REDISCOVER REAL ESTATE

T.O houses – and not condos – selling for 100% of asking

Outside of the condo market, there's increasingly little room for price negotiations in good ole T.O., with homes selling at 100% or more of the asking price within three weeks, according to new data.

The Toronto Real Estate Board released its mid-month resale housing figures, which also showed prices were up in all sectors from a year ago, and especially in single family homes.

“Strong competition between home buyers in many parts of the GTA has resulted in sellers realizing their asking price in a short period of time,” said Jason Mercer, senior manager or market analysis for TREB. “The fact that homes are selling for 100% of the asking price, on average, suggests that sellers are very much in tune with the current market situation and know the fair market value of their home.”

It also suggests buyers have little chance of scoring a deal below those increasing values. In February, Toronto homes sold for an average of 99% of the asking price.

But there is one exception, namely condo apartments. The average price in mid-March of $336,397 is 4% higher than a year ago, but it is 1.4% lower than the average condo apartment price weeks earlier at the end of February.

“I’m especially seeing it at the high-end, with developers offering (very high) Realtor commissions for properties that have sat on the market for quite a while,” Wojciech Pianka, a Toronto mortgage agent with Mortgage Alliance, said. “Some of those condos are also selling for less now than they did pre-construction, meaning investors are having to sell for less than they paid.”

Analysts point out that It can be difficult to read too much into trends over just a couple of weeks, but there is another sign pointing to a softening condo market.

While the average home listed in Toronto in February sold in 24 days, it was taking condos 29 days on average to sell.

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Bank of Canada holds rate but says outlook improved

OTTAWA (Reuters) - The Bank of Canada held its key interest rate unchanged on Thursday, as anticipated, but issued a more upbeat outlook for the Canadian and global economies that suggests it is starting to think about an eventual rate hike.

The central bank maintained its overnight lending rate target at 1 percent for the 12th straight time. It said the Canadian economic outlook was "marginally improved", uncertainty around the global economy had decreased and the profile for inflation was somewhat firmer than it had foreseen.

It also added a line about the dangers of high household debt levels in a sign of increasing worry about the consequences of ultra-low borrowing costs.

"Canadian household spending is expected to remain high relative to GDP (gross domestic product) as households add to their debt burden, which remains the biggest domestic risk," the bank said in a statement.

The bank repeated that there was "considerable monetary policy stimulus" in Canada but made no mention of the need to eventually withdraw that stimulus, language that it used in May and July of last year.

It tempered its more optimistic tone by noting that while it expected the economy to perform better in the first quarter than forecast, it would be due to temporary factors. Exports will contribute little to growth despite stronger U.S. demand because of persistent Canadian dollar strength and competitive challenges, it predicted. (Reporting by Louise Egan; Editing by Randall Palmer)

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Tighter mortgage rules ahead, say economists.

A new poll suggests economists are increasingly convinced the government will move to ratchet down mortgage rules in 2012 – that even as the broker channel ramps up lobbying efforts to block the move.

Some 10 of 14 economists and strategists surveyed for Reuter’s first poll on the Canadian housing sector last week said Ottawa does, indeed, seem poised to tighten mortgage rules within the next 12 months. Moreover, they believe that intervention is likely to come as early as the busy spring season.
 
That opinion may be reflected in their projections for home prices this year, with respondents predicting a mere 0.1 percent climb for this year and again in 2013. That’s down from last year’s near-1 per cent price growth. The poll results may only add to broker concerns that the federal government is planning to reduce the maximum amortization for CMHC-insured mortgages to 25 years instead of the current 30.
 
Brokers are already concerned that the CMHC has effectively moved to discourage lenders from growing their business-for-self portfolios. Earlier this month, the Crown corporation warned lenders they’ll face increasingly limited access to bulk insurance for their conventional loans as the CMHC’s $600 billion fund comes within 10 per cent of its government-set ceiling. At the same time, documents from the Office of the Superintendent of Financial Institutions revealed the regulator’s concerns over mortgage lending for self-employeds and lender underwriting standards on those loans.
 
Economists polled by Reuters are suggesting more formal rule changes are in the works. Industry analysts are betting on that chop in the amortization cap and/or an increase in the cost of mortgage insurance.
 
CAAMP is now actively lobbying against any such move, with its CEO twice travelling to Ottawa this month to deliver that message to Finance committee members in person. It has also crafted a new industry report documenting what could well be at stake with further tightening of the country’s mortgage rules --  detailing the economic impact of the housing and mortgage industry.
 
“We want the government to be aware of the economic and job contribution that housing and the real estate industry provide,” said CAAMP CEO Jim Murphy, coming off a second visit to Parliament Hill. ”CAAMP, based on current data and research, sees no need to further tighten or restrict access to residential mortgages at this time.”
 
