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Real Estate

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Office buildings across Canada have faced high vacancy rates for years, and the rise of work from home arrangements has only amplified the crisis.

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This week on Down to Business, Steven Paynter, a principal in Toronto at Gensler, the largest architectural and interior design firm in the world, spoke about the future of the office building.

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During the pandemic, the city of Calgary hired Gensler to study whether it would be practical to convert many of its empty office buildings into residential units, and Gensler explained what he found.

Such conversions may help cities kill two birds with one stone — that is add more housing while helping offset some of the costs of empty office buildings, which deprive them of tax revenue, hurt local retail and have many other deleterious effects.

But Paynter also said that the office building suffers from a series of woes, and the reasons that many buildings are empty aren’t going away immediately. As always the interview is edited for clarity and brevity.

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Chronic housing shortages in large urban centres have resulted in ‘mini boom and bust cycles’

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Inventory levels in major Canadian housing markets have been dwindling over the past decade, with active listings in July running below the 10-year average in most cases, according to a report released Monday by Re/Max Canada.

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The organization’s Housing Inventory Report report, based on Canadian Real Estate Association data and insights from the Re/Max network, examined active listings in July from 2013 to 2022 in eight Canadian centres and found inventory levels have fallen short of the 10-year average in seven of them in 2022.

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Double-digit declines were noted in Halifax-Dartmouth (65.5 per cent below the 10-year average); Ottawa (almost 42 per cent); Montreal (40 per cent, from a nine-year average); Calgary (26 per cent); Winnipeg (23 per cent); and Greater Vancouver (16 per cent). The housing inventory shortage was less-pronounced in the Greater Toronto Area, where it was down almost seven per cent from the 10-year average. Hamilton-Burlington was the only market to buck the trend, landing at 3.2-per-cent above average.

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Christopher Alexander, president of Re/Max Canada, said population growth has played a significant role in depleting inventory levels from coast to coast over the past decade, triggering chronic housing shortages in large urban centres that have resulted in “mini boom and bust” cycles.

“If we don’t move now to build more housing in the current lull, it’s expected that this same scenario will continue to resurface over and over again,” Alexander said in the report.

A crisis is looming, but the outcome is not cast in stone

Christopher Alexander

Canada experienced double-digit population growth between 2006 and 2021, a trend that is expected to continue given Ottawa’s commitment to welcome 1.2 million newcomers into the country between 2021 and 2023 as part of an immigration strategy aimed at propelling economic growth and reducing labour shortages. However, in the context of the housing stock shortage, the rising numbers of new Canadians combined with an increase in household formation overall, are expected to intensify the inventory shortfall further.

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A recent report from the Canada Mortgage and Housing Corporation (CMHC) concluded that the country would need to build 3.5 million new homes by 2030 to improve affordability, yet Canada is averaging only 200,000 to 300,000 new units per year.

“During this window of softer demand, building efforts should be ramped up, not down. The offshoot effect is straining rental markets and contributing to ever-rising levels of homelessness throughout the country,” Alexander said.

Meanwhile, CMHC noted a decrease in the seasonally adjusted annual rate of housing starts in Canada’s urban areas in July 2022, driven by lower starts in the single-detached category. Stronger declines in multi-unit residential starts were registered in Vancouver, while a substantial slow-down occurred in both multi-unit and detached residential starts in Montreal.

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Yet, the trend is perhaps most pronounced in the country’s largest housing market — the Greater Toronto Area. According to a second quarter Condominium Market Survey by real estate research firm Urbanation Inc., approximately 35,000 new condo units were originally expected to launch for pre-construction sale in the GTA in 2022. While close to 16,000 units were launched in the first half of the year, fewer than 10,000 units are now expected during the remainder of 2022, suggesting that 10,000 units have been shelved.

  1. The Bank of Canada's interest rate hike on Sept. 7 will put homeownership further out of reach for more Canadians, say industry insiders.

    Mortgage stress test in focus as rate hikes ratchet up pressure on borrowers

  2. Pedestrians pass in front of a home for sale in the Le Plateau Mont-Royal borough of Montreal, Que.

    Single-family home prices in Montreal down nine per cent since April

  3. A home for sale. Toronto home sales fell in August compared to the same time last year.

    Toronto real estate board wants OSFI to revisit stress test as home sales volumes tick up

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Falling real estate prices may be adding to the current pressure on inventories, creating a disincentive for new construction.

