Toronto Real Estate Blog

The Toronto real estate market continued at a moderate but healthy pace throughout the first half of June, Toronto Real Estate Board President Maureen O’Neill announced today.

Prices continued their upward trend in the first half of this month. The GTA average price is currently $398,542, up four per cent over the $384,576 average from the same timeframe a year ago and up 11% from the $358,648 recorded at mid-June 2006.

In the City of Toronto the current average price is $439,469, up three per cent over the $424,888 average a year ago and up 14% over the $386,960 average in the first half of June 2006.

In the 905 Region the average price is $371,686 up four per cent from the $357,359 average a year ago and up 10% from the $338,578 recorded at mid-June 2006.

In the City of Toronto 1,733 sales took place to mid-June 2008. This represents a 15% decrease compared to the 2,045 properties sold a year ago but a two per cent increase over the 1,690 transactions in the first half of June 2006. A different story emerges when you compare the first half of June 2007 before the Toronto Land Transfer Tax went into effect to the same period in June 2006, a period showing a 21% increase in sales.

“With 4,374 transactions in the first two weeks of this month, sales in the GTA declined 14% compared to the same timeframe a year ago when 5,074 properties were sold,” said Ms. O’Neill. “However, compared to the first half of June 2006 when 4,074 properties changed hands, this month’s activity is up seven per cent.

In the 905 Region, the scenario was similar. In the first two weeks of June, 2,641 properties were sold. This represents a 13% decline compared to the 3,029 homes sold in the first half of June 2007 but an 11% increase over the 2,384 properties sold at mid-June 2006. When you compare the first half of June 2007 to the same period in June 2006, sales increased by 27%.

Certain communities including Riverdale, West Agincourt, Caledon and Richmond Hill South experienced strong activity in the first half of this month.

In Riverdale (E01) transactions increased 28% compared to the first half of June 2007 driven by strong condo sales.

Condo sales also drove West Agincourt (E05) to a 24% increase in sales compared to the same timeframe a year ago.

In Caledon (W28) detached home transactions lead to a nine per cent increase in sales over the same period a year ago.

Richmond Hill South (N03) also experienced strong detached home sales, which resulted in a five per cent increase from mid-June 2007.

“With employment and interest rates holding steady and a 17% increase in available listings compared to a year ago, it is an ideal time to take advantage of all that the Toronto real estate market has to offer,” said Ms. O’Neill.

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A mature house near the subway or a new home with a big yard; both have big gains

Canada News Wire

When it comes to laying down roots, the proverbial debate of ‘the city versus the suburbs’ is likely to get a little more heated, as the majority of house prices in both Canada’s major urban and suburban neighbourhoods were found to have nearly doubled over the past 10 years, with urban dwellings appreciating slightly more than their suburban counterparts, according to the Urban vs. Suburban Survey. The country’s most impressive gains were seen in Edmonton where condominiums in both urban and suburban areas more than tripled and quadrupled in price, respectively.

Of the thirty-two urban and twenty-six suburban markets examined across Canada, the national average price of a standard two-storey home in an urban neighbourhood appreciated by 129.2% to $522,999, over the past decade; while the same property type in the suburbs appreciated by 110.1% to $334,380. The national average price of a bungalow in urban Canada appreciated by 122.3% to $371,059, while its suburban counterpart rose by 115.2% to $318,346, over the past 10 years. The last decade saw the national average price of an urban condominium increase by 131.5% to $284,312, while the same property in the suburbs pressured upwards by 103.7% to $212,323.

“A look back at the last 10 years in Canadian real estate growth reveals that typically, home prices in urban markets have grown faster than those in the suburbs, with both areas showing impressive appreciation,” said Phil Soper. “This decade has provided Canadians with the historically longest real estate market expansionary cycle in the nation’s history. It is no surprise that house prices have increased as much as they have; strong demand for amenities and limited supply in city centres have spiked prices upwards in urban areas, while affordability and spacious yards continue to attract buyers to the suburbs. It really comes down to a lifestyle choice.”

