December 10, 2023

Homebuyers are more often getting the “upper hand” — and better prices — on sellers in Canada’s slowing real estate markets, according to a new Royal Bank of Canada report.

The RBC analysis of the October resale market argues higher interest rates have the fall housing market “stuck in a low gear.”

Inventories are still growing, but not at the pace seen for the past few months in Toronto, Vancouver and the Fraser Valley. Buyers are still finding they have more options to choose from, leading to a “rebalancing of market conditions.”

Those buyers who are able to qualify for a mortgage amid higher interest rates have been able to extract lower prices in some Ontario, Quebec and British Columbian markets, according to the report from RBC’s Robert Hogue and Rachel Battaglia.

Click to play video: 'New report shows just how far out of reach home ownership has become'

New report shows just how far out of reach home ownership has become

Toronto, Montreal, Vancouver and the Fraser Valley all saw price declines month-to-month in October.

Story continues below advertisement

Toronto’s October was the quietest in nearly 25 years, the report said, with buyers taking the “upper hand” in negotiations. But the rapid increase in interest rates means many prospective homebuyers are struggling to secure mortgages and are facing high ownership costs if they can qualify.

“Buyers are poised to maintain their strong bargaining position while their budget remains heavily constrained by high interest rates and extremely poor affordability conditions,” the report notes.

Vancouver, too, is in “full-blown cooling mode” with residential sales now below levels seen this time last year. “Tepid demand” from homebuyers and expectations that sellers will continue to list in the market will “tip the scale in favour of buyers and sustain the softening in prices in the months ahead,” the report argues.

Calgary continues to see home values climb, though the market “began to show cracks,” the report argues.

The city remains “Canada’s hottest market,” the authors note, but the advantages Calgary had tied to relative affordability and rapid population growth “are starting to wear off as powerful drivers of real estate activity.” Home resales in the city have declined in back-to-back months, but property values continue to climb.

Hogue and Battaglia say they expect the current national trends to last for the rest of the fall, with buyers “on the defensive” despite more choice in the market.

Story continues below advertisement

“High interest rates, ongoing affordability issues and a looming recession are poised to pose major obstacles,” they write.

Click to play video: 'Will Peterborough’s housing market rebound from interest rate hikes?'

Will Peterborough’s housing market rebound from interest rate hikes?

&copy 2023 Global News, a division of Corus Entertainment Inc.

Leave a Reply

Your email address will not be published. Required fields are marked *