Canadian real estate: Signs of recovery come with rising listings and cautious optimism
There’s an interesting pattern emerging in Canadian real estate: ever since the Bank of Canada’s first rate cut, home sales have increased as buyers get improved affordability, though still well below the long-term average.Price recovery is still yet to be found, and sales volume trended up again 1.3 per cent month-over-month in August, reaching its highest level since January 2020. At the same time, new listing activity continues to accumulate with new listings climbing for the fourth straight month. Will this trend continue? The market will head into buyer’s market territory, where supply is outgrowing demand. With that in mind, there are expectations that future rate cuts into 2025 well lead to cautious optimism among potential buyers and investors. Newly listed properties in Edmonton and Calgary offset GTA decline Despite the uptick in sales, the market remains mostly stuck in a holding pattern as many buyers are waiting for improved affordability before making purchases.The number of newly listed properties increased by 1.1 per cent month-over-month in August, with approximately 177,450 properties available for sale — up 18.8 per cent from the previous year, but still below historical averages.But for the second month in a row, there was a boost in new supply in Calgary, with Edmonton also witnessing an uptick of listings. The rise of newly listed properties in Edmonton and Calgary offsets a decline in the GTA. Consistent, stable increase in sales-to-new-listings The national sales-to-new listing ratio rose slightly to 53 per cent, matching our record in April. We’re a long way from returning to what was our highest average of sales-to-new listings which we achieved in December 2023: 81 per cent.We have been relatively and consistently stable ever since our increase from January’s 46 per cent to February’s 52 per cent. So, it may be some news that we’ve matched our April 2024 average. Prices After Canada experienced a record high price in 2022, the market recoiled down about as quickly as it jumped up. Since the bottom of the recoil, we’ve seen very little upward or downward momentum in price. Significant fluctuation in GTA condominiums Toronto area condominium apartments are having a significant fluctuation, with a recoil off of an all-time high price and a few bounces since the blow-off top. Source: x.com/Tablesalt13/ It’s clear that the outlook doesn’t look good for 2025, as it seems it will touch the 350 margin — the record low from around 450 in January 2022. Enjoying this article?Get the latest REM articles in your inbox 3x week so you stay up to date on the latest in the Canadian real estate industry Success! Email Subscribe The post Canadian real estate: Signs of recovery come with rising listings and cautious optimism appeared first on REM.
Retail Rent Growth Grows Across Canadian Cities; Eastern Markets Lead Growth
CBRE’s H1 2024 Retail Rent Survey was recently released, providing an essential look at retail rental trends across Canada. Covering 11 key cities—Victoria, Vancouver, Calgary, Edmonton, Saskatoon, Winnipeg, Kitchener-Waterloo, Toronto, Ottawa, Montreal, and Halifax—the survey tracks rental rates and market conditions across various retail formats. The survey is particularly valuable for understanding shifts in demand, rental growth, and market dynamics that have emerged in the first half of the year, providing data-driven insights into Canada’s evolving retail landscape.The survey found that with strong competition for retail space, rents are rising in most markets, reflecting the growing demand for prime locations. The report highlights that rental growth is widespread, with significant increases in suburban power centres and key urban areas, particularly in eastern cities like Toronto and Ottawa. As vacancy rates tighten due to rising construction costs and limited new supply, the report expects rental rates to remain elevated.Out of the 120 areas surveyed, 40 experienced rental rate hikes during the first half of 2024, the highest number recorded in the survey’s history. Toronto and Ottawa led the charge, reporting rent increases across seven retail formats or key urban areas, a significant concentration of growth in these eastern markets. This represents a geographic shift in rental activity, as eastern cities outpace others in terms of rising rents.One of the standout retail formats was the power centre, which saw rent spikes in seven of the 11 markets studied. These suburban, open-air retail hubs that typically feature standalone big-box retailers and smaller specialty shops, reported an average rental growth of 10% compared to the end of 2023, underscoring growing demand for larger spaces outside of traditional city centres.While urban areas benefited from increased tourism and summer events, helping to drive foot traffic in certain markets, others are still grappling with reduced daytime activity. Despite these fluctuations, rental rates continued to climb in several key urban nodes across six markets.Another factor influencing this trend is the high cost of construction, which has become a limiting force across many regions. The rising costs are restricting new retail development, keeping vacancy rates tight and rents elevated. New supply remains concentrated on mixed-use developments, which are adding both retail and residential units, particularly in high-demand areas where housing is scarce.The report highlights the continued demand for space and the upward pressure on rents, especially in key eastern cities and suburban retail formats. As construction costs limit supply and demand continues to grow, elevated rents are likely to persist, making retail an increasingly competitive and valuable asset.The full report, including breakdowns by each city, can be found on CBRE’s website.
