Stable environment and low interest rates continue to feed nesting instinct

With the overall strength of the Canadian real estate market, experts report pockets of high demand and prices and others where buyers are in charge.   ISTOCKPHOTO.COM 

With the overall strength of the Canadian real estate market, experts report pockets of high demand and prices and others where buyers are in charge. ISTOCKPHOTO.COM 

With spring’s welcome arrival, would-be homebuyers are flocking to real estate markets across Canada.

According to CIBC economists, low interest rates and reasonably healthy employment numbers continue to support a strong housing market, says Todd Lawrence, senior vice president of products and payments at CIBC. “Although there is little doubt that the market will eventually react to higher interest rates by slowing down, the expectation is that those higher rates will likely be slow to come.”

These factors also make it likely that any adjustment in the housing market “will be modest and slow,” he adds.

Today, as well as historically, the mortgage and banking sector in Canada is much more stable than it is in countries that have experienced more dramatic corrections, including the U.S., says Lawrence Dale, group head of real estate business at Zoocasa, a Rogers Communications company that offers a homebuyer-focused alternative to “It’s a more strict and regulated environment. When you combine that stability with low interest rates, people can afford more, which has definitely contributed to more demand.”

With a stable foundation and no prospect of a significant increase in interest rates in the immediate future, he sees the general housing market outlook as “very positive, with strong and solid markets in all of Canada’s major centres.”

Within that overall strength, there are variations in supply as well as demand for homes in different regions and even different neighbourhoods, stress both experts. “There are certainly pockets in the market that have very strong fundamentals in terms of both activity and prices, and others that are in a more equilibrium situation,” says Mr. Lawrence.

For the greater Toronto area, Mr. Dale anticipates a continuation of the strong markets seen over most of the last decade. With the exception of the 2007-2008 financial crisis, he says, “when the hiccups happen, they’re ever so small. We have seen a levelling off in terms of total number of transactions, but we’re still at a level that would have been considered unbelievably high seven years ago.”

That strength translates into multiple offers in desirable neighbourhoods such as Leaside, North Toronto and Kingsway, he adds.

Ian Watt, a realtor who has dominated Vancouver’s condo market for many years through innovative digital marketing strategies combined with intensely personalized service, reports a similar situation there. While transactions have levelled off and prices have softened in some sectors of the market, the inventory level of unique, desirable homes is extremely low.

Internationally recognized for his work with sports and entertainment celebrities as well as Vancouver’s tech elite, Mr. Watt says that even his clients with generous budgets are finding that it may take some time to find exactly what they’re looking for. “It’s hard to compete with the ‘bank of mom and dad.’ First-time homebuyers are coming in with assistance from their parents at all levels of the market, and many are young offshore buyers looking for million-dollar condos,” he says.

That competition exacerbates the effect of low inventory in many sectors of the market, he says. “There are a lot of typical condos available in the $600,000 range. But I have a client from Alberta looking for a $900,000 condo with a water view, and there have only been about 10 or 11 on the market since he started his search a few months ago.”

An Ontario couple looking for a heritage-style home in the city’s east side has so far had only two properties to choose from, he adds.

In general, rising home prices and federal government tightening of some down payment and amortization requirements have made homes less affordable, but the recently released Genworth Homebuyer’s Survey shows that the effect has been very subtle. (See pages M 2 and M 5 for more on the survey findings.)

In any real estate market environment, the key to a successful outcome is to be knowledgeable and prepared, “not only about the local market, but about the options available for financing the home purchase,” says Mr. Lawrence.

Whatever the market environment, meeting with a mortgage adviser early in the process can provide an important advantage, especially for first-time homebuyers, he adds. With professional advice, “you’ll know what you can afford as well as the mortgage features and benefits available.

“Our mortgage advisers can help with a plan that will make sure your expectations fit your budget and your financial goals – and give you the confidence you need to succeed in your search.” 


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“The expectation is that ... higher rates will likely be slow to come.”
Todd Lawrence
is senior vice president of products and payments at CIBC