Prospective home buyers held their breath in anticipation through the second half of last year – and largely halted their searches – as residential real estate prices declined across the country following rapid interest rate increases by the Bank of Canada.
To be sure, this spring won’t mark a return to the feverish bidding of the COVID-19-era housing boom. In many markets, demand from real estate investors and wealthy out-of-towners from big cities has waned. Buyers are far more cautious about making offers above the asking price, purchasing properties sight unseen and waiving home inspections.
Yet, in a stark departure from the pandemic, it is mostly local buyers who are venturing back into the market so far this year. In 2021 and early 2022, moneyed buyers from expensive cities such as Toronto and Vancouver flocked to suburbs and smaller towns looking for bigger homes and lower prices, ramping up competition in markets such as Chilliwack, London and Halifax.
Buyers are adapting to the higher mortgage rates in Vancouver and Toronto as well, the two priciest real estate markets in the country. People are now looking for smaller properties or in less desirable neighbourhoods, said Faith Wilson, a realtor with Christie’s International Real Estate in the Vancouver region.
In Halifax, where home prices started the year 10 per cent below their previous peak, the benchmark home price remains 70 per cent higher than it was four years ago. Current rules require lenders to ensure that mortgage applicants would be able to keep making payments based on the higher of a minimum qualifying mortgage rate of 5.25 per cent, or their contract rate plus two percentage points.
A home that would have been “just right” for them, recently sold for over $900,000, far above the couple’s financial comfort zone. Fixer-uppers are going for well below that, but generally require such extensive work that Ms. Laing reckons the cost of renovations would send the couple over budget anyway.
But even after higher mortgage rates brought an end to the real estate euphoria of 2021 and early 2022, finding the right home at an affordable price remains a challenge, she said.First time home buyer, Nishant Kalia, 31 , and Tanushree Holker, 30, look for a potential property in a newly developed area in the residential neighbourhood of Sage Hill in northwest Calgary.The challenge is that, for now at least, homeowners aren’t rushing to put up for sale signs.
In Oshawa, Ont., real estate agents Tania and Brandon Sheridan recommend that all prospective buyers make their offers conditional not just on their ability to secure financing but, if applicable, on their lender conducting an appraisal within that financing condition period, which is usually from three to seven days.
That became an issue for some buyers last year, as the housing market was cooling off. A buyer and a seller would agree on a price and a period of a few weeks or months to close the deal. In the meantime, though, similar properties in the neighbourhood could sell at lower prices. The ability to demand conditions without fear of losing out to other bids is a marked improvement so far this year compared to the past two years for buyers such as Ms. Laing, who knows all too well about the importance of a home inspection.
Having to withdraw the offer when she thought they’d finally found their dream home was a low in what had been a months-long emotional roller coaster, she said.Even after higher mortgage rates brought an end to the real estate euphoria of 2021 and early 2022, finding the right home at an affordable price remains a challenge, says Laing.Buyers in today’s market may be wary of making rash decisions and paying too much but, like Ms. Laing, they’re motivated.
From Delhi, India, Kalia and Holker arrived in Canada in 2019 as permanent resident and lived in Toronto for three years before settling on Calgary. Better real estate value, a lower population density and sunnier weather were all factors that influenced their move to western Canada.Mr. Kalia, who works in recruiting, and Ms.
One of them was Ms. Laing’s 29-year-old sister, Krista Laing, who bought a condo in Oshawa in February.Shay Conroy/The Globe and Mail
If anybody wants to know: residential construction (houses) is collapsing. Commercial construction (condos) is on fire. Enjoy condo fees for the rest of your life.