TD Bank economist Rishi Sondhi predicts that “the average price of a home in Canada could fall between 20 and 25 per cent from its peak seen earlier this year” by early 2023, but that there is a likely a floor on how low they can go.

“Several factors … will help cushion housing demand and prices — the fastest rate-hike cycle in decades, growing consumer incomes and excess savings and low inventories in the new and resale markets,” Sondhi wrote in a recent report.

Other Industry watchers have cited a number of factors emerging to create a perfect storm that will keep housing scarce now and in the future, including inflation and rising interest rates, increased global supply-chain interruptions, swelling construction costs and a serious shortage of labour in the skilled trades, as well as high land acquisition costs and slow municipal approval processes.

“The trouble is that housing development is a slow process, and experience tells us the only thing slower might be government processes,” Alexander said. “Removing barriers and cutting red tape is necessary. A crisis is looming, but the outcome is not cast in stone. There is a short runway to reverse course before the impacts become very real for Canadian home buyers and renters.”

• Email: shcampbell@postmedia.com

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Lenders raise rate 75 basis points to 5.45%

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Major Canadian banks have increased their prime lending rates by 75 basis points to 5.45 per cent in response to the Bank of Canada’s move Wednesday to raise its key policy rate to 3.25 per cent.

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Toronto-Dominion Bank, Royal Bank of Canada, Canadian Imperial Bank of Commerce, Scotiabank, Bank of Montreal and National Bank of Canada all had their prime lending rate at 4.70 per cent prior to the announcement.

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The new prime rates come into effect Thursday. The hike in prime lending rate at Canadian banks indicate a higher starting point for lenders’ loan calculations.

  1. Bank of Canada governor Tiff Macklem

    Bank of Canada raises rate 75 bps and signals more hikes to come

  2. The Bank of Canada's interest rate hike on Sept. 7 will put homeownership further out of reach for more Canadians, say industry insiders.

    Mortgage stress test in focus as rate hikes ratchet up pressure on borrowers

The banks’ announcements come after the central bank hiked interest rates 75 basis points on Wednesday, the fifth consecutive increase since it started tightening in March.

The central bank said more hikes are on the way to tame inflation that continues to be too widespread in the economy.

• Email: dpaglinawan@postmedia.com | Twitter:

Listen to Down to Business for in-depth discussions and insights into the latest in Canadian business, available wherever you get your podcasts. Check out the latest episode below:

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Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

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Higher qualifying rates will put homeownership further out of reach, say industry insiders

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The Bank of Canada’s move to hike its policy rate by 75 basis points Wednesday will be quickly noticed by variable-rate mortgage holders and those anxious to get off the homeownership sidelines, but if inflation persists and rates have to rise more quickly — something the central bank’s chief acknowledged was a possibility — the effects are not likely to stop there.

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Yesterday’s move indicates the central bank is not letting up on its aggressive approach to tackling inflation, which eased in July to 7.6 per cent from 8.1 per cent in June and has made commercial banks and other financial institutions raise their mortgage rates in tandem with the Bank of Canada’s policy rate.

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The series of rapid interest rate increases this year has fuelled concerns that homeowners will eventually begin to have trouble handling their increased mortgage payments.

Based on the Canadian Real Estate Association’s average home price of $629,971 in July, a variable rate of 4.45 per cent would result in monthly mortgage payments of roughly $2,787 assuming a 20 per cent down payment. Prior to today’s hike, the same mortgage holder would have paid $2,577 per month.

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Alex Leduc, CEO of Canadian mortgage rate and analytic website www.myperch.io, noted that the difference of $210 per month was “not super material” but that it could still affect the average homebuyer.

Others in the industry see the latest rate hike as a huge strain on Canadians.

“Another 75 bps sucks significant discretionary income from the pockets of floating-rate borrowers,” said mortgage strategist Robert McLister in an email. “It also boosts the minimum mortgage stress test rate, which will dim housing sentiment further.”

The topic of the stress test resurfaced recently after the Toronto Regional Real Estate Board called for OSFI to revisit its rules.

“I wouldn’t bet on regulators blunting the stress test. The stress test is doing what it’s supposed to do.” McLister said. “Policymakers want to see higher-risk borrowers have higher qualifying hurdles as rates and unemployment rise. That’s what protects the financial system best.”

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Christopher Alexander, president of RE/MAX Canada, however, said he thinks it’s time to review it.

