Lowest Sales in History, Agents are Fleeing, 2023 Canadian Housing Market

MLS® sales per capita for 2023 is the lowest in recorded history, agents are struggling and many are leaving and looking for new jobs. Premiers from Ontario and BC are attempting to influence the bank of Canada in their most recent interest rate announcement while AirBnB owners are suffering huge losses due to new rules limiting their operation.

Links/references:

https://financialpost.com/news/todays-top-business-stories-october-24-2023

https://www.cbc.ca/news/canada/british-columbia/airbnb-owners-short-term-regulations-1.7004651

https://www.vancouverislandfreedaily.com/news/very-hurt-new-airbnb-restrictions-spark-backlash-from-b-c-landlords/

https://bc.ctvnews.ca/airbnb-operator-says-he-s-facing-losses-of-hundreds-of-thousands-of-dollars-because-of-b-c-s-new-short-term-rental-laws-1.6605986

https://www.thestar.com/politics/provincial/doug-ford-asks-bank-of-canada-to-stop-devastating-interest-rate-hikes/article_4355fdab-2fab-510e-b26d-ac2253562a15.html

Hello once again John Flynn here from Flynn real estate serving Southern Ontario based out of the Niagara region thank you all once again for tuning in so tomorrow we have the big interest rate announcement from the Bank of Canada and yet again we have another Premiere this time the premier of

Ontario Doug Ford writing his pity letters to the Bank of Canada asking them to pause the rates last month it was on September 1st I believe it was eie from BC and I think there was another one also but again writing a similar letter uh our citizens are struggling with these interest payments

Please don’t raise them anymore and then today just before the rate announcement the Bank of Canada says the premier rate requests risk Independence so of course the Bank of Canada has its mandate and is supposed to be independent from the government and governments not being influenced by them they have to stick to

Their 2% inflation Target and they need to do what they need to do and for some reason these politicians think that they can break the rules and uh influence them which is the whole point of being independent you’re not supposed to be influenced now will they influence them

No what they’re going to do is they’re going to write these letters one week before the announcement knowing what the announcement will most likely be which will still be a pause on the rates because they are taking effect and then they will you know get the credit for it

Saying well we wrote a letter and look we helped keep the paused but let me know what you think in the comments about that situation next I want to move on to the Airbnb issue and I’ll start with just a few headlines Airbnb operator says he’s facing losses of

Hundreds of thousands of dollars because of BC’s new short-term rental laws very hurt new Airbnb restrictions spark backlash from BC landlords and the next one’s kind of on the opposite side of the argument or the debate these Airbnb owners support support new BC regulations on short-term rentals Wyatt

D and Brett Mason say Airbnb limits will hurt them but help others so of course the argument is well these investors and these business people are losing all this money because they created these new rules and on the other side of the fence some say yes we’re owners it’s

Going to hurt us but it’s going to help people with their housing needs now overall let me know what you think I actually got a really good comment on either X or YouTube this week I tried to look for but I couldn’t find it but they said it’s kind of backwards nowadays all

The hotels are used for long-term rentals and the homes are used as hotel rooms which is kind of true right now another point I made was the technological loophole how the and how these things were created they were created with technology and of course they weren’t regulated they were saying

Here do your own thing don’t worry about hotel regulations or real bed and breakfast regulations you can just rent the rooms out yourself you don’t need to go through a city or anything so the cities and the municipalities have to plain catchup where you know they again it was a technological loophole that

These things were created through and they’re playing catchup now whether it’s Uber or Airbnb they’re slowly catching up with regulations saying look you can’t just drive people around in your car you have to have it inspected you have to be registered with the city and so there’s really they’re not going

Backwards with these they’re just catching them up to the standards that everyone else was subject to prior to this technological advancement okay now let’s look at some data and I do have an updated housing or home buying recipe but let’s look at some data first from

This week so I created this chart to supplement a chart I had from last week where I showed the sales in 2023 and the forecast it for the last three months but the total sales for 2023 similar to the sales in 2010 yet we have 7 million

More people and 2 and a half Mill million more homes so I wanted to put that into perspective so I did a sales per capita chart here and it really goes to show you this takes into account all those extra people and all the extra homes and when looking at the sales per

Capita and this chart scale is sales per 100,000 people you can see how low they are it’s actually the lowest in recorded history we didn’t have MLS sales data prior to maybe 2004 but there was no data available up until 200 7 of course uh MLS uh electronic systems weren’t

