REDISCOVER REAL ESTATE

Toronto housing market’s new challenge: Low supply

Toronto continues to live up to its reputation as one of Canada’s most dynamic real estate markets, with the latest data from the Toronto Real Estate Board (TREB) showing healthy sales at 10,326 transactions in March and 22,575 in the first quarter of the year.
 
However, while demand was clearly not an issue, the other metrics showed an emerging trend: a shortage of properties as demonstrated by the drop in the number of new listings this quarter, compared to the same period last year.
 
In an interview with CP24, TREB president Mark McClean said that low supply in the market is one of the board’s primary concerns at present.
 
“Transactions are great. The problem that we’re facing is just the fact that we’re not getting as much product as we used to, and moving forward, that seems to be the challenge,” McClean stated.
 
TREB officials argued that this shortage might even play a role in dampening the market, which could compound in the long run.
 
“The supply of listings [continues] to aggravate many would-be home buyers.  We could have experienced even stronger sales growth were it not for the constrained supply of listings, especially in the low-rise market segments,” TREB director of market analysis Jason Mercer said in a report.
 
Despite this dearth in availability, the brakes in Toronto’s real estate activity aren’t engaging any time soon.
 
“The benefits of home ownership [here are] the safety and the security. And of course, when you own a home, your investment is something that you could actually live in,” McClean said.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage.

Source: Canadian Real Estate Wealth

Looking to buy, sell or refinance? Know your options. I can help! Direct line: 416-219-6662

 

How transportation impacts real estate prices

Being around public transportation wasn’t always a good choice when it came to real estate. After World War II, downtown living was frowned upon and people flocked towards the suburbs in order to find larger and greener land. As a result, real estate prices rose outside the city.

Fast forward to today and we’re seeing the opposite effect. People want to live in the downtown core and public transportation is at the forefront of political debate.

Billions of dollars are being spent on new subways and streetcars in cities like Toronto and Vancouver. Calgary and Ottawa are also beefing up its public transit service in response to a higher demand from residents.

In fact, every major city across Canada has plans to focus on public transportation. It’s a response to increased population demands, and on minimizing the cost of economic and environmental resources.

Increased housing prices are a result of higher demand. In terms of housing near public transportation, this demand has increased because people want the convenience of walking to a subway or streetcar. This is an advantage because there is no requirement to pay for parking.

The millennial generation (those under 30 years old) also prefers to live close to public transportation. This generation of the population has made a conscious decision to drive less and walk more, thus, making them more dependent on public transportation.

This is especially true in the rental market where many renters opt to live in housing that is walking distance to a subway or streetcar route.

Transit is vital for building communities. It’s an essential service that provides mobility, creates jobs and takes cars off the street. As a result, congestion is reduced, fostering economic growth in the economy.

In terms of real estate prices, property values that are located close to public transit increase at a higher rate and have been shown to be more resilient to economic downturns.

A study created by the National Association of Realtors (NAR) and the American Public Transportation Association (APTA) concluded that “property values with good access to public transit remained much closer to their pre-recession levels than properties without access, even within the same city.”

This can also be seen in the short-term rental market. Properties listed on AirBnB and VRBO yield a higher return when they are located close to public transportation and to the downtown core.

As cities across Canada become more developed, it will be more and more difficult to commute downtown via car. Thus, properties that are located closer to the downtown and have good access to public transportation will continue to see growth in real estate prices.

by Michael Rix -Canadian Real Estate Wealth

Looking to buy, sell or refinance? Know your options. I can help! Direct line: 416-219-6662

 

Vancouver and Toronto markets continue to defy expectations

In its updated outlook for the housing industry this year, the Canadian Real Estate Association noted that Vancouver and Toronto continued to defy expectations despite predictions of possible slowdown in 2016.
 
Previously, the CREA projected that price growth in Ontario and British Columbia would cool down a bit this year. The revised forecast now anticipates sales growth of 1 per cent, with the two provinces to stimulate an increase of 8 per cent in national average prices, up to $478,100.
 
“Price gains in these regions are expected to continue to stand in sharp contrast to moderate price declines among housing markets whose prospects are closely tied to oil and other natural resource prices,” the outlook stated, as quoted by The Globe and Mail.
 
