The Weekly 411

TLDR:

😮 45,000 Realtors Have Exited the Ontario Real Estate Industry

📉 Canada's Inflation Rate Drops Unexpectedly

💲 Income Needed to Buy a Home Dropped in January

🤔 How Much Can $1M Buy in Major Canadian Real Estate Markets

📈45,000 Realtors Have Exited the Ontario Real Estate Industry

• Since 2022, approximately 45,000 realtors have left the industry in Ontario

• Toronto has the highest number of realtors per capita globally

• Ontario and British Columbia are more reliant on real estate than other provinces, resulting in a greater impact on their employment rates.

• The Ontario government has implemented new standards for realtors, including enhanced ethics codes and the ability to investigate realtors' conduct.

Why This Matters: Experienced realtors play a crucial role in helping buyers navigate the complex real estate market and are needed to ensure a successful transaction. The pandemic boom created a floodgate of new realtors. As the market heats up again, there is concern that inexperienced realtors will re-enter the market. 

📉 Canada's Inflation Rate Drops Unexpectedly

• Canada's annual inflation rate dropped to 2.9% in January, significantly lower than the 3.3% that was forecasted.

• Money market bets for a rate cut in April have increased to as high as 58%.

• The BoC's (Bank of Canada) next policy announcement is on March 6.

• Shelter price inflation increased to 6.2% in January, indicating upward momentum in rental costs.

• The BoC targets inflation at 2%, and is expecting inflation to cool to 2.5% by the end of the year

Why This Matters: Economists differ in their predictions for the first rate cut, with some expecting it in April and others in June. The Bank of Canada will likely remain cautious due to strong wage gains, and core inflation holding above 3%. 

💲 Income Needed to Buy a Home Dropped in January

• Housing affordability improved in Canada in January, as the minimum income required to buy an average-priced home decreased nationwide.

• Even in markets where home prices increased, the drop in interest rates offset the price increases, resulting in improved affordability.

• Vancouver saw the largest decline in the minimum income required

• In Toronto, the minimum income required to buy a home fell by $7,800 to $210,300, and average home prices decreased by $1,400.

Why This Matters: The improvement in affordability was mainly due to softening mortgage rates, which also led to a reduction in the mortgage stress test. Although the trend is positive, the sentiment may shift as demand returns and prices rise.

🤔 How Much Can $1M Buy in Major Canadian Real Estate Markets

• The average $1 million home in Canada is 1,760 sq ft with 3.2 bedrooms and 2.1 bathrooms. A $2 million home has 3.7 bedrooms and 2.6 bathrooms.

• Edmonton has the highest average square footage for $1 million homes at 2,675 sq ft, while Vancouver has the lowest at 900 sq ft.

• Toronto and Vancouver have smaller-than-average $1 million homes, while the Greater Montreal Area has homes 466 sq ft larger than the national average.

• Winnipeg and Halifax have the largest average size for $2 million homes at nearly 4,000 sq ft.

• National housing market activity has slowed, keeping the purchasing power of $1 million relatively consistent year over year

Why This Matters: Real estate investors leverage such statistics to strategically select locations where their investment dollars yield larger. Geographic diversification, informed by these insights, can mitigate investment risks associated with market volatility in specific regions. Properties in areas where investment stretches further may offer better rental income prospects and higher potential for capital appreciation.