Around prior to again the beginning of the 2000s or so but you can see the lowest level by far 18% below the average and 10% below the previous low so 2023 is by far the lowest sales per capita and again in reference the lowest sales overall by that measure of course

It always has to come back to us the agents now how are we making out and of it’s going to hurt a lot of agents in 2010 we had 98,000 agents now we have over 160,000 probably closer to 165,000 agents so looking at that how many deals

Per agent uh are happening right now and of course it’s going to be like the sales per capita it’s going to be very low so here is an updated chart going back again 2007 since we have consistent records from that year and this is deals

Per agent per year and this is MLS deal so it wouldn’t include a lot of the new builds but um again it’s all MLS sales and you can see we’re about half of what we wear in 2007 and about 40% lower than we were in 2021 so the agents are doing

A lot less deals and making a lot less money obviously I just want to share some comments from the post that I made on Twitter about this or should I say x so of course I posted this charge on X and my sarcastic comment asking if the

Agent Sav some cash from 2021 and here are some of the comments waiting patiently for discounted Audi leases on leasebusters from free casino money I have known my agent for 24 years up to June she was doing fine as her clients were listing and moving out to Port Hope

Brighton or moving out of Province now she is feeling it as many buyers are not qualifying for what they want to buy she sold two homes in past three months actually that’s not bad considering most agents or the average agent does 2.7 deals per year in 2023 and from Donna

Baker I don’t know how to say your name properly you can pronounce it like 10 different ways uh so sorry if I mispronounced it she’s actually a retired realtor from what I know had a chat with a realtor in GHA greater Hamilton area who I’ve known forever

Very constant producer 18 to 24 deals a year in 2023 zero deals zero they haven’t been able to get anything together listings that haven’t sold doing nothing but spending a lot of dollars they don’t think they can renew wow so that’s that’s huge right zero deals in what nine months almost 10

Months by now I actually had a call from an agent or previous agent that used to work under my brokerage and he was calling looking for a reference for some job he was applying for so it is changing out there agents are leaving the industry a lot of them will hold

Their licenses so you won’t see the Korean numbers go down because you can hang your license fairly cheap maybe $500 a year without being part of a board but again they are leaving the boards and are leaving active trading in real estate now a couple of really

Important charts before I go the first one is time it took rate hike Cycles to break something and this is in Canada this was going back for the last four Cycles 1978 to 1981 it took 42 months there were some pretty significant rate hikes back then in the late 80s it took

31 months again these are from the bottom of when they started hiking rates until they reached the top and they broke and they have to start dropping rates 31 months in the late 80s the one from 1997 to 2001 is the dotom bubble not a huge deal in Canada it more

Affected the states but again it took 44 months in Canada to break something and that economic downturn happened right after and then the most recent one in 2005 to 2007 right before the great financial crisis Canada got off easy again on that uh crisis but it took 28

Months from the bottom of the cycle to the top to break something before they started dropping rates so we have between 28 and 44 months we are at month 20 right now so it could happen at any point where they reverse course but the predictions even from the Bank of Canada

Are saying late 2024 before they considered dropping rates it might happen before then but we’re probably looking at Mid 2024 at the earliest until 2025 sometime before they start reversing on this cycle and start dropping rates and of course we’ll be in an econ economic turmoil by then and yes

The Bank of Canada does want a recession they call it a soft Landing but they do want a recession this is the whole point of that some people think that I’m praying for a recession but it’s not me this is the the cycle right this is all

Part of the cycle you know we have good times and you have bad times I just told my cousin today in Ireland she was messaging about the Irish housing market uh people who were saying well prices won’t go down I say well just as the tide goes in it goes out right it’s

Prices go up they come down and lastly the home buying recipe this is updated not a big change but I did add battery indicators to make it more visually appealing for those people who like that kind of thing and of course we have the falling prices the falling rates we

Don’t have yet the high unemployment we don’t have but it has ticked up so we have one bar of battery there and the mortgage AAR and delinquencies are still ultra low nothing happening there of course in my previous predictions last year I’m predicting 2024 to 2025 for

Buying opportunities so we are kind of on track but don’t expect it in the next month or two so that’s it for this week any comments replies questions down below as always and I’ll see you next time