The number of homes available through listings also spiked upwards by 0.5 per cent in February compared to the beginning of the year. Meanwhile, the sales-to-new-listing ratio nationwide sat at 59.5 per cent last month, breaking the record set in November 2009.
 
“Canadian resale housing market trends this year are expected to resemble those apparent in 2015, with very tight supply leading to strong price gains in British Columbia and Ontario – particularly in the Lower Mainland and in and around the Greater Toronto Area,” the report added.
 
CREA said that this performance level has kept national sales numbers afloat, despite weakness in other markets like Edmonton, Montreal, and Greater Moncton.
 
However, BMO chief economist Doug Porter warned that these numbers might paint a misleading picture of a strong overall national market, when in fact it’s basically just two heavyweights propping up Canadian real estate.
 
“The Canadian housing market remains a tale of three solitudes – the uber-strength in Vancouver and Toronto (and surrounding cities in both regions), ice-cold conditions in markets exposed to oil prices and the just-right middle markets in almost every other region,” Porter said.

Looking to buy, sell or refinance? Know your options. I can help! Direct line: 416-219-6662

 

 

MARKET UPDATE FOR THE WEEK ENDING MARCH 4TH, 2016

Knock-knock. Who's there? Scarce listings. Scarce listings who? Scarce listings are causing multiple offers and sharp price increases.

Ok, so we are missing the usual snappy opening this week but the lack of available listings has us, and our buyer clients, in a bit of a bad mood. Even with near record low inventory levels, sales have been extremely brisk. The frenzy of activity isn't just localized in the downtown core either. As the Globe and Mail recently reported, suburban homes across the GTA are experiencing a similar fate. The trifecta of low interest rates, strong employment and immigration are driving accelerated price growth across the region. As the Globe reports 'nearly half of all job growth and 75% of immigration' is happening in the 905.

Available freehold listings dropped 35% last week, falling to a 3 week low. Sales however have remained strong, improving by 7.8%. Fewer homes on the market and strong demand has led to a 10% increase in multiple offers over the week, to 69.3%. This was most noticeable in the $700k to $1.5m price range in the east and west core where a remarkable 90% of homes sold over asking. Our view is that month over month price gains will continue to cruise at double digit rates for the foreseeable future.

We believe that the condo sector may have finally come to the realization that its value lies more with end users who were unable to buy freehold homes. Despite an almost 16% decline in listings across the 416, sales have continued to strengthen registering a 3% increase over the previous week. The outstanding factor that proves the condo market's health has to be the percentage of sales at or above the list price, currently sitting at 34%, the highest percentage ever.

Looking to buy, sell or refinance? Know your options. I can help! Direct line: 416-219-6662

 

Major drivers of price growth in red-hot markets

Recent official statements and regulatory changes have placed the spotlight on the major role of overseas investors in driving up Canadian real estate prices, but Bank of Montreal senior economist Robert Kavcic thinks that factors closer to home are at play.
 
Kavcic noted that while it’s easy to blame overseas capital for the exorbitant housing prices in high-demand, high-volume markets like Toronto and Vancouver, it is a sorely misguided assumption.
 
“Sure, all anecdotes suggest they are playing a role in some neighbourhoods — we just don’t know exactly how big that role is. What we do know is that the fundamentals right here are strong enough on their own to drive big price gains,” Kavcic told HuffPost Business Canada.
 
Among these drivers are the country’s mortgage rates, which are now at an historic low despite some hikes in large banks in the past few months.
 
“A five-year fixed mortgage is barely above the expected long-run inflation rate,” Kavcic observed. “The longer this lasts, the hotter these markets will burn.”
 
Another aspect to consider is the increased upward pressure on the Toronto and Vancouver housing sectors, brought about by a significant shift: More and more new owners are now in the 30-39 age group, while first-time buyers in the 25-34 bracket are getting increasingly rarer. Kavcic warned that while the present period is a boon for sellers and brokers, this situation is essentially a demographic time bomb that is set to hit housing markets hard starting 2018.
 
Most importantly, Kavcic pointed at the growing scarcity of space for new homes. In particular, the prevailing philosophy of building upward (not outward) in Vancouver, and the death of single-family homes in high-density Toronto, are stimulating intense consumer competition and price spikes in these areas.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage.

