Real Estate News – November
Good morning Ottawa!!
So, the question remains, are home prices going up or going down?
I wish there was a quick, easy answer for this, but in reality, we’re in a very complex economy right now. We need to look at supply, demand, population growth, employment, inflation, politics…..
Are builders keeping up with our increasing population? Sadly, no. The number of housing construction starts are down in Ontario. And the majority of new build projects are rentals. (more info on this later in this email).
Are interest rates coming down? Yes, they are, although it’s hard to say how long they’ll stay lower. And I don’t expect them to come down to 2% again. Either way, this is certainly a much-needed change for home-owners and buyers.
Is consumer confidence still strong? Not overly, although the recent US election results are certainly boosting overall confidence in certain markets. Generally, there’s a still concern surrounding inflation, Canadian government policies, taxes, political tensions globally, and the future of our economy.
So, to answer the original question of where the housing prices are going, my guess is it will continue to be a slower market with pricing on a very gradual rise. The overall forecast seems to be that we’re in a stagflation economy (inflation/cost of living rises, while consumer spending shrinks). And we’re starting to see this in residential home sales. Sales volume is still slower than it has been over the past 10 years, but thankfully, prices are holding fairly stable.
OCTOBER MARKET STATS:
Home sales volume is up 9.4% compared to October of 2023, but we’re down 3.9% below the 5 year average, and down 9.4% below the 10 year average (for October). Things are improving out there, but it’s a slow climb.
SALES VOLUME:
In October 2024, residential and condo resales increased by 9.4% compared to September of 2023.
AVERAGE SALE PRICES:
The average price of detached homes sold in October was $724,500. This is an increase of 0.4% from 2023.
The average price of townhomes (condo & freehold) sold in October was $506,900. This is a increase of 1.6% from 2023.
BIG PICTURE : WHAT’S NEXT?
Canadians may see inventory issues in the not-too-distant future (yes, worse than our current inventory shortage). As we know, the real affordability issue comes from supply and demand (in this case, a lack of supply with growing demand). We are seeing a drop in new home/condo construction and a drop in pre-construction sales. New condo sales were down over 50% in the first half of 2024 (see Reuters article below).
As pre-con sales drop significantly, construction starts will continue to slow down (typically, developers won’t move forward with a project unless they can sell at least 50% to 70% upfront). In a country with rapidly increasing population (immigration), we will eventually have a serious problem if the builders stop building. Construction is way behind the current demand, and Canada needs to address this concern (ideally with a real world, practical approach).
CHRIS STEEVES
www.exprealty.com
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