Toronto Condo and Real Estate Blog

Housing purchases jump 21% in what is usually a slow fourth quarter, but slowdown expected after tax takes effect in February

Lori Mcleod - Globe and Mail

Buyers racing to beat Toronto’s incoming land transfer tax created an uncharacteristic spike in home sales over the holiday season, but a slowdown is on the horizon after the tax comes into effect.

“The fourth quarter of any calendar year tends to be very slow for the real estate market, but this was anything but slow,” said Phil Soper, president and chief executive of RLP. “It is painfully obvious that the new tax that’s being imposed on people in Toronto’s 416 area drove activity.”

As of Feb. 1, Toronto home buyers will pay a new fee to the city in addition to the existing provincial land transfer tax. It will nearly double the tax bill for home buyers, raising the tab on a $375,000 home to $7,575 from $4,100.

“The rate of activity in areas where the tax will not impact people was much lower than in neighbouring areas where the tax comes into effect,” Mr. Soper said.

Housing unit sales were up approximately 21% in the GTA in the fourth quarter, compared with 7% in surrounding areas, according to data from the Toronto Real Estate Board.

The strong fourth quarter helped the Toronto real estate market shatter previous sales records in 2007, according to data released by RLP. The average price of a two-storey detached home in the city hit $506,900, up 8% from last year. The price of a detached bungalow rose 8.9% to $413,375, and that of a condo unit rose 10.4% to $280,505.

Two years ago a two-storey home in the city averaged $461,282, while a bungalow went for $362,611 and a condo unit $242,202.

After the current wave of buyers subsides, both price gains and sales should start to decline, Mr. Soper said.

“We do expect real estate activity in Toronto this year to fall by about 4 to 5% versus 2007,” he said. “We don’t expect to see a year like 2007 in terms of raw activity for a few years to come.”

Things could start to cool down in popular areas such as Riverdale and the Beaches, Mr. Soper said. Markets that could be poised for better-than-average price gains this year include Parkdale and Corktown neighbourhoods along with Don Mills, which could get a boost after the ongoing renovation of the Don Mills shopping centre is completed.

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By Lori Mcleod Globe and Mail

Canadian real estate prices blasted through what is usually a holiday slowdown period at warp speed, but the big gains are unlikely to continue this year, according at a recent real estate report.

While home sale prices typically moderate in the fourth quarter, last year the average price of a detached bungalow increased by 11.6% to $337,555 from $302,497 the year before. The price of an average two-storey property rose 11.3% to $399,738, and a condo unit 11.7% to $240,395.

“The fourth quarter [of] 2007 was surprisingly strong, with unseasonably high price increases and unwavering demand,” said Phil Soper, president and chief executive officer of RLP, in a statement.

“As we move into the new year, activity levels are expected to wane from the frantic pace that many regions of the country experienced in 2007.”

While home sale prices typically moderate in the fourth quarter, last year the average price of a detached bungalow increased by 11.6% to $337,555 from $302,497 the year before.

Average prices are still expected to rise, but at a much more moderate pace, Mr. Soper added.

Much of the fourth quarter’s strength was due to natural resources, which drove growth in markets such as Regina and Saskatoon, the report said. The market with the biggest year-over-year home price gain in the quarter was Saskatoon, where the price of a bungalow rose by 55.2% to $292,500 and a two-storey home by 56.7% to $321,250. The highest priced homes in the country were in Vancouver, where the average two-storey house would set you back $895,000, compared with $803,500 the year before.

The only market to experience a price decline was the condo market in Fredericton, where the price of a unit fell by $500 to $126,000. Price growth was also notably slower in Calgary, where double digit gains appear to be a thing of the past. The price of a detached bungalow in Calgary rose 5.2% to $429,889, compared with $408,833 in 2006.

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Contact the Jeffrey Team for more information - 416-388-1960

Housing starts reach their second highest level in nearly two decades despite cooling in December

Housing starts in 2007 are estimated at 229,600, surpassing 2006 starts, and reaching their second highest level in nearly two decades. However, the seasonally adjusted annual rate of housing starts in December decreased to 187,500 units from November’s 233,300 units, according to Canada Mortgage and Housing Corporation (CMHC).

“Growth in 2007 housing starts was driven by low mortgage rates, solid employment, income growth and a high level of consumer confidence, said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “Even with the weakness in residential construction in December, new home starts are estimated at 229,600 units in 2007, surpassing 2006 levels.”

After two strong months in October and November, the volatile multiples segment and single-detached starts fell in December mainly due to harsh winter weather. Also, the seasonally adjusted annual rate of urban starts decreased 23.2% to 151,600 units in December, compared to November. Urban singles were down 12.6% to 85,600 units in December, while multiple starts decreased 33.7% to 66,000 units.

In December, the seasonally adjusted annual rate of urban starts increased in two of Canada’s five regions. Urban starts registered an increase of 3.4% in Quebec and 1.2% in the Atlantic region. British Columbia, Ontario and the Prairies all recorded a decline in activity for December (-36.7%, -33.1%, and -17.1% respectively). Urban single starts were down in all regions except the Atlantic and British Columbia, while only Quebec saw an increase in urban multiple starts.

Rural starts were estimated at a seasonally adjusted annual rate of 35,900 units in December.

For the year 2007, actual starts, in rural and urban areas combined, increased by an estimated 1.0% compared to 2006. In urban areas, actual total starts in 2007 decreased by an estimated 0.6%. Actual urban single starts for 2007 were down 3.5% compared to 2006, while multiple starts grew an estimated 2.1% in 2007 compared to 2006.

Housing starts are expected to remain strong in 2008, but are forecast to decrease to 214,300 units.

As Canada’s national housing agency, CMHC draws on over 60 years of experience to help Canadians access a variety of quality, environmentally sustainable, and affordable homes - homes that will continue to create vibrant and healthy communities and cities across the country.

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Contact the Jeffrey Team for more information - 416-388-1960