Source: Canadian Real Estate Wealth

Looking to buy, sell or refinance? Know your options. I can help! Direct line: 416-219-6662

 

New mortgage rules and higher rates to push Canadian home sales lower in 2016

New lending rules set to take effect next week coupled with mortgage rates that are creeping higher are expected to slow Canadian home sales in 2016, according to TD Economics.

The bank’s economic research arm is now forecasting existing home sales to amount to 488,600 units by the end of 2016, a 3.1 per cent drop from last year. In 2015 transactions numbered about 504,200, a 5.1 per cent increase compared to 2014.

Despite the Bank of Canada’s near historically low target for the key interest rate, TD notes that some banks have hiked the five-year special mortgage rate by as much as 30 basis points from December to January.

“History suggests that a 30 basis point rate increase translates into a 5 per cent to 10 per cent decline in existing home sales over a period of two quarters,” TD said, adding activity would still remain above “long-run averages.”

The key interest rate influences mortgage rates, but despite the Bank of Canada keeping it at a historically low level, rising operating costs for banks are pushing rates they offer to consumers higher.

In July this year, the Canada Mortgage and Housing Corporation is set to start charging higher rates to financial institutions for the loans it insures.

Meanwhile, down payments will be getting more expensive for some homebuyers as another rule the federal Liberal government put forward in December takes effect February 15th, further cool activity. For government insured mortgages, the minimum down payment is rising to to 10 per cent from 5 per cent, but only on the portion of the loan between $500,000 and $1 million.

“This marks the fifth time in almost seven years the government has tightened qualifying rules for insured mortgages,” TD Economics noted in the report.

“Following each of the past four rule changes, housing demand slumped for about four to six quarters,” the bank continued.

TD Economics have noted this rule change won’t have an impact of that scale, it will still downwardly affect sales, particularly in Toronto and Vancouver, where average home prices are well above $500,000.

“The lofty activity last year has likely left these two markets more vulnerable to even a gradual increase in interest rates and regulatory rule changes,” the bank explained.

TD Economics expects 93,400 existing homes to change hands in Toronto this year, an 8.3 per cent drop from 2015. During this period, TD predicts Vancouver activity to fall to 39,800 units, a 7.8 per cent year-over-year decline.

Activity in these cities influences national housing market numbers more so than other local markets because they typically have higher sales volumes.

“The new [mortgage rule] changes may also disproportionately impact Calgary, a market that has a higher proportion of first-time homebuyers than most,” TD added.

Looking to buy, sell or refinance? Know your options. I can help! Direct line: 416-219-6662

 

MARKET UPDATE FOR THE WEEK ENDING FEBRUARY 5TH, 2016

Last week we waited in anticipation for an advanced weather prediction from nothing less than a couple of famous rodents. Ground Hog Day was a split decision but it made us wonder if we could use a similar technique for predicting the exact moment the spring market hits. Our suggestion is to put a green bin out on the sidewalk to see how the local racoons react. A knocked over bin indicates the spring market has started but if it’s frozen to the ground we have to wait another two weeks. Thoughts?

In the freehold resale market there is a strong indication that spring has sprung. Last week listings were up 54% from the previous week while sales climbed 40%. Typical of a sudden jump in new listings there is a lag of about a week before we see an uptick in sales. This is mainly due to the holdback period. While only 49% of existing homes sold at or above the list price we expect that percentage to improve significantly over the coming weeks. While the hottest area has been the east core, particularly in the mid-range price point, last week it was the west core that was the star with over 65% of properties sold at or above the list price.

The condominium sector may end up being the shining light of Toronto’s real estate market. Last week, new listings edged up 15% (almost entirely from the central core) while the number of sales improved by a remarkable 40%.  What is more interesting is that sales of suites at or above the list price rose from an already healthy 22.4% to a near all-time high of 28.9%. In both the east and west core of the city, there were almost as many sales as new listings. (35 to 37 units).

Looking to buy, sell or refinance? Know your options. I can help! Direct line: 416-219-6662

 

MARKET UPDATE FOR THE WEEK ENDING JANUARY 29TH, 2016

It’s  hard to believe that we are already one month into 2016. This winter is already the second warmest on record thanks to our friend El Nino.

