Page 7 - Real Estate Now Sept-Oct 2022

Where has the market been before?
A seller’s market occurs when there are more buyers than homes
on the market, leading to more competition and higher prices.
On the flip side, a buyer’s market takes place when there are more
homes compared to purchasers, and prices tend to be lower due
to increased supply. A balanced market is somewhere between the
two.
Toronto and Vancouver were recently in a notable seller’s market,
a trend that only accelerated during 2020 and 2021 as buyers
reevaluated their needs during the pandemic and sought out new
living quarters.
“Right before the pandemic, I would say we were a little more balanced. I think due to the pandemic, the seller’s
market was abnormally strong. There was just an intrinsic need for more space at home,” said Alex Yao, a broker
and REALTOR® with RE/MAX Select Properties in Vancouver, British Columbia. “[For] everyone, their lifestyles were
completely changed; spending more time at home, working from home, kids not going to school and [therefore]
needing the space.”

This hasn’t been the case for every market in Canada. In Calgary, the transition into a seller’s market has been more
recent. Jared Chamberlain, broker and co-owner of Chamberlain Real Estate Group, said a seller’s market didn’t start
to emerge in the city until mid-2020 and fully surfaced in 2022, a pattern that formed as out-of-town buyers relocated
to Calgary during the pandemic and existing residents upsized their homes.
“What happened in 2020 and 2021 is we saw some increases in prices. We saw some multiple offers coming together,
things happening that way,” explained Chamberlain. “But when we turned into 2022, something just took off and
there was a lot of out-of-town interest, more than what we saw [before].”
Only recently, Chamberlain says Calgary has been flirting with a balanced market in areas outside of the downtown
core, such as Airdrie, Cochrane, and Okotoks—most of the city is still in a seller’s market. Meanwhile, the transition to
more balanced and buyer market conditions occurred in Vancouver and Toronto started earlier this year.

Why is the market changing, and what does it look like these days?
In terms of why Canadian real estate markets are changing, it comes down to multiple factors.
The most obvious reason would be a rise in interest rates, which have been increasing since the Bank of Canada
announced its first hike to its target for the overnight rate in March 2022. In July, the Bank moved up the target rate
by one whole percentage point to 2.5%. This increase has forced buyers to qualify for a mortgage at a higher rate.

In some cases, higher interest rates have limited buyer purchasing power. Tirajeh Mazaheri, a REALTOR® in Vancouver
with Coldwell Banker Prestige Realty, explained some purchasers who wanted to buy in early 2022 held back on
buying in hopes the market would cool. However, their purchasing power has since reduced as monthly mortgage
payments grow with rising interest rates.

“It’s shifted more. The buyers [who] can make those payments, they’re going out and have more negotiation power,”
said Mazaheri. “But at the same time, there are a lot of properties just sitting on the market because those same
buyers who were wanting to buy before, can’t buy anymore.”
The sales-to-new listings ratio pulled back to 51.7% in June—the lowest level since January 2015. In its report, CREA
noted about 75% of local markets were now balanced, and a handful of others are in buyer’s market territory.
Higher rates have affected some segments of the market differently. According to Davelle Morrison, a Toronto-based
broker with Bosley Real Estate Ltd., condos, which tend to be less expensive than single-family homes, have been
faring better than their detached counterparts.

www.BCislandhomes.ca | REAL ESTATE NOW | 7