A recent report from Re/Max Canada shows that investors and move-up buyers are driving the detached housing market in the Greater Toronto Area (GTA), Greater Vancouver, and Fraser Valley.
As first-time homebuyers struggle with affordability in these expensive markets, those looking to upgrade or invest in real estate are the main drivers of sales in the first half of 2024.
‘The first (June’s) interest rate cut did little to incentivize buyers, but the second may have struck a nerve’
“While affordability remains a challenge for first-time buyers, more experienced buyers and investors are taking advantage of softer housing values, making moves before the Bank of Canada’s end to quantitative tightening,” says Re/Max Canada president Christopher Alexander.
“Pent-up demand continues to grow, with an estimated 20,000 to 25,000 buyers waiting in the GTA and another 5,000 in Greater Vancouver ready to buy. The first interest rate cut in June had little impact, but early signs show the second cut may be more effective.”
The Re/Max Hot Pocket Communities Report found that nearly 40% of surveyed markets (33 out of 83) saw an increase in detached home values in the first six months of 2024, with 30% (25 out of 83) reporting a rise in sales, indicating strong demand despite affordability challenges.
GTA: Sales momentum and price increases
In the GTA, the 416 area code (Toronto) has seen the strongest sales momentum. Over 34% of neighborhoods there have either remained stable or experienced growth in detached homebuying activity, surpassing the 905 area code, Greater Vancouver, and Fraser Valley. This resurgence is significant given the high prices that have deterred many first-time buyers.
Specific neighborhoods in Toronto, like Dufferin Grove, Little Portugal, Trinity-Bellwoods, and Rosedale-Moore Park, have seen notable increases in sales activity.
On the pricing front, the West End of Toronto has led with significant increases in detached housing values. Neighborhoods such as Kingsway South and High Park North have seen prices rise by 7.0% to 9.0% compared to last year.
Greater Vancouver and Fraser Valley: Limited inventory drives price appreciation
Limited inventory in British Columbia has supported price appreciation in the detached home category, especially in the Fraser Valley, where over 83% of markets reported an increase in average prices. Greater Vancouver follows closely, with over 70% of neighborhoods noting rising median values.
Areas like Squamish, Burnaby, and Port Coquitlam have seen significant price gains, with median home values rising by as much as 14.2%. Despite the higher prices, demand remains strong from local buyers and investors capitalizing on long-term growth potential.
Change in investor activity
The report highlights a shift in investor behavior, particularly in the GTA. Many investors, disappointed with condominium performance, are now turning to detached homes, especially on smaller lots in Toronto’s east end.
A recent report by Urbanation and CIBC Economics revealed that condo investors who closed on newly completed units in 2023 faced negative cash flow, prompting a reevaluation of investment strategies.
Affordable housing and the first-time buyer dilemma
While the report shows significant price appreciation, it also highlights the challenges faced by first-time buyers. Affordability remains a barrier, especially in high-demand regions like the GTA and Greater Vancouver, although there are still affordable options in these markets.
Regions like Durham in the GTA and the Sunshine Coast in Greater Vancouver offer detached homes under $1 million, providing opportunities for entry into the housing market.
The report suggests policy changes to address the affordability crisis, such as extending longer amortization periods for resale homes to help buyers qualify for mortgages in high-priced markets.
“All boats rise with the tide — once the first-time buyer segment gains traction, we should see a ripple effect,” says Alexander. “We’re not…
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