The new report by CAAMP Chief Economist Will Dunning is bringing that point home by identifying all the ways that the Canadian housing sector is a significant economic driver.
 
Housing and mortgage activities, along, “could account for more than 1.35 million direct and indirect jobs about 8 per cent of total Canadian employment,” writes Dunning. “The housing and mortgage industry has been particularly important to job creation these past five years.”
 
The report estimates that from 2006 to 2011, 18 per cent of all job creation occurred as a direct and indirect result of growth in the housing and mortgage sector.

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Home prices to rise slightly in 2012: CMHC

(Reuters) - Activity in Canada's housing sector is slowing, but the average home price is expected to rise in each of the next two years, Canada Mortgage and Housing Corp forecast on Monday.

Experts have been calling for a slowdown in the sector for months, pointing to high real estate prices at a time when household debt levels have hit record highs.

However, the government housing agency projected Canadian housing starts and sales of existing homes will be little changed over the next 24 months.

"With the Canadian economy set to expand at a moderate pace and mortgage rates expected to remain low, activity levels in 2012 in both new home construction and sales of existing homes will stay close to levels seen in 2011," Mathieu Laberge, deputy chief economist for CMHC, said in a statement.

The Bank of Canada has kept interest rates at record lows since the financial crisis began in 2008 and is widely expected to keep is main policy rate at its current 1 percent target through 2013.

Strong demand for housing helped propel Canada's economy to a quick recovery following the 2008 recession. But continued high prices and heavy borrowing amid rock-bottom mortgage rates have policymakers worried about overheating.

While some observers fear there will be a major correction in the housing market when rates start rising again, few expect a U.S.-style subprime collapse. Recent data has suggested a soft landing for the housing market.

CMHC said housing starts are expected to be around 190,000 units in 2012, down slightly from 2011's 193,950. In 2013, starts are seen bouncing back to 193,800 units.

However, the agency predicted prices would continue to rise, with the average Canadian home reaching C$368,900 ($368,900) in 2012, up about 1.5 percent from 2011's average of C$363,365. For 2013, the average price was seen at C$379,000, a 4.3 percent increase over last year's level.

CMHC said sales of existing homes will edge up to 457,300 in 2012 from 456,316 in 2011. In 2013 sales are expected to climb to 468,200.

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Toronto real estate: Average detached house $606,600

The Canadian Real Estate Association has launched a new system for tracking home and condo sales prices aimed at giving buyers and sellers a more precise picture of what’s happening right in their neighbourhoods.

The new system will track Canadian and regional home sales and price escalations based on “benchmark prices.” Those benchmarks are based on quantitative factors (the number of rooms, bathrooms, age of home) and qualitative factors (proximity to schools, parks) and are intended to shine a light on highly localized factors that may be skewing prices up or down but not necessarily reflect market conditions.

CREA has also established a new MLS Home Price Index — similar to the Consumer Price Index which measures price inflation — that tracks prices relative to January, 2005 based on house type, be it single-family homes with one or two storeys, townhouses, row homes or condo apartments.

As of January, the benchmark price of a single-family home in Toronto hit $606,600 — $100,000 more than the $499,800 benchmark price for a similar home in the rest of Canada. That Toronto home cost 50.3 per cent more than it would have in January, 2005.

Over time, far more localized data will become available for MLS districts that should paint a clearer picture of neighbourhood trends.

“One of the key goals is to take a little bit of volatility out of housing statistics,” says Jason Mercer, senior analyst for the Toronto Real Estate Board. “It’s going to provide a good tool for consumers to understand where their home fits into the market.”

CREA will continue to release its traditional Canada-wide and regional breakdowns of average and median home prices, which it claims are often “misinterpreted” and can swing significantly, as national prices did last year when there was a rush of foreign investors snapping up homes in high-end Vancouver neighbourhoods.

Right now, just five major real estate boards across Canada are part of the new system — the GTA, Greater Vancouver, the Fraser Valley, Calgary, and Greater Montreal.

Eight more boards will start using the new measures this year, and another eight boards next year.

Source -The Star

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Toronto condo boom aligns with investor demand

An influx of new supply doesn’t seem to be slowing sales or rising rents in Toronto’s condo apartment market.

The Toronto area’s vacancy rate was down to 1.1% by the end of 2011 from 1.6% in 2010, according to the Toronto Real Estate Board.

The stiffened competition for rental units has resulted in landlords bringing rents beyond the level of inflation, said the board. Demand has been especially strong for modern units, aimed at both young professionals and downsizing baby boomers.

“The number of renters looking for apartments with modern finishes and amenities has steadily increased,” said Jason Mercer, TREB’s senior manager of market analysis. “The main source of these types of units has been investor-held condominium apartments. As renters have flocked to this segment of the rental market, upward pressure on rents has increased.

