Toronto Real Estate Blog

By Lori Mcleod – Globe and Mail

The economic downturn brought on by the crisis in global financial markets will likely send the average price of a home in Canada lower by another 5 to 10 per cent over the next eight to 10 months, an economist with CIBC World Markets Inc. told a conference in Toronto yesterday.

Sales will also drop by an average of about 20 per cent from current levels before stabilizing near the end of 2009, Benjamin Tal, senior economist at CIBC World Markets Inc., added in an interview.

The market will level off by this time next year as conditions in the Canadian economy stabilize, but Canadians should not expect a “V-shaped recovery,” at that point, he cautioned. Instead, his forecast calls for home prices and sales to remain relatively flat. “What we are saying is that prices will continue to ease in the coming months, but there will be no U.S.-style freefall,” Mr. Tal said.

Canada should be firmly in buyers’ market territory – where consumers feel tempted to wait for deals in the hope prices will get cheaper – by late 2008 or early 2009 for the first time since 2001, he added.
The Globe and Mail

In June, the average resale home price fell year over year nationally for the first time in more than nine years, according to the Canadian Real Estate Association. Prices slipped further in the next two months, and the same trend will likely be repeated when September numbers are released next week.

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Resale home prices in most major Canadian cities continued rising in the summer quarter, “in stark contrast to the housing market woes that continue to plague the U.S.,” Royal LePage Real Estate Services reported Monday.

While the rate of price appreciation is dropping, the national real estate sales company said Canada’s housing market is on an entirely different track than the American meltdown.

“Boasting still-affordable homes, resource-rich Regina and St. John’s (N.L.) posted significant double-digit gains, while home prices in Alberta corrected downwards slightly after experiencing a period of unprecedented growth,” Royal LePage reported.

“It is not surprising that the regions that had experienced the largest and quickest rise in home value are now experiencing easing price appreciation trends as their markets return to more balanced conditions.

On average across Canada, condominium prices in the July-September quarter were up 0.2 per cent from a year earlier to $243,529, according to the Royal LePage tally. Standard two-storey properties edged up 0.1 per cent to $408,927, while the average bungalow price was flat at $240,000.

Regina’s housing market posted the steepest year-over-year appreciations with gains as high as 49 per cent for standard condominiums; St. John’s condo prices swelled 26.9 per cent.

“Canada’s housing market is holding up well, with resilient buyer demand supporting house prices that continue to inch upwards,” stated Royal LePage president Phil Soper.

“While rate of price appreciation is obviously tempering across the entire country, it’s important to underscore the fact that Canada’s housing market is supported by markedly different, and stronger, economic fundamentals than those that American homeowners are wrestling with.”

He cites solid employment and population-growth fundamentals and the continuing availability of affordable financing.

“Credit-worthy Canadians continue to have wide access to fairly priced mortgages,” Soper said.

“While we are not immune to the serious problems facing global credit markets, our financial institutions are in much better shape than mortgage providers in the U.S. In Canada, subprime or high-risk mortgages account for a small portion of our banks’ portfolios and the mortgage approval process has many more checks and balances in place. As such, we should expect stability in Canada’s real estate market.”

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Jamie Sturgeon, Financial Post

Housing construction in September moved unexpectedly higher, to an annualized rate of 217,600 new units, Canada Mortgage and Housing Corp. said Wednesday.

“Housing starts remained at a high level in September, with construction activity again staying above the 200,000 unit threshold,” said Bob Dugan, chief economist at CMHC.

Higher starts of multiple-family dwellings such as condominiums and townhouses were behind the rise in new home construction activity, Mr. Dugan said.

Economists had forecast an annualized rate 205,000 for the month. In general, construction rose 2.8% month-over-month across the country, representing the second rise in a row after a dramatic decline in July, which saw starts fall to 186,500.

By province, British Columbia saw the most activity, with 33,600 new starts. Construction on new homes moved markedly higher in the Prairie provinces of Saskatchewan and Manitoba as well. Atlantic Canada also witnessed a rise.

In contrast, Ontario, grappling with worsening economic conditions especially across its urban manufacturing centres, saw construction on new homes fall broadly in the month. New starts in the country’s most populous province decreased 6.6% to 80,900, the CMHC said.

