from last year.
2. Other than price, more Canadians rated having access to green space as an important factor when looking to purchase a home than any other consideration.
- Access to green spaces and parks = 52 per cent
- Proximity to work = 49 per cent
- Proximity to big and small retail stores = 43 per cent
- Proximity to public transit = 35 per cent
- Easy access to bike lanes and/or walking paths = 26 per cent
- Proximity to preferred schools = 25 per cent
- Proximity to restaurants = 21 per cent
- Proximity to cultural and community centres = 17 per cent
3. Canadians rate the following resources as being helpful to them when buying a home:
- Easily accessible information about homes in the neighbourhood that you are considering buying in = 56 per cent
- Access to a knowledgeable and experienced real estate agent = 52 per cent
- Online listings = 52 per cent
- Information and recommendations from trusted friends and family = 44 per cent
- Easily accessible community information for the neighbourhood that you are considering buying a home in = 39 per cent
- Easily accessible information about schools in the neighbourhood that you are considering buying a home in = 28 per cent
4. One-quarter (26 per cent) of Canadians are impacted by the regulatory changes in 2018 in their ability to purchase a new home. Of those affected:
- 24 per cent had to compromise on the size of their home
- 18 per cent had to compromise on the location/neighbourhood of their choice
- 17 per cent had to compromise on the style of the home
About the RE/MAX Network
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. Over 115,000 agents provide RE/MAX a global reach of more than 100 countries and territories. RE/MAX is Canada's leading real estate organization with more than 20,000 Sales Associates and over 900 independently-owned and operated offices nationwide. RE/MAX, LLC, one of the world's leading franchisors of real estate brokerage services, is a subsidiary of RE/MAX Holdings, Inc. (NYSE: RMAX). With a passion for the communities in which its agents live and work, RE/MAX is proud to have raised more than $150 million for Children's Miracle Network Hospitals® and other charities. For more information about RE/MAX, to search home listings or find an agent in your community, please visit www.remax.ca.
About RE/MAX INTEGRA and RE/MAX INTEGRA, Ontario-Atlantic Canada
RE/MAX INTEGRA, founded in 1980, is a privately held company by Canadian entrepreneurs. With regional headquarters in Toronto, Boston, Minneapolis, Indianapolis, Zug, and Vienna, RE/MAX INTEGRA represents nearly a third of all RE/MAX Sales Associates worldwide. The company was founded on the premise of providing outstanding service and support both at the regional level and to the end consumer. The Ontario-Atlantic Canada region has surpassed 10,000 quality Associates; The US regions — New England and the Midwest (including the following states: Minnesota, Wisconsin and Indiana) – account for more than 6,500 Associates with over 2,600 and 3,800 Associates respectively; and the European region leads with more than 16,000 Associates. For more information about RE/MAX INTEGRA, visit www.remaxintegra.com
About Leger
Leger is the largest Canadian-owned full-service market research firm. A survey of 1574 Canadians was completed online between March 12-15, 2018 using Leger's online panel, LegerWeb. Leger's online panel has more than 400,000 members nationally and has a retention rate of 90%. A probability sample of the same size would yield a margin of error of +/- 2.5%, 19 times out of 20.
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the "safe harbor" 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 "anticipate," "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 the future performance of the housing market, the Company's financial and operational outlook, as well as other statements regarding the Company's strategic and operational plans. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. 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. Such risks and uncertainties include, without limitation, (1) changes in business and economic activity in general, (2) changes in the real estate market, including changes due to interest rates and availability of financing, (3) the Company's ability to attract and retain quality franchisees, (4) the Company's franchisees' ability to recruit and retain agents, (5) changes in laws and regulations, (6) failure to maintain, protect and enhance the RE/MAX brand (7) fluctuations in foreign currency exchange rates, (8) the impact of recent changes to the Company's senior management team, (9) the impact of a previously-disclosed special committee investigation, including reputational damage to the Company and the time and expenses incurred in implementing the special committee's recommendations, as well as those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operation" in the most recent Form 10-K filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent 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 Ontario-Atlantic Canada
and to coordinate interviews, please contact: Danielle Scott, O. 416-934-2127, E: [email protected]; Marc Dodsworth, O. 416-934-2128, E: [email protected]; Western Canada: Wade Paterson, O. 250-860-3628; Ontario and Atlantic Canada: Melissa Clemance, O. 905-542-2400
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