The neighbourhoods outside of the city had even lower vacancy rates. York had a vacancy rate of 0.8%, while Peel and Halton were down to 0.3%.

Despite a continuing effort by builders to add supply in the Toronto region, condo apartment prices have continued upward movement as well, rising 7.2% from $314,259 in the fourth quarter of 2010 to $336,748 in the fourth quarter of 2011.

New listings were up 14% in the fourth quarter compared to the same period in 2010.

“Even with the uptick in new listings following strong condo completions last year, market conditions remained tight,” said TREB President Richard Silver.

“Tight conditions were the foundation for a robust year-over-year increase in the average selling price.”

The fastest moving condos were within the York Region in Newmarket, with an average days on market of 18 days. The TREB overall average was 32 days.

Similarly, a section just west of the downtown of Toronto had an average days on market of 19 days.

 

 

Bank of Canada holds rates, sees faster recovery

OTTAWA (Reuters) - The Bank of Canada held its key policy rate at 1 percent on Tuesday, but forecast a faster Canadian recovery than expected despite an increasingly worrying outlook for the global economy.

Governor Mark Carney has held the central bank's rate unchanged for 16 months, the longest period without a rate change since the bank began targeting the overnight rate in 1994. A below-inflation 1 percent rate is providing considerable stimulus to the domestic economy, it says.

"For the Bank of Canada, 2011 was the year of 'copy and paste' when setting the overnight rate. This theme is expected to prevail throughout 2012," said David Tulk at TD Securities.

The bank said its overall Canadian economic outlook was little changed from October. But a stronger-than-expected second half of 2011 meant the economy should reach full capacity and inflation should return to its 2 percent target by the third quarter of 2013, one quarter sooner than previously forecast.

Inflation was 2.9 percent in November, the last month for which figures are available, and is forecast to ease to 2.8 percent in December.

The bank raised its projections for 2011 economic growth to 2.4 percent from 2.1 percent and for 2012 to 2 percent from 1.9 percent. Its estimate for 2013 was 2.8 percent, slightly lower than originally forecast.

But there is little sign that the bank is worried about a speedier return to full capacity. In its July Monetary Policy Report, the central bank said economic headwinds meant the policy rate could "deviate from its long-run level even if inflation is at target and output is at potential."

Economists and strategists in a Reuters poll had predicted no rate change on Tuesday and expect the bank to stay on the sidelines for at least another year.

"There was nothing here for those looking for a rate cut. At the same time there's really no indication that they're going to be considering hiking rates for many, many months," said Doug Porter, deputy chief economist at BMO Capital Markets.

While most economists have expected that the next move will be up - a change they forecast for the first quarter of 2013 - overnight index swaps, which are based on expectations for the overnight rate, point to lower rates.

Denis Senecal, head of fixed income and cash at State Street Global Advisors, said 2 percent growth would still be relatively strong considering that exports will not contribute to growth and there will not be any fiscal stimulus.

"It's not a great year, it won't be part of the vintage of the last 20 years, but it's still pretty strong considering the fact that we're not coming from slow growth, we're coming from healthy growth. So it's a transition year and the only negatives are coming from outside Canada right now," he said.

Europe is in worse shape than expected in October, but the bank said it assumed that the authorities there will take sufficient steps to contain the crisis.

On the other hand, the United States turned in a stronger performance in the second half of 2011 and "the U.S. recovery will proceed at a more modest pace going forward."

"There's a recognition here that our trading partner is doing better, but yes, the European sovereign debt crisis remains a threat to the global economy. But all in all the recent developments show that Mr. Carney is comfortable with his current...stance," said National Bank Financial chief economist Stefane Marion.

Shortly after the announcement, the Canadian dollar firmed to C$1.0121 to the U.S. dollar, or 98.80 U.S. cents, from about C$1.0131 just before the statement. It weakened to C$1.0132 by 12:10 a.m. EST (1710 GMT).

 

Housing starts jump in December

TORONTO (Reuters) - Canadian housing starts climbed more than expected in December, lifted mostly by multiple-unit buildings like condominiums, the latest sign that low interest and mortgage rates are keeping the country's property market buoyant.

Housing starts rose to a seasonally adjusted annualized rate of 200,200 units, up from an upwardly revised 185,600 units a month earlier, Canada Mortgage and Housing Corp said on Tuesday.

The number of starts was well above the consensus expectation of analysts, who had called for 185,000 starts.

"The increase posted in December was mainly attributable to the multiple urban starts, particularly in Ontario and in Atlantic Canada", Mathieu Laberge, deputy chief economist at CMHC's Market Analysis Centre, said in a statement.

