Toronto Real Estate Blog

Tony Wong – Toronto Star

Existing home sales in the Toronto area were up 28% in September compared to last year, according to figures released Monday by the Toronto Real Estate Board.

“We have experienced an increasing rate of existing home price growth in the GTA as sales have continued to outpace 2008 results,” said board president Tom Lebour.

The board said 8,196 homes traded hands during the month.

The average price of an existing home was also up, by 10% to $406,877.

Comment: In the GTA as a whole. Houses are selling for over $430k on average now, with detached two-storey homes going for almost $100,000 more than that.

One reason has been a dearth of listings. Active listings were down significantly in September by 42% to 15,894, according to the board. That has meant buyers are competing for less product on the market, which has led to bidding wars in some neighbourhoods.

The average home is now on the market for 27 days, compared to 36 days last year.

Much of this has to do with the magic of low interest rates, where five year fixed mortgages can be had for less than 4%.

Comment: Yet records were still set in 2007 when rates were 2% higher. Yet rates then were not so “magical”. Let’s not pick and choose our numbers, shall we? It is not just the low rates that are fuelling the market right now. Rates were just as low in March and sales were through the floor. For the nth time, the whole low interest rate argument is total crap.

“Clearly the way the market has come back has been a surprise,” said Benjamin Tal, senior economist at CIBC World Markets. “The question still remains though as to how sustainable are these sales figures?”

Comment: It is not a surprise to those of us who work in the field, who are out there on the front lines every day. Maybe to analysts who are too far removed from what is actually going on, it is a surprise. Since we have had 13 straight years now of rising real estate, I would say that things are pretty sustainable.

Most analysts now expect this year to surpass last year in terms of sales.

Year to date sales are also up 4.5% in the first nine months of 2009 compared to the same period last year.

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By Tony Wong – Toronto Star

The Toronto real estate market is on the way to a recovery, although an undersupply of homes is leading to bidding wars, says a report by Royal LePage released today.

The activity in the existing homes market is spilling over into the new homes sector, where housing starts surged in September by a seasonally adjusted and annualized 25% from a month earlier, according to figures also released today by the Canada Mortgage and Housing Corporation.

“The sharp recovery in real estate demand is beginning to work its way into the residential construction sector in Toronto,” said Shaun Hildebrand, CMHC senior market analyst.

Both single-detached homes and multiple-family homes, which includes condominiums, showed an improvement. A home is considered “