Realosophy chief outlines the ins and outs of Canadian housing affordability
While housing prices have decreased in many Canadian markets, overall affordability remains “significantly worse today than what it was a year ago,” according to John Pasalis, president and broker at Realosophy Realty Inc.
This is despite considerable price drops of as much as 20% in the Toronto area.
“The fact is when you look at housing costs today, even though prices are lower with rates where they are, it’s actually more expensive today than if you bought at the peak of the market,” Pasalis said in an interview with Bloomberg Markets yesterday. “So it’s more expensive to actually buy a home [now].”
Surging demand and inflamed competition in the tightest markets continue to keep homes out of reach for many Canadians.
“We haven’t seen a lot of people exiting the market, and this has actually been putting pressure on the housing market,” Pasalis said, noting that this is especially apparent in the Greater Toronto Area (GTA).
“Typically in down markets you expect to see investors exit the market quickly,” he said. “They’re usually the first ones to list their properties for sale, and we haven’t seen that in the GTA… That has actually kind of kept a ceiling on the number of listings hitting the market and has actually made the housing market in Toronto right now quite competitive, even with sales at 20-year lows.”
Even renting, once considered as the lower-cost alternative to ownership, is no refuge now.
“The rental market is unbelievable and part of that was driven by, you know, people hitting pause on their home search, but a lot of that more recently is this big boom in both immigration and non-permanent residents, and many of them tend to go to the rental market first,” Pasalis said.
“This is really pushing rents up. In Toronto, rents are probably up about 20%, per year, and we’re seeing similar rates across the country as well.”