The seasonally adjusted annual rate of urban starts rose by 10.1 percent to 181,900 units. Multiple urban starts, the lion's share of the broader rise, were up by 14.5 percent to 111,300 units in December, while urban single starts climbed by 3.8 percent to 70,600 units. Rural starts were estimated at 18,300.

But Mazen Issa, Canada Macro Strategist, at TD Securities said the outlook for the housing sector going forward was less optimistic.

"While we expect that an environment of low interest rates will prevent a pronounced drop in demand, the combination of overstretched household balance sheets, the impact of tighter mortgage regulations (including the potential for an additional tightening), and bruised confidence will nevertheless weigh," he said in a note to clients.

Led by a moderation in multiple units, which have underpinned activity over the last two years, Issa forecast that starts will moderate to 181,000 units in 2012 and to 172,000 units in 2013.

By REUTERS, , Updated: January 10, 2012 10:47 AM

 

 

Public Support for Toronto Land Transfer Tax Repeal is Resilient, According to Poll

Toronto, December 6, 2011 –REALTORS® will be making a presentation on Wednesday December 7 to the City of Toronto's Budget Committee, and will be providing City Council with results of a recent poll showing that, even after recent difficult debates on the future of City services, Torontonians continue to want fiscal reform at City Hall, including the repeal of the Toronto Land Transfer Tax and concessions from the City's unions. The poll was conducted by Ipsos Reid for the Toronto Real Estate Board (TREB) between November 17 and November 22, 2011. "TREB supports the recommended 2012 Budget because it continues the process of bringing fiscal sustainability back to City Hall; however, while we support the direction of this Budget, we are pointing out that it does not begin the process of fulfilling Mayor Ford's commitment to repeal the Toronto Land Transfer Tax in 2012.

This is a commitment that is strongly supported by Torontonians,” said Richard Silver, TREB President.

The poll found that,

65 per cent of Torontonians continue to support Mayor Ford’s commitment to repeal the Toronto Land Transfer Tax. Even when asked to consider the City’s deficit and recent efforts to address it, public support for the repeal of this tax is at 57 per cent; Torontonians want to see respect for taxpayers during negotiations with City Unions: 67 per cent believe that City negotiators should seek concessions from the unions; 57 per cent would like to see an end to current job security provisions; and 54 per cent would support a lock-out if union representatives do not agree to concessions; in contrast to the public’s strong opposition to the Land Transfer Tax, 52% of Torontonians support increasing residential property taxes as part of the solution to addressing the City’s deficit and paying for services; and, 54%, a majority, believe that City spending on programs and services is cost-effective and efficient. This is an increase of 9 per cent , from 45 per cent to 54 per cent, since April, 2011 when Ipsos Reid last measured this sentiment for TREB, indicating an apparent shift in attitude.

“Notwithstanding the difficult decisions that City Council has faced with regard to the budget, Torontonians understand that the Land Transfer Tax is part of the problem because it unfairly forces home buyers and business owners to pay more than their fair share, costing the average Toronto home buyer more than $6,000 every time they move; it is an unpredictable revenue stream that goes up and down with the real estate market; and it makes the City less competitive than other GTA municipalities,” said Silver. “The Land Transfer Tax is simply a band aid that has delayed the true solutions to the City’s financial challenges.”

These poll results were gathered from 401 residents of the City of Toronto, yielding a margin of error of +/- 4.9 percentage points 19 times out of 20.

 

Toronto’s skyline heads for the clouds!

Ten York will link downtown with the waterfront.

Ten York, the proposed 75-storey condo unveiled earlier this week by Tridel and Build Toronto, is poised to become one of the city’s most iconic new towers.

But the site on which it’s being built posed a serious challenge for architect Rudy Wallman. The property is wedged (it’s literally shaped like a triangle) between the Gardiner Expressway and the York St. off-ramp at the northwest corner of Harbour St. and York.

The land currently serves as a Toronto Parking Authority lot and a car-impound yard. “The site was quite interesting to work with,” Wallman says. “But we think we’ve made what could be negative into something a lot more positive.”

Ten York is slated to go on sale next spring with construction expected to begin in 2013. Anticipated occupancy will be in 2016. The project will include 774 suites.

The original design for the Ten York tower had a triangular “footprint” to correspond with the site. But the city expressed concern that the building was “too broad” on the east-west axis and “not a good fit with the neighbouring buildings,” Wallman says. “They thought a more compact, square-shaped building would be more appropriate.”

So he tweaked the design and returned with a plan that located the tower on the easternmost end of the site, where there’s the most room to work with. The base of the building retains the wedge-like shape.

Ten York will have vertical glass boxes projecting from its exterior, which Wallman says will give the tower its character. more details >>>

Published On Fri Nov 25 2011 -Toronto Star

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