“Asking people to qualify at seven per cent now is going to negatively affect more people than even the government, I would think, wants to. I’m all for responsible lending practices — that’s what got us through the financial crisis in 2008 — but the stress test is just putting too many people at a disadvantage considering how high interest rates are today,” Alexander said.

Dan Eisner, CEO of True North Mortgage, predicts changes to the stress test won’t take place until December, when the Bank of Canada’s final 2022 interest rate announcement is set to occur. However, if the market fares the way he expects, the stress test might not budge at all.

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“By now buyers realize what is happening. I don’t think that this is the rate movement that turns buyers off more than they have been. It is quite the opposite,” he said.

He said he believes buyers are becoming more confident now that one of the final rate hikes has been announced.

“I think a lot of the talk right now is that this is one of the final moves the Bank of Canada is going to make. They may not make another rate increase and in fact if they do it’ll be a smaller one and so the five-year fixed rate might have plateaued and may not go any higher.”

Eisner noted that until recently, 60 per cent of his clients were taking a variable rate. He predicts that after the most recent rate announcement, the most popular rate will become a five-year fixed.

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“If you’re a buyer out there, you arguably have a little bit more certainty with what is going to happen with your payments. We might actually see buyers saying, ‘Well, at least I know what my borrowing costs are so now I can be a little more confident to go out and buy.”

  1. None

    Canada’s home sales and prices are falling. Has something changed in the housing market?

  2. A home for sale. Toronto home sales fell in August compared to the same time last year.

    Toronto real estate board wants OSFI to revisit stress test as home sales volumes tick up

One thing that is certain is that there will be two more interest rate announcements coming out of the Bank of Canada this year.

James Laird, Co-CEO of Ratehub.ca and President of CanWise said that homeowners should expect rates to continue to rise, and not to get caught by surprise.

“Fixed-rate mortgage holders should budget for today’s higher rates when their next renewal comes up,” he said.

• Email: shcampbell@postmedia.com

Listen to Down to Business for in-depth discussions and insights into the latest in Canadian business, available wherever you get your podcasts. Check out the latest episode below:

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Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

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Episode 165 of Down to Business podcast

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Across Canada, the number of houses and condos being sold is dropping, and what’s more prices are falling. But has anything fundamentally changed in the real estate market?

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This week on Down to Business, Murtaza Haider, a professor of real estate management at Toronto Metropolitan University, explains why he thinks housing prices in Canada will return to their space-ward trajectory.

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Haider said rising interest rates have forced prospective homebuyers to look in lower price brackets, which is bringing housing prices down. But he thinks the problem remains the same — too many people, not enough houses.

But as hybrid work arrangements take a more permanent shape, and companies reconsider their commercial office space, things could change. But that remains several years away at best. As always the interview is edited for clarity and brevity.

Listen on Apple PodcastsSpotifyStitcher and YouTube where you can also subscribe to get new episodes every Wednesday morning.

If you have any questions about the show, or if there are topics you want us to tackle, email us: downtobusiness@postmedia.com.

• Email: gfriedman@postmedia.com | Twitter:

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Meanwhile, the rush to unload properties showed no signs of slowing down

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Montreal is the latest Canadian city to report that its real estate markets slowed in August, with monthly data released by the Quebec Professional Association of Real Estate Brokers (QPAREB) revealing “several signs of weakness.” 

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The median price of a single-family home in the city in August was $525,000, down from $550,000 in July but up five per cent over August 2021, the QPAREB data showed. Prices peaked in April at $580,000 and have tumbled a cumulative nine per cent since then. 

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Condominiums dropped to a median price of $385,000, down from $391,500 in July. 

Meanwhile, the rush to unload properties showed no signs of slowing down. Active listings rose year over year in the Montreal CMA, with single-family home listings up 58 per cent and overall listings increasing by 37 per cent over August 2021. There are now 13,715 listings available for sale.  

“The magnitude of the increase in mortgage interest rates is beginning to be reflected in a more incisive way,” said Charles Brant, director of the QPAREB’s market analysis department. 

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  1. A home for sale. Toronto home sales fell in August compared to the same time last year.

    Toronto real estate board wants OSFI to revisit stress test as home sales volumes tick up

  2. A real estate sign in Calgary.

    ‘Not as frenetic’: Calgary home sales fall for third month in a row as market keeps cooling

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According to QPAREB, August is usually characterized by a lower volume of properties coming to the market than most other months in the year. In contrast to the past 20 years, this August has seen the most listings year-to-date. 

The dramatic effect that interest rate hikes are having on housing markets prompted the Toronto Regional Real Estate Board to call on OSFI to revisit its mortgage stress test rules. 

