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Good Morning, 

The spring real estate season is gearing up and realtors are reporting that Canadians appear to be in the mood to buy.

A report by RE/MAX Canada out today says sales of luxury housing were up in the first quarter of 2023 over the end of last year in most Canadian markets, a trend it sees continuing.  

Pent-up demand is driving the rebound, they say. After a year of rising interest rates, the Bank of Canada’s decision to temporarily pause hikes in March has given potential buyers more confidence. 

But even though buyers are jumping back in, sellers so far have not. In February there was a 7.9 per cent plunge in the number of homes put up for sale. In some markets supply levels are now tighter than they were during the pandemic. 

The lack of homes for sale is propping up prices across the country, said Christopher Alexander, president of RE/MAX Canada. Prices swooned in the second and third quarters of 2022, but are now holding up relatively well in major centres, he said.

Prices for luxury homes in Calgary and Moncton have increased from the year before, while the GTA, Hamilton-Burlington, Ottawa and Greater Vancouver have fallen just short of peak levels.

Global uncertainty in the financial system may also be playing a role in demand. 

“As of late in the quarter, as a result of the SVB [Silicon Valley Bank] failure there seems to be a new wave of buyers wanting to make bigger purchases to get more of their cash into real estate,” said the report. 

So what does this look like across the country? 

“After a tumultuous 2022, cautious optimism is growing in major centres across the country,” said the report. “Competitive offers, once again on the table from St. John’s to Greater Vancouver, are becoming increasingly common, especially in areas such as the GTA where nearly 20 per cent of freehold homes over $3 million sold at or above list price in Q1 2023.”

• Saskatoon luxury home sales stood out by actually exceeding levels seen in the first quarter of 2022, the only province to do so. 

• In St. John’s, Nfld, a property, recently listed for $800,000, attracted 15 showings, three offers and sold on its first day on the market. 

• Sales of $4 million homes in Vancouver rose 21 per cent from the quarter before and in Fraser Valley, where housing inventory is at a 30-year low, sales of $3 million homes were up 20 per cent. 

• In Montreal, where there is still an ample supply of high-end homes and condos for sale, “uber-luxe” buyers have been active with a recent sale in Westmount for almost $8 million and in Ville-Marie for $5.6 million. 

• In Toronto, “hungry buyers returned to the market, expecting bargains and selection, but finding neither,” said RE/MAX. 

  Limited inventory has seen the return of multiple offers. So far this year more than 260 homes in the Greater Toronto Area have sold for $3 million and higher, but the “uber-luxe” market remains soft with just two sales over $10 million this year. 

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LEADING INDICATOR

Canadians aren’t holding out much hope that borrowing rates will return to historic lows anytime soon. At least according to the Bank of Canada’s latest survey of consumer expectations.

The prime lending rate right now is 6.7 per cent, up from 2.45 per cent in March, 2022. The Bank’s first-quarter survey shows that consumers now expect interest rates on mortgages will be almost 6 per cent one year from now, 5.19 per cent two years from now and 4.97 per cent in five years. 

Consumers are also reporting that they are worse off because of higher interest rates and inflation than in the last survey taken in the fourth quarter of 2022. More than 56 per cent of Canadians said high inflation has made them worse off, while more than 30 per cent say higher interest rates are causing them pain. 

Both businesses and consumers expect inflation to remain above two per cent until at least 2025.

FP MUST READS

Nutrien’s Ken Seitz on how Canada can seize its spot on the world stage

FP Editor-in-chief Kevin Carmichael in conversation with the head of the world’s biggest producer of potash and largest agricultural retailer, Saskatoon-based Nutrien

Investing pro Martin Pelletier relates his own experience searching for a home in Calgary’s tight housing market to finding the best stocks

Can the industry minister really force big telcos to lower phone bills?

Ottawa has a long history of talking a lot about creating competition in the telecom industry and accomplishing relatively little

WonderFi, Coinsquare and CoinSmart to create largest Canadian regulated crypto platform

The combined entity is expected to serve 1.65 million registered Canadian users with over $600 million in combined assets 

QUOTE OF THE DAY

— Richard Powers, of the University of Toronto’s Rotman School of Management, on whether Canadians can expect lower wireless prices after the merger of Rogers Communications Inc and Shaw Communications Inc. 

MARKET SIGNALS

BREAKING TODAY

• Prime Minister Justin Trudeau will deliver the keynote address at the U.S.-Canada Summit, hosted by the Eurasia Group and BMO Financial Group in Toronto

• BMO Capital Markets holds its annual oil and gas industry conference, CAPP Energy Symposium, in Toronto

• Scotiabank and CIBC hold annual meetings of shareholders

• Real Estate Board of Greater Vancouver reports home sales

• Today’s Data: Canada building permits, U.S. factory orders and job openings

• Earnings: Novagold Resources

PERSONAL FINANCE

There comes a day when most people are done with work and want to retire. Sometimes that day comes before you turn 65, so you need a bridge of some sort between now and when your pension and government benefits kick in fully. One reader is 62 and has reached that point in his career, and his financial situation backs him up. But financial planner Ed Rempel and retirement planner Eliott Einarson say things could be even better.

Ask Family Finance