RE/MAX Canada says more detached home buyers enter the market due to prices decline

The latest report by RE/MAX Canada says that while many Canadian homebuyers are still pushed out of the market, some regions are facing a wave of detached houses buyers amid a significant prices decrease.

Home sales in the second quarter were up by 40% in the Greater Toronto Area communities and by 31% in the Greater Vancouver communities compared to Q1.

“The buyers that were active in Q2 saw better housing affordability caused by lower prices, and the threat of more interest rate hikes as a reason to enter the detached houses market,” – noted Christopher Alexander, president of RE/MAX Canada.

In case of Toronto, a rise in detached home sales was reported within the city limits.

“As the centre has traditionally been more resilient, with its strong demand, weak supply, higher household incomes, and greater equity of the expensive market, the results are not surprising,” – he added.

Detached house prices in Canada’s two biggest real estate markets have dropped since their peak seen in February.

According to the Toronto Regional Real Estate Board, the benchmark price of a detached home in the city of Toronto fell to $1,515,763 in July from $2,073,989 reported in February.

Realtors say some sellers decide to de-list their property because of the prices decline, intensifying a lack of market supply in certain areas.

John Pasalis, a president of Realosophy, says in July he saw a “huge hike” in the number of delisted properties. The reasons were different, including their decision to re-list their home at lower prices.

Alexander expects the tendency of weak market supply to continue.

“It’s a real issue, as supply of detached houses is still low from a historical point of view and also in the context of population growth and future needs. This will remain the main factor affecting Toronto and Vancouver,” – he noted.

“Tighter market conditions and a prospect of recession will be main market problems, but history shows that recessions are often followed by strong recoveries.”