Canada’s two most expensive real estate markets are becoming even more exclusively reserved for the few.
A Canada Mortgage and Housing Corporation report found that housing demand in Toronto and Vancouver remains high while supply is considerably lagging—especially compared to Montreal, Calgary and Edmonton.
Vancouver-based REMAX sales agent Ron Antalek says the new mortgage stress tests have removed about 20% of buyers from the market, however, that’s done little to abate pressure on the Lower Mainland’s housing market. Low-rise housing under $1mln is especially hot.
“We still have bidding wars,” said Antalek. “They subsided a bit, but we still get them on well-priced detached housing, especially in the under-million rage, so the demand is still very high on apartments and townhouses.”
Antalek says that there’s strong demand for Lower Mainland condos, and that’s being reflected in housing starts, albeit they’re still too little. Alluding to the recent string of government intervention in the housing market, he believes priorities are misplaced and that more can be done to increase supply.
“We have more new housing starts for apartments and townhouses this year than last year, so some new supply is healthy,” he said. “We do not need government implementing negative policy to create affordable housing, we need incentive for the development community to build more and supply will help correct the price issue. There are lots of new housing starts coming and the remedy is to increase the supply. That will help the consumer, that will help the supply, and that will help the pricing.”
Back in Toronto, Zolo Realty sales agent Geoff Malisa says low supply coupled with exorbitant pricing is keeping renters in their apartments for longer, and with rent control, it’s made him think twice about purchasing investment properties.
“I can speak from my own personal experience—I’m looking to buy an investment unit and I’m crunching the numbers one one-bedroom units in the King West area,” he said. “These one-bedroom spots go for $450,000 or $500,000. Factor in the maintenance fees and rental rates, and prices have increased quicker than rental rates. I find now that when I go to buy an investment condo, if there’s a tenant in place and the landlord hasn’t properly managed the rent and it’s below market, it’s tough to increase the rent until another tenant comes in. Investors are looking for returns, but it’s getting tough.”
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