Toronto Real Estate Blog

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Real estate sales in Toronto are gaining strength after suffering a steep decline over the past few months, according to the Toronto Real Estate Board.

March statistics show that sales are down by seven per cent from the same time last year, a number that condo expert Brad J. Lamb calls a “very strong margin.”

“Statistics are showing us now that the bottom of Ontario’s real estate market was probably December, at the peak of pessimism,” he said in an interview on Canada AM Monday. “It’s clawed its way back. Each month since then, it’s gotten better and better.”

Jason Mercer, senior manager of market analysis with the Toronto Real Estate Board agreed with Lamb, calling March numbers a “marked improvement” over the first months of 2009.

“While it’s still a decline it’s a marked improvement over what we saw during February and January where sales were down by a third and then 50% respectively,” he said.

He said Toronto’s housing prices have seen a five per cent slump over this time last year.

Still the recession has forced some buyers to reconsider investing their money in real estate.

Sharyn and Glenn Tarver, who were interviewed last year by Canada AM while they were looking to purchase a Toronto condo, said they’ve decided to stay put for now.

Especially with the economic times right now, we’ve decided to back off looking probably for five years,” said Sharyn Tarver in a recent interview with Canada AM

At the time, the Tarvers were empty-nesters who had paid off their mortgage on their home and were looking to downsize. Their daughter Laura, a professional cook, was also looking to buy her first home.

Today, Laura has moved back into the family home along with her brother Mark who is a college student.

Glenn Tarver said he worries that the cost of buying a condominium would have an impact on their lifestyle.

“I would say the recession has affected us somewhat because we can’t do quite as many things as we used to do but our lifestyle is pretty good,” he said.

“I’m a little worried that if we move into a condo our lifestyle might suffer a bit because we might end up trading a property here that is mortgage-free for something we’d be back paying a mortgage for.”

Lamb said the Toronto real estate market has not suffered as much as other municipalities during the recession and the proof is in the strength of residential construction projects that are currently underway.

Condo developers in other cities have had to scale back their operations after failing to sell the majority of their units but Toronto has been spared, he said.

“Basically (in Toronto) we haven’t had any large-scale construction project stop. Most of them — I’d say about 99 per cent of them — have gone forward,” said the “Big City Broker” host.

“It’s not a situation where someone has put a deposit down and then lost the right to buy a condominium in Ontario.”

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Financial Post

Home construction rose unexpectedly in March, led by Ontario and Quebec, Canada Mortgage and Housing Corporation said Wednesday.

There were 154,700 housing starts on an annualized basis during the month, up from a revised 136,100 units in February, the government agency said.

Many economists had expected housing starts to dip to 130,000 units in March.

“Higher multiple starts in Ontario and Quebec were the main contributors to the rise in new construction activity in March,” said Bob Dugan, CMHC’s chief economist.

“While the multiples segment experienced the largest increase, the overall boost in starts was broad based, encompassing the singles segment as well.”

Urban housing starts were up 17% to 127,900 units in March, the agency said. Urban multiple starts rose 28.3% to 81,500 and urban single starts were 1.3% higher at 46,400.

Construction of urban units rose by an annualized 35% in Ontario and 23.3% in Quebec. Meanwhile, urban activity fell 17.3% in British Columbia, 7.9% in Atlantic Canada and by 7.5% in the Prairies.

Rural starts were flat at 26,800 units in March.

“New home construction is now at a more sustainable level after having been exceptionally strong over the past seven years, exceeding 200,000 units per year,” CMHC said.

Millan Mulraine, economics strategist at TD Securities, said the report “suggests that new housing starts activity pickup aggressively in March after six consecutive monthly declines.”

“However, in the grand scheme of things, the key economic fundamental factors continue to point to further weakness in Canadian housing sector activity, and as such we believe that this surprising pickup in construction activity is likely to be a one-month wonder, and expect activity to soften in the coming months,” he said.

The CMHC report comes a day after TD Economic forecast average Canadian house prices to fall to about $246,000 in 2009 – down 24% from the peak of $324,000 in 2007 – while overbuilding in the residential market, particularly in the Prairies, should prevent the sector from making a quick recovery from the current downturn in sales, prices and construction.

Comment: Take note, those are national prices, not Toronto prices. It is not unexpected to see, as the Western Provinces are taking a nasty hit in their respective real estate markets. It was Ontario that led the increase in housing starts above, keep that in mind.

“A glut in the housing stock means that builders will have to rein in residential construction further – particularly in the most overbuilt markets. As well, excess inventories in certain markets will prove an additional drag on home prices,” it said.

