Cooling detached home prices lured buyers in these markets despite rising rates | Globalnews.ca

Many neighbourhoods in the Greater Toronto and Vancouver areas saw a jump in detached home sales in the second quarter of 2022 as buyers locked in lower rates and took advantage of discounts, according to a new report from Re/Max.

The real estate brokerage compared home prices and sales activity across dozens of communities in the two metropolises between the first and second quarters of the year.

The report provides a glimpse into how segments of the Toronto and Vancouver housing markets reacted as the Bank of Canada rapidly hiked interest rates, starting in March of this year.

“Those fast and furious incremental increases placed downward pressure on housing sales and prices, improving affordability on one hand, but eroding it on the other,” said Chris Alexander, president of Re/Max Canada, in a statement.

Re/Max found that home values dropped 10 to 15 per cent in the second quarter of the year compared with the first in parts of the Greater Toronto area, with Durham, Peel, Dufferin, York and Halton all experiencing double-digit drops.

Only 15 Toronto neighbourhoods saw an uptick in price quarter-to-quarter, five of which were in the city’s core.

Alexander pointed to the core’s strong demand and finite supply, along with higher average incomes for residents, as keeping the area “resilient” through the downturn.

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In Vancouver, 75 per cent of neighbourhoods saw home price declines in Q2, most of which dropped around 10 per cent in value, Re/Max said.

Core regions of Vancouver West and West Vancouver/Howe Sound saw home prices rise quarter-to-quarter, however, up 2.4 per cent and 8.2 per cent, respectively.

Re/Max also flagged a reversal of a pandemic trend affecting suburban markets: while many buyers sought to escape the city at the outset of the lockdowns in spring 2020, they’re now looking to return to the core as some remote work plans come to an end and downtowns reopen.

The softening of prices in these areas, meanwhile, gave prospective buyers an affordable way into a detached home in the suburbs as many were able to lock in five-year fixed mortgage rates as the central bank was mid-way through raising the cost of borrowing.

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Some 40 per cent of Greater Toronto Area markets saw an uptick in sales of detached homes in the second quarter compared with the first, Re/Max said. Durham Region reported an uptick in sales in this segment in half of its neighbourhoods.

The Greater Vancouver Area saw detached sales rise in 31 per cent of its markets, quarter-to-quarter.

“For those buyers that were active in Q2, improved housing affordability due to easing prices and the threat of higher rates down the road clearly provided the impetus for many to leap into detached home ownership,” Alexander said.

This trend is giving some existing homeowners the chance to upsize their homes or move into a more desirable neighbourhood, the report stated.

Condo owners, for example, who have seen their property values hold relatively steady, have been able to upgrade to larger, detached homes in these conditions as prices ease in the segment, according to Re/Max.