The key to restoring housing affordability & encouraging smart policymaking lies in innovation & collaboration
Can housing affordability be restored? Is it just a matter of a few interest rate cuts and transit-oriented development? Reducing housing costs involves more than simply tweaking interest rates — it calls for a multifaceted approach that reflects the complexity of the problem. Lowering housing costs depends on several critical factors: the impact of government policies on the cost of homeownership, the necessity for community-focused strategies in new developments, the crucial role of collaborations between government and the private sector in enhancing quality of life indicators like housing accessibility and the embracing of proptech (property technology) advancements and data-driven decision making in real estate. Government participation in strengthening Canadian communities Developers want to create vibrant communities across Canada and support the needs of a growing national population. This is particularly relevant in Canada’s key metropolitan regions — Vancouver, Montreal and Toronto — as they receive the bulk of newcomers in the country. By collaborating with developers to lower development and construction costs, municipalities and regional districts in British Columbia can significantly boost the financial viability of projects for developers. This strategy can open the door to new opportunities for building vibrant communities outside metropolitan areas where land is more readily available, while also stimulating growth in urban neighbourhoods that have seen limited changes. The difficulty in managing costs can be seen in Vancouver’s 15-month delay in obtaining permits, which can substantially increase developers’ costs. This not only raises interest on project financing as funds remain idle but it also allows inflation to drive up material and labour costs. Additionally, this extended waiting period often leads to resource misallocation, potentially resulting in penalties for rescheduling construction crews and equipment. These disruptions can have a ripple effect, impacting broader financial plans and cash flow management. Government policy is another crucial ingredient, as zoning regulations, building codes and taxation can significantly influence the availability and cost of housing. Policymakers must work closely with industry stakeholders to foster an environment that promotes sustainable growth and affordability. Examining the impact of the new 30-year mortgage rule However, policy for the sake of policy is not the answer. Take the new 30-year mortgage rule that the federal government introduced for first-time buyers. While this can increase the borrowing power of first-time buyers, the reality is that this will not impact the vast majority of Canadians who need relief when it comes to buying a home. Meanwhile, it does serve as an effective political soundbite. In larger markets like Vancouver and Toronto, a 30-year mortgage stretches payments over three decades, leading to higher interest costs for homebuyers in the long run despite immediate payment relief. We must engage with local and provincial governments to ensure that both homeowners and developers are actively involved in decision-making processes. Notably, developers in the United States have an easier time accessing information, permits and data. For example, in Seattle, developers who have applied for a development permit can obtain the permit in a minimum of 21 days. In contrast, in Canadian cities like Vancouver, permits are obtained within an average of 15.2 months. Our current high borrowing costs and extensive time spent waiting for permits ultimately get passed down to homebuyers. Embracing proptech advancements alongside new policies Government policy alone won’t move the needle when it comes to helping first-time buyers get into their dream homes. But new policies combined with technology and innovation have the power to revolutionize the real estate industry, offering new ways to reduce costs and enhance efficiency. Proptech advancements, such as virtual reality tours and AI-driven property management systems, streamline operations and improve customer experiences. This goes hand in hand with innovations to speed up the approval process and grant building permits at the municipal and provincial levels. These technologies reduce the time and cost associated with buying, selling and managing properties. Additionally, the use of data and analytics allows for more informed decision-making, helping developers and policymakers identify emerging trends. Leveraging these technologies, alongside government programs and incentives designed to retain engineering and tech talent within Canada, will position us as leaders in innovation. This strategic approach will enable us to break new ground in the realm of development and affordable housing. Meeting housing needs and strengthening Canada’s future Addressing the high cost of development and homeownership in Canada requires more than just lower interest rates. Local governments need to foster public-private partnerships, reassess zoning laws and incentivize affordable housing development. This goes along with embracing technological innovations that can enhance transparency and efficiency, while a proactive approach to managing real assets ensures long-term value and cost-effectiveness. Governments at all levels should also be exploring strategies to streamline their cost structures, as current systems and processes lag behind the advanced technologies being adopted worldwide. In addition, succession planning can provide stability and continuity in housing strategies. These measures collectively encourage smarter policymaking and will work to increase affordable housing supply, resulting in stronger Canadian communities.
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