The TD report said house prices have been overshooting their fundamental value by about 9% since 2005 as speculation drove up prices and encouraged overbuilding.

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Helen Morris, National Post

For first-time buyers with secure employment, the housing market may look rather more appealing now than it has in recent years, when they struggled with affordability.

“We know for Toronto, and for Ontario as a whole, there’s been a pretty dramatic shift since the fourth quarter of last year, into a buyers’ market,” says Pascal Gauthier, economist at TD Economics. “Looking ahead to the next, say, 12 to 18 months, it is very difficult to believe that that is going to turn around, just given the economic backdrop.”

While a continued buyers’ market is good news for them, house hunters shouldn’t expect to see a dramatic drop in prices.

“In Toronto, we’re not seeing huge price declines,” says Laurin Jeffrey, an agent with Century 21 Regal Realty, “but buyers are finding a lot more selection.”

While last year, clients would find many properties had been sold before they had a chance to view them, “Now we’re going through a list of 50, taking 20 that are good and getting out to see 10 top ones.”

Mortgage broker Maria Dominelli advises clients to look very closely at their finances and lifestyle before stepping on to the property ladder.

“The first thing we want to determine is if home ownership is really right for the individual. They’ve got to look at coming up with the down payment … [and] maintaining the home. It requires not only money but a commitment in time,” says Ms. Dominelli, who works with Invis. “Make sure you do a check on that reality … so you know the disadvantages and advantages of buying.”

Mr. Jeffrey also urges clients to think about potential lifestyle changes that come with home ownership.

“If all of a sudden you’re now restricted to a weekend in Montreal and a couple of lattes, when you’re used to having dinner out [and vacationing in] Cuba, well, you’re not going to be very happy,” says Mr. Jeffrey.

If first-time buyers decide they are psychologically ready to take the plunge, there are some new government policies that can help with the finances.

Under the recent federal budget, first-time buyers can qualify for a $750 tax credit to help with closing costs. In addition, they can now withdraw up to $25,000 from their RRSPs under the Home Buyers Plan to help with a down payment, up from the previous $20,000.

First-time buyers in Toronto buying properties of $400,000 or less will receive a maximum rebate of $3,725 on land transfer tax.

Ms. Dominelli says it is always crucial for purchasers to have a back-up financial plan, but especially now in these testing economic times.

“One of the strategies is for people to actually have their mortgages registered for a longer amortization [for lower payments on paper] but to actually make their payments as though they are in a shorter amortization,” says Ms. Dominelli. “While you are working, you can afford it. If the sky falls in and you lose your job and need to bide some time, you can ask the lender to change the payments to the lower total again without having to go back and incur legal fees.”

Mr. Jeffrey believes in the value of the real estate investment. If your job prospects are good, he says, “Relax, take a breath, be smart. If you don’t need that big flat screen TV, don’t buy it. But if you need a place to live, prices are down a bit, mortgage rates are stupidly low. It’s not a bad time [to buy].”

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

Analysts predict the housing slowdown will likely continue, but a correction is coming

Helen Morris, National Post

Home sales in Toronto fell 7% to 6,171 in March compared with the same month last year – but that’s a good thing.

This was the smallest year-over-year decline in the past five months, the Toronto Real Estate Board (TREB) reported this week. Once again, the market favoured buyers as the average price for homes sold in March was $362,052, a fall of almost 5% from the price of March, 2008.

According to TREB, the seasonally adjusted annual rate of sales recovered to 65,600 in March, that represented a 36% rise from the 10-year low recorded in January.

“Sales in March increased at a rate over and above what would be expected from the normal spring-time bump,” says Jason Mercer, TREB’s senior manager of market analysis, in a release. “A greater number of households have taken advantage of increased affordability in the housing marketplace.”

The housing sector proved stable in Statistics Canada’s report of the value of building permits for February. “The usual concern of late, the housing sector, wasn’t the problem in the month as residential permits held up well, falling a minor 0.3%,” notes Benjamin Reitzes at BMO Capital Markets Economics. “Perhaps,” he says, “this is a tentative sign (along with slowing declines in sales and prices) that the housing market might soon hit bottom.”

Overall permits, a measure of intention and not actual construction, decreased 15.9% to $3.7-billion in February across the country, compared with the month before. StatCan said the largest decreases were in the non-residential sector in Ontario; the value of all building permits in Toronto fell 40.8% during that period.

Analysts concur that the decline in permits reflects wider economic malaise and that the slowdown will likely continue.

