From the desk of Tina O'Brien
December stats off the presses:
Sales down 48%
prices down 9%
Listings down 21%
We are also a few days into the Foreign buyer ban. Some key facts:
Foreign buyers are not a material segment of the population; less than 6% and there are exemptions ie international students and those who have filed taxes in the past 2 years, 3 unit exemptions
The Ban does not affect purchases in cottage country
This is a limited 2 year ban
On another note: The budget is also setting out an additional tax incentive to first time buyers that might put more pressure on demand
We can only currently house less than half of the population (tracking closely with the US)
The Feds apparently didn’t consult with CREA to model the impact on housing of these moves, so we have little in the way of impact predictions. Most analysts don’t think it will be impactful at all. It kind of signals to the world that we are discouraging for foreign investment. We might see retaliatory moves from other countries when it comes to investing but right now we haven’t heard any rumblings
How does this affect us? We need to be more mindful of foreign owned corporations that might be purchasing property, and we are awaiting direction from our national and provincial organizations on new required documentation if any.
Realtors only had about 11 days to understand the full content of the ban so we assume they are trying to sort it out. If you think your client might fall into this category, please contact me to discuss.
We don’t really expect that this ban will have much impact on demand. The interest rates have definitely sidelined some buyers and we are seeing a record number of rentals.
I think we’re all a bit puzzled about this given that during Covid, domestic demand seem to be what drove up the price is to be in with. It’s certainly pretty easy to rent out a second property and rates are up 17% in some places. Not a bad option considering the stock market is down to 2008.
So we’ve got a true housing shortage, interest rates are going to come back down because they have to in order for the economy to operate properly. So are we going to have another tsunami of demand with another immigration spike, and a first time homebuyer tax incentive?
With a highly competitive rental environment, at what point will these rents exceed the cost of financing?
This is certainly a lot to digest! It would seem that housing should be under a strong buy recommendation right now with a short term fixed rate. We have to build 3.5 million homes to meet demand by 2030. Sellers who do not have to sell are out of the market. If a property is priced reasonably well, it’s going to sell.
If you’ve got buyers, this is the time for them to make their move. They are going to save a further 10% which more than offsets the short term increase in mortgage costs. This is an amazing buyers market! (Check out our new buyer guide at SQ marketing!)
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