 

In real estate terms, mild winters are a blessing for those intrepid Realtors. It means no snow drifts to climb over, no hunting for parking spots while out showing and less layers to wear. Of course this would all be great if there were properties to show but our research indicates that listings in both the freehold and condo sector have backed off substantially from one year ago while demand has not wavered.

In the freehold sector, listings continue to be a source of concern. One year ago there were 221 new listings compared to just 120 this year. Sales on the other hand are brisk. Our records indicate 115 sales last week compared to a mere 74 for the same period last year. It is interesting to note that last year only about 53% of homes sold at or above asking while this year that percentage has climbed to 66.7. The hottest area was the east core where nearly 90% of homes sold at or over the asking price.

 

A similar market exists in the resale condominium sector. Listings are off about 20% while sales are up by 32% from one year ago. Last year sales at or over the list price were a very respectable 18.9% while this year we are reporting 22.4%. While the number of new listings has remained stable in the east and west, there is a noticeable drop in the central core, proving once again that demand still exists for central condos.

 

Looking to buy, sell or refinance? Know your options. I can help! Direct line: 416-219-6662

 

 

Rising Home Sales, Prices Continue In January In Hot Toronto Market

A series of heat maps of Toronto based on Toronto Real Estate Board data provides a vivid picture of how the real estate market in this city has caught fire over the last decade.

In 2005, the map was mostly pale yellow, with splashes here and there of orange and red. In the extensive yellow areas, mainly Scarborough and North York and parts of the west end, a person selling his or her home would have had to wait more than thirty or even forty days for a buyer to come along. In a few central areas, mainly in hot neighbourhoods like the beach, Riverdale, Rosedale, the Annex and Bloor West Village, buyers showed up in less than twenty-two days after the listing appeared. In 2005, these orange and red areas stand out like patches of inflammation on a pale face.

Skip ahead to 2015. There are no more pale yellow areas on the map. The fire has spread to every district of the city, now coloured entirely in shades of orange and red, mostly red. From the centre of the city all the way east as far as the map goes, red dominates. In those areas, homes sold in under twenty-two days. Anyone with a home to sell, it seems, could sell it almost overnight. The city was on fire .>> full article

Looking to buy, sell or refinance? Know your options. I can help! Direct line: 416-219-6662

 

Property virgins: Most 2015 Toronto home sales were to first-time buyers

It was a year of firsts for the Greater Toronto Area’s housing market. A majority of the area’s residential real estate transactions in 2015 involved first-time buyers, a recent poll of homeowners suggests.

To support its forecast for the 2016 GTA housing market and 2015 review, the Toronto Real Estate Board (TREB) brought on Ipsos Reid, the pollster perhaps most known for its Canadian political surveys.

The resulting Ipsos Home Owners Survey, which included 1,000 GTA residents aged 18 and up who said they bought a home in the last 12 months as of November, found 53 per cent of these recent buyers had never purchased a dwelling before.

“These results bolster the argument that people in Toronto and the surrounding regions continue to view home ownership as a solid long-term investment,” says Sean Simpson, Ipsos Reid’s vice president, in a statement.

“This includes young people aged 18 to 34, who made up the majority of intending first-time buyers,” he added.

Over the last year, the share of first-timers among homebuyers in Toronto was higher than what was observed in the rest of the GTA, the findings suggest.

Some 60 per cent of recent homebuyers in Toronto were property virgins before their purchase.

“The fact that the first-time buyer percentage was higher in the City of Toronto likely speaks to the prevalence of condominium apartments, which generally sell at a lower price per square foot than low-rise home types and thus represent a popular entry point into home ownership,” TREB explained in its Market Year in Review & Outlook report.

Looking at the GTA excluding Toronto, newcomers to real estate took part in 47 per cent of transactions from November 2014 to the same month last year.

Ipsos carried out the survey, based on 2,500 online interviews with GTA homeowners, from November 3rd to the 20th.

By: Josh Sherman | JANUARY  22, 2016 BUZZBUZZ Home News

Looking to buy, sell or refinance? Know your options. I can help! Direct line: 416-219-6662