QPAREB data also shows that market activity declined at different rates in different regions within Montreal. The North Shore experienced the smallest slowdown, with a three per cent decrease, followed by the South Shore, with a 10 per cent decrease. Other major areas, meanwhile, registered larger slowdowns, with decreases of 23 per cent in Vaudreuil-Soulanges, 28 per cent in Laval, 31 per cent on the Island of Montreal and 34 per cent in Saint-Jean-sur-Richelieu. 

• Email: shcampbell@postmedia.com

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Higher borrowing costs hitting potential buyers and also existing homeowners nearing mortgage renewal

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Toronto’s real estate board is calling on the government to revisit the stress test as home sales in the country’s most populous city showed hints of a rebound in August, with price and volume moving up over July.

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The Toronto Regional Real Estate Board said higher borrowing costs are not only affecting whether Canadians can buy homes but are also hitting existing homeowners nearing mortgage renewal. In such a climate, it said the Office of the Superintendent of Financial Institutions (OSFI), Canada’s top financial regulator, should weigh in on whether the current stress test remains applicable.

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“Is it reasonable to test home buyers at two percentage points above the current elevated rates, or should a more flexible test be applied that follows the interest rate cycle?” its chief executive, John DiMichele, said.

A report released Friday found the number of homes sold in August was up 5,627 from 4,912 in July. This, however, is still 34.2 per cent below the 8,549 home sales in 2021.

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It found that sales represented a higher share of new listings compared to the previous three months, possibly indicating some support for selling prices in the months ahead.

The data also show that the board’s MLS Home Price Index was up 8.9 per cent from the prior year, while the average selling price for all sales only increased slightly, by 0.9 per cent, to $1,079,500 from $1,070,201.

In an interview, the board’s lead market analyst said the drop in sales this year compared to last year, as well as higher borrowing costs, are partly due to uncertainty.

Jason Mercer said they’ve been asking for clarity from OSFI, the Canada Mortgage and Housing Corporation and the finance ministry regarding the stress test, amortization periods and price ceilings for mortgage insurance eligibility amid the rapid rise in borrowing costs.

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“It’s important to hear what those bodies have to say about housing affordability,” Mercer said, noting the housing market is very sensitive to interest rates and will continue to be affected.

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The real estate board said removing the stress test when existing mortgages are switched to a new lender can provide affordability for existing homeowners. It also called for longer amortization periods on mortgage renewals to help in the inflationary environment.

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There hasn’t been much change since the two percentage points stress test was put into place, Mercer said, adding that it’s important to have flexibility on how that test is applied, especially as the market moves through different stages of the interest-rate cycle.

“Does the (current) stress test make sense in an interest rate environment that’s much different from when it first came into place and also much different from the ultra-low interest rate environment we saw in 2020, in the first part of 2021 or all the way through to the first part of 2022?”

• Email: dpaglinawan@postmedia.com | Twitter:

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Parts of landscape should remain resilient, even if rising prices, rapid monetary tightening throw Canada into a downturn

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Canada’s commercial real estate companies saw positive leasing momentum, strong rent collections and stable occupancy as they continued to battle back from the pandemic during the first half of 2022. Now the question is whether they can keep that trend going in the face of rising inflation and a potential recession.

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While Canada has so far been able to outrun the worst of the forces buffeting the global economy, a disappointing GDP print that showed slowing growth in Q2 and an early reading of a contraction in July suggests the country’s luck might be running out.

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But some market watchers suggest at least parts of the REIT landscape should remain resilient, even if rising prices and rapid monetary tightening throw Canada into a downturn.

A report from CIBC Capital Markets in June noted that REITs appear well-positioned to handle rising rates into 2026 for a number of reasons, including the ongoing return to pre-pandemic operational performance and the way REITS tend to structure their debt, with only a portion rolling over and being subjected to potentially higher rates each year.

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In its Q2 real estate outlook, meanwhile, global real estate services firm Jones Lang LaSalle Inc. predicted that different segments of the REIT universe would hold up better than others if the economy worsens.

“Both industrial and retail are expected to remain resilient to softening economic conditions as the year wears on,” the report said. “Office, however, is expected to experience a delayed recovery from COVID-induced occupancy losses.”

Both industrial and retail are expected to remain resilient to softening economic conditions

Jones Lang LaSalle

The outlooks came after a generally strong quarter across the board.