“On balance, this is a weak report and further suggests that the pace of [overall] building activity has come against pretty strong economic headwinds over the past few months, as growth has been under pressure,” notes Ian Pollick, economics strategist at TD Securities. “And as the correction garners momentum, the pace of construction activity will likely continue to moderate in the near term.”

After permits are issued, the next category measured is starts. Figures from Canada Mortgage and Housing Corp. showed an unexpected rise as the seasonally adjusted annual rate of housing starts in Toronto rose 36% in March to hit 36,700 units.

“While no doubt a pleasant surprise, we wouldn’t read too much into today’s rebound in starts,” notes Douglas Porter, BMO Capital Markets Economics. “The housing sector is still trying to find a bottom, and with prices in retreat in most major cities, we wouldn’t look for a lasting rebound in homebuilding until at least 2010.”

In a special report on the Canadian housing market published this week by TD Economics, economists Grant Bishop and Pascal Gauthier note that previous levels of construction were unsustainable.

“Looking back on the boom in Canadian homebuilding from 2002 to 2008, it is now clear that unsustainable price increases drove unsustainable levels of building. This overbuilding will weigh on markets over at least the next three years,” notes the report. “Even as Canada recovers from the cyclical downturn, house prices will only rebound sluggishly and new residential construction will remain depressed, owing to this structural weakness.”

The authors also note: “While Ontario homebuilding will reel from a cyclical downturn, the degree of structural weakness appears limited – with the important exception of the Toronto condo market.”

The authors warn: “The number of multiple units presently under construction in Toronto certainly raises flags. More condos will be completed in Toronto during 2009 than in any year in the past two decades except 2008.” They add: “While many of these multiple units are pre-sold prior to construction commencing, Toronto could end up with sizeable overhangs of condos unless construction is ratcheted back substantially.”

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

After much waiting, the Madison Avenue Lofts are finally reselling! If you missed out on getting one for the builder, your chance has come to get a piece of this amazing Annex loft conversion.

The Madison Avenue Lofts are a 6 storey art deco structure housing 211 units is the reconstruction of the 1951 former Toronto Hydro building, and is the epitome of loft style living. The original styling has been preserved, while modern elements have been combined to create an authentic loft feel.

The Madison Avenue Lofts are located in the fabulous Annex, neighbouring Yorkville and Lower Forest Hill. Walking distance to world class shopping, dining, galleries and museums. This neighbourhood also offers cafes, parks, gardens, artisans and small shops. Enjoy the rich history of Casa Loma appreciating the architecture of the 19th century.

A restoration of the former Toronto Hydro building, Madison Avenue Lofts are truly authentic loft spaces. With ceiling heights reaching up to 14 feet and windows reaching up to 12 feet. Exposed columns, exposed concrete ceilings painted white with duct work and visible conduits. Walk out onto exclusive use balcony, terrace or patio.

Built by BURNAC, one of Canada’s leading real estate developers and builders. Other projects include 33 Delisle, 85 Bloor East & West and the Tiffany & Co. building. Paired with Northgrave Architect Inc., which is the mastermind behind such buildings as the Merchandise Building Lofts, Absolute Lofts, The Monet, 1 City Center and Symphony Place. Designed by “Two by Four Design Associates” who have won three Designer of the year awards for their work on the Brewery Lofts, Toy Factory Lofts and the Broadview Lofts. Their vision for Madison Avenue Lofts combines souring industrial architecture with profound creativity making it a singularly unique space.

The Madison Avenue Lofts have a dramatic lobby entrance with impeccable finishes creates a welcoming atmosphere with 24 hour concierge and security. Complete with equipped exercise room, change rooms, his & hers steam saunas and showers, you can host a party in the private function space that features a fully equipped kitchen, lounge, multi purpose room and theatre. Enjoy the fully landscaped courtyard by NAK. Walk out on to the rooftop terrace with gas barbeques. Visitor parking in the underground garage.

Madison Avenue Lofts, ranging in size from 545 square feet to 1,800 square feet, feature eight foot sliding entry doors, 14 foot ceilings with exposed concrete and ductwork, amazing 12 foot windows, and exposed metal columns in an open space concept. 211 units with impeccable finishes featuring granite counter tops, barn style sliding doors, mosaic back splashes, laminate flooring, 4″ high baseboards and Stainless Steel appliances.

After much waiting, the Madison Avenue Lofts are finally reselling! If you missed out on getting one for the builder, your chance has come to get a piece of this amazing Annex loft conversion.

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