The study revealed that house price appreciation patterns differed significantly from city to city, and across different housing types. Some cities saw their surrounding suburbs appreciate more than urban properties, and others experienced a reversed pattern. Factors driving price increases in the country’s urban neighbourhoods generally included limited property availability, a desire to be near the workplace, diverse amenities and more recently, the rising cost of fuel – which, when combined, have heightened buyer interest in these city-core areas.

Suburban price appreciation has mostly stemmed from the relative affordability of areas that are removed from the city core. The availability of affordable, larger properties with garages and more green space also appeal to buyers. Increases in the cost of doing business in commercial downtown areas have seen more corporate offices moving outside of urban areas, where many buyers are realizing that their workplace can be only minutes away from home in the suburbs.

It was the cities that have recently experienced huge levels of in-migration, as well as cities that were historically the most affordable, that have seen the highest price increases.

Added Soper: “Looking forward to the next 10 years, it’s likely that the great debate of city dwelling versus suburbia will continue. Regardless of if your home address is in the middle of an urban metropolis, or you hang your hat many kilometres from the city centre, real estate proves to be a solid long-term investment.”

The survey found that Toronto’s urban detached bungalows and standard two-storey homes appreciated more than their suburban counterparts. Soaring prices in urban areas can largely be attributed to the limited supply and increase in demand to be closer to amenities such as work, transit and restaurants. Despite trailing slightly behind their urban counterparts in house prices, suburban areas have seen a greater appreciation in condominium prices, which may be largely due to maturing baby boomers looking to downsize their empty nests to something that requires less maintenance.

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John Morrissy, Canwest News Service

Better a city mouse or a country mouse to be? When it comes to the value of the house you live in, the city wins out, but only by a whisker.

While home prices in Canada’s major markets have nearly doubled no matter where a person lived, urban properties held the edge on their suburban counterparts, says Royal LePage.

The national average price of a standard two-storey home in an urban neighbourhood rose 129.2% to $522,999 over the past 10 years, the real estate services company said. The same property type in the suburbs grew in value by 110.1% to $334,380.

“A look back at the last 10 years in Canadian real estate growth reveals that typically, home prices in urban markets have grown faster than those in the suburbs, with both areas showing impressive appreciation,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services.

“Strong demand for amenities and limited supply in city centres have spiked prices upwards in urban areas, while affordability and spacious yards continue to attract buyers to the suburbs. It really comes down to a lifestyle choice.”

But the real estate market provided many exceptions to the rule, with house price appreciation varying from city to city and across different housing types, and with gains sometimes more marked in the suburbs than in urban areas, Mr. Soper said.

The greatest advances were in Edmonton, where condos in urban and suburban areas more than tripled and quadrupled in price, respectively.

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

Tough economic times, dwindling affordability hit Toronto real estate market

By Tony Wong – YourHome.ca

Warmer weather is failing to heat up the Toronto real estate market as it was hit with the fifth consecutive month of declining year over year sales since the start of the year.

Existing-home sales in May dropped 16% to 9,411, compared with 11,146 a year earlier, according to figures released yesterday by the Toronto Real Estate Board.

Many analysts had expected pent-up demand left over from the spring market, when buyers were hampered by slush and snow. But April and May have not brought encouragement to Toronto real estate agents.

“With economic uncertainty, people become more cautious,” said Pascal Gauthier, an economist with TD Bank Financial Group.

Manufacturing has been hit hard in Ontario, with General Motors announcing this week that the Oshawa truck plant will close next year. The planned move was just one in a string of bad news announcements that have damaged consumer confidence.

Sales are also down because potential owners are being priced out of the market, Gauthier said.

“Affordability has also been a big issue in the Toronto real estate market, especially when you have a situation where house prices start to outpace incomes,” said Gauthier.

One-third of households in Toronto spent 30% or more of their incomes on shelter in 2006, according to figures released yesterday by Statistics Canada. That was the highest figure of all urban areas in Canada. StatsCan also said the province as a whole had the highest shelter costs in Canada for both owners and renters.

“Affordability is the big factor crimping demand moving forward,” said Gauthier.

More people own their homes in Ontario than ever before, but the homeowners also have a lot more debt, according to the federal agency.