Industrial outperforming 

Industrial real estate markets continued to experience strong demand, with warehousing and fulfilment ranking as the top investments and inventories remaining extremely limited across Canada, according to PricewaterhouseCoopers (PwC).

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The rapid rise of e-commerce has been the biggest driver of growth on the industrial side. Trends, such as bidding wars, more typically associated with other asset classes are increasingly becoming factors in the space. There has also been a significant crossover and blurring of lines between industrial and retail markets as the “last-mile” delivery of e-commerce goods brings industrial facilities closer and closer to end-use consumers.

According to JLL’s report, leasable industrial space is expected to remain in short supply in the coming quarters. While industrial sales may begin to see a significant shift downwards with rising interest rates, so far, sales and performance have remained robust.

Granite Real Estate Investment Trust and Granite REIT Inc., for example, posted net operating income (“NOI”) of $92.8 million in the second quarter of 2022, up from $80.3 million in the prior year period.

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Retail evolution 

On the retail side, landlords continue to adapt to post-pandemic realities, and are looking for new ways to bring value to their tenants, such as by sharing data and offering more diverse experiences.

RioCan chief executive Jonathan Gitlin said his company has sought to help retailers reconfigure their stores and environments as shopping preferences shift.

The RioCan Langley Centre in Langley, British Columbia.
The RioCan Langley Centre in Langley, British Columbia. Photo by Jennifer Gauthier/Reuters files

“We’re helping our tenants evolve the space, whether it’s by changing the way drive aisles are set up in the parking lots … or if it’s changing the way loading works, or if it’s changing the way signage works. We’re doing things to help our tenants open up again and thrive,” he said.

It’s one of the tactics that has the company confident it can withstand any turbulence inflation might inflict on the retail sector.

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RioCan saw committed occupancy improve for the sixth consecutive quarter in the second quarter, returning to a pre-pandemic level of 97.2 per cent.

JLL noted that confidence remains high on both sides of the retail equation, auguring well for the sector.

“Businesses are confident about increased sales and shoppers are largely confident about spending,” the JLL report said.

End of the office party?

Pedestrians walk in front of office buildings in Montreal.
Pedestrians walk in front of office buildings in Montreal. Photo by Christinne Muschi/Bloomberg files

Office space, on the other hand, has been the laggard of the group, and could be most susceptible to a downturn.

After a slow rise in national vacancies over the past three quarters, the rate jumped 40 basis points in Q2, to reach 14.7 per cent.

Vancouver continued to lead the pack with the lowest vacancy rate in North America at 7.3 per cent. At the other end of the spectrum, Calgary checked in with a 26.8 per cent vacancy rate, though that’s still down from a high of 27.3 per cent experienced in late 2021.

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To respond to some of these challenges, landlords have offered support to those tenants looking to reconfigure their offices to incorporate more room for collaboration and team meetings. But at the first hint of a recession, “several companies began second-guessing their real estate decisions,” according to JLL.

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“Some tenants opted to sign termination agreements with the landlords, especially those reducing their headcount or shelving their growth plans for the time being. While this can be a pricey option upfront, the alternative of under-using their space could be much more costly still,” the report said.

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Overall, the REIT market experienced a net rental rate drop quarter-over-quarter, except in Montreal, which saw a 5.4-per-cent increase in overall average net rental rates. The downtown Toronto market saw the most significant decrease, dropping just over four per cent quarter over quarter to $36.92 per square foot from an average of $38.44 in Q1. The national average hit $20.22 in Q2, a 1.5 per cent decrease relative to the $20.52 average in Q1, a historical high.

Market watchers will be monitoring to see if that softening continues amid the economic headwinds.

• Email: shcampbell@postmedia.com

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Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

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Average selling price increased slightly to $1,079,500

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The number of homes sold in August dropped 34.2 per cent from the same month last year, signalling a cooler market for homebuyers amid rising mortgage rates.

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Data from the Toronto Regional Real Estate Board show that there were 5,627 home sales in August, down from 8,549 in 2021. The new number, however, is up slightly compared to home sales in July.

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“While higher borrowing costs have impacted home purchase decisions, existing homeowners nearing mortgage renewal are also facing higher costs,” the board’s president, Kevin Crigger, said.

The report released Friday also found that sales represented a higher share of new listings compared to the previous three months. The real estate board said this could indicate some support for selling prices in the months ahead.

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It also said The MLS Home Price Index was up 8.9 per cent from the prior year, while the average selling price for all sales only increased slightly, by 0.9 per cent, to $1,079,500 from $1,070,201.