Housing construction was higher on multi-family dwellings in all provinces in September with the exception of Ontario, which saw a decrease of 1.9%, the CMHC said.

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Insist risks of a collapse in Canada are overstated, but fewer sales agents likely to emerge from slump

By Tony Wong, Toronto Star

Fears of a major real estate downturn are overblown and the Canadian market is still performing well, say top executives from the country’s largest real estate companies.

“We are being overwhelmed by the negativity, the market has not slowed down that much, it’s like you’re going from 150 kilometres per hour to 120 kilometres, it feels slower, but it’s still healthy,” Michael Polzler, executive vice-president of ReMax Ontario Atlantic Canada, told more than 1,000 realtors yesterday at the annual general meeting of the Toronto Real Estate Board.

“This is a fear attack that will blow over,” said Stephen Wong, chair of Living Realty Inc. “We do not have the same problems as the United States.”

Leaders gave a rousing pep talk to beleaguered agents, blaming the implosion of Wall Street and the surrounding media coverage for much of the loss of consumer confidence in Canada. The average price of a home in the city of Toronto was 15% less in the first half of October compared with a year earlier and listings are up significantly, by 30%.

“Just stop reading the newspaper and watching the news,” Polzler said to enthusiastic applause.

“The need is paramount now to accentuate the positive,” said Gary Hockey, president of Coldwell Banker Canada. “We have to create some positive spin so we don’t get dragged down to the doldrums.”

Hockey said the next 12 to 15 months should provide good buying opportunities.

“If you have the cash, liquidity and courage, now is the time.”

Howard Drukarsh, vice-president of Right At Home Realty Inc., said in an uncertain equities market, buyers will gravitate to property investments for financial shelter.

“During the last dot-com bust, where did they go? They didn’t go back to the stock market, they went to real estate,” Drukarsh said.

However, leaders generally agreed there would be a pull back in the number of agents due to the downturn.

“We think there will be a considerable contraction in this industry,” Polzler said.

Underperforming agents who “can’t make a living in this industry” will be the first casualties, while “brokerages running on thin margins will have to reassess the business model,” he added.

An estimated 20% of the agents now active in the Toronto area have been registered only in the past two years.

But they are also earning more.

Phil Soper, president and chief executive of Royal LePage, said there were 77,000 agents selling $30 billion worth of real estate during the height of the previous boom, in 1987, compared with 95,000 agents selling $160 billion today.

“Those who stuck it out during the hard times got significant market share,” Soper said.

“Unlike the U.S., Canadian buyers have jobs, they have money, they have access to mortgages,” Soper said. “What they don’t have is confidence.”

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Experts Speak at Toronto Real Estate Board Meeting

More than 1,100 Greater Toronto Realtors gathered to hear Canada’s top experts talk about the future of the housing market at the Toronto Real Estate Board’s 88th Annual General Meeting October 27th.

Much of their discussion was focused on current market conditions, with panelists attributing a recent dip in the Toronto real estate market to waning consumer confidence.

“People are mislead by the media,” said Living Realty’s Stephen Wong. “We don’t have a problem; it’s being self-inflicted.”

Panelists also agreed that while a return to robust conditions may not be seen until 2010, the market continues to be balanced and supported by the economic fundamentals of strong employment and immigration, and historically low interest rates.

In addition, Royal LePage’s Phil Soper noted that unlike other major cities, the GTA has not experienced artificially inflated house prices.

“We’re going through a time of general economic malaise but it is not going to be prolonged and in the Toronto real estate market we’re not going to see a reset because it wasn’t off in the first place,” he said.

Toronto Real Estate Board President Maureen O’Neill’s speech focused on raising the bar with respect to professionalism, an idea that was echoed by Michael Polzler of RE/MAX Ontario-Atlantic.

“This is a time for Toronto Realtors who know the business and all aspects of it, to lead people through complicated transactions,” he said.

Panelists concluded their discussion by pledging to support organized real estate’s lobbying efforts against unrealistic regulatory expectations and unfair taxes, like the Toronto Land Transfer Tax.

“This event’s incredible turnout demonstrates Toronto Realtors’ genuine desire to continuously improve in order to provide the highest level of service to their clients,” said Ms. O’Neill. “We’re also delighted to have received the full support of Canada’s largest real estate companies as we continue our efforts to advocate on behalf of GTA property owners.”

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