“Those who spend more than 30% or more of their household income on shelter may do so by choice, or they may be at risk of experiencing problems related to housing affordability,” said Statistics Canada.

In Ontario, levels of home ownership are rising dramatically, helped by the low-interest-rate environment of the past decade.

Seventy-one per cent of households own their own homes, up significantly from 67.8% five years earlier. The proportion of households with mortgages also jumped in that time frame, to 59.1% from 57.9%. The latest figure was the highest since 1981, when a flood of baby boomers was entering the housing market.

“With the aging population… the percentage of households with mortgages could be expected to decline and the percentage that are mortgage-free could be expected to rise,” StatsCan said. “Instead the reverse occurred.”

This could be because of a large portion of renters moving into home ownership, but also because people are more willing to take on debt for such things as financing renovations or other big purchases.

Canada had $833 billion in outstanding mortgage debt as of February of this year.

Placing some downward pressure on prices in the Toronto real estate market is more inventory in the form of new listings, which rose a significant 15% in May.

Economist Gauthier, however, cautioned that the overall weak numbers for the Toronto real estate market may look bleaker than the reality because sales are coming off the record highs of 2007.

“Depending on how well the economy does, there is a risk that it would unwind in a disorderly fashion. But what you are seeing right now is a cooling. It’s not coming off the tracks.”

Prices are still appreciating because sales still remain at historically lofty levels, even though they’re not now as high as they have been. The average price in May was $398,148, up a moderate 4% from May of 2007

The Toronto Real Estate Board said it is continuing to monitor sales declines in the city of Toronto after a controversial land transfer tax was implemented this year, adding further to the cost of buying a home.

The number of sales was down 19% in May, compared with 13% in the 905 region, the board said.

“The Toronto land transfer tax has been in effect for four months, and the decline in sales has been running for the same time period,” said board president Maureen O’Neill.

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

As construction begins on 1 Bloor, analysts say investors aren’t buying like they used to

By Matthew Campbell – Globe and Mail

Torontonians at the busy intersection of Yonge and Bloor Streets were treated to an unusual sight yesterday as a tracked excavator officially began demolition for the 80-storey 1 Bloor condo and hotel development.

Onlookers – about 800, according to police estimates – thronged Bloor Street to watch the vehicle take a ceremonial chunk out of a low-rise building that will make way for the project by developer Bazis International.

The sheer size of the 1 Bloor tower and the considerable publicity surrounding its launch, including a multi-day lineup of buyers before the opening of its sales office, have made it one of the most visible symbols of the city’s building boom.

Yet it may also mark the end of an era.

Industry sources suggest that after an extraordinary year in 2007, the Toronto condo market is slowing.

Although total sales remain strong, individual projects are having a tougher time as a huge number of developers – 148 in the high-rise market, according to Urbanation, a condo tracking firm – compete for buyers.

Brad Lamb, one of the city’s most prominent real estate agents, has noticed the pinch. “Of what we expected to sell in a month,” he said, “we are now selling half. … We’ve come down to earth.”

The change appears to be the result of investors, looking to rent or quickly sell multiple condo units, beginning to balk at rising prices and reports of a weakening economy.

Although there are no definitive statistics on the number of investors in the market, Jane Renwick, executive vice-president of Urbanation, estimates they snapped up as much as 60% of units in some large, downtown developments last year. “We’re expecting investor activity to slow,” she said.

At Mr. Lamb’s firm, meanwhile, “investors would now take a quarter” of the units in a typical project, down from half in 2007, he said.

All of this implies that the “real estate market in Toronto is certainly cooling down,” according to Craig Alexander, deputy chief economist at Toronto-Dominion Bank.

But “cooling” is relative, especially in popular neighbourhoods. City Councillor Kyle Rae, whose downtown ward includes the Yonge and Bloor intersection, has not seen “any reduction in applications” for development. But slower sales and financing may mean those applications take longer to become buildings.

Mr. Lamb is unfazed by this new reality.

“It was ridiculous,” he said of last year’s Toronto condo market. “… Nobody in our industry thought it could last.”

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