• Email: dpaglinawan@postmedia.com | Twitter:

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More nuanced statistics show the magnitude of sale and price movements is in the expected range

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Housing markets are unique for their location, type, quality and size, so a decline in the average housing price is not the same as a decline in the price of an average house, which sometimes makes it difficult to decide whether it’s the right time to buy or sell.

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Adding to the confusion is that some metrics suggest prices are falling and others show an increase, though, overall, housing sales are down significantly compared to the peak activity in February, while average prices are down to a lesser extent.

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Let’s unpack the numbers in the Greater Toronto Area (GTA) as an example to clarify how markets are moving.

Sales in the GTA were down to 5,627 units in August, a year-over-year decline of 34.2 per cent, while the average house price rose by a tiny 0.9 per cent, according to Toronto Regional Real Estate Board (TRREB) data.

But TRREB’s quality- and size-adjusted Home Price Index (HPI) is a better indicator of price movements, because smaller and hence lower-priced homes might sell more frequently during slowdowns, which can lower the average price.

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Compared to August last year, the HPI was up 8.9 per cent, which seems a lot different from the dismal-sounding newspaper headlines and economist forecasts. What gives?

It appears a lot depends upon how the metrics are generated. For example, instead of comparing current sales and prices with those from the same period a year ago, you could make the peak housing sales activity in March 2022 the benchmark. Any comparison with March will exaggerate the declines.

Sales in the GTA in August were down 48.3 per cent from the peak sales observed in March, a much more significant decline than the 34.2 per cent drop from August last year. Similarly, average prices in August, not adjusted for quality or size, were down 18 per cent from the peak prices observed in February.

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Are housing prices declining or climbing then?

The answer depends upon perspective. If, say, someone bought a house at the peak of the housing market in February and is trying to sell the same property today, they are likely to experience a noticeable loss. However, such a cohort is usually small. Most homebuyers stay at the same place for longer than just a few months.

Even the significant decline in housing sales relative to the peak in February hides the fact that sales activity in lower-priced homes has picked up since then. The number of homes sold for less than $600,000 in the GTA has increased by almost 70 per cent since February, while sales for homes sold for more than $1.5 million declined by 71 per cent.

The shift from expensive to cheaper homes contributes to the decline in average home prices. But the decline in average prices does not necessarily mean that the price of an average or typical home has also declined by the same rate, because average prices are being computed for housing whose quality and size vary considerably over time.

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Despite these caveats, sales volume in 2022 will clearly be considerably less than observed last year. Housing experts attribute the decline to the increase in the cost of borrowing resulting from the steep rise in mortgage rates.

But what is ignored in such pronouncements is a phenomenon known as the “forward buy,” where consumers move up their purchases to benefit from a rebate or avoid paying an expected new tax later.

Last year’s ultra-low mortgage rates were partly responsible for the extraordinary sales volume because many households likely advanced their home purchase from 2022 to 2021, thereby boosting sales.

Housing sales in the GTA jumped by 28 per cent in 2021 from the year before, reaching an all-time high of 121,642. Overall, over 100,000 more sales were recorded in 2021 by the Multiple Listing Service in Canada than the long-term annual average. The decline in sales in 2022 is partly because some of this year’s sales were lost to last year.

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  1. A home for sale. Toronto home sales fell in August compared to the same time last year.

    Toronto home sales slide 34% in August, with average prices mostly flat

  2. New homes under construction in Brampton, Ont.

    Why Ottawa’s rent-to-own program won’t do much to solve Canada’s housing woes

  3. Homes under construction in a development in Langford, British Columbia.

    Estimates differ, but planners should never forget that more housing construction is needed

  4. Three quarters of millennials said that if housing was more affordable, they would prefer to stay in their current city or town.

    Canada’s millennials still bent on owning homes, even if it means relocating

These more nuanced statistics should help us realize that Canada is not experiencing a meltdown in housing markets. The magnitude of sale and price movements is in the expected range.

And since the average number of days a property is on the market increased to 34 in August from 11 in February, buyers in the GTA can now take their time deciding. The days of multiple offers and rapid sales are over, at least for now, which should be good news for homebuyers.

Murtaza Haider is a professor of real estate management and director of the Urban Analytics Institute at Toronto Metropolitan University. Stephen Moranis is a real estate industry veteran. They can be reached at the Haider-Moranis Bulletin website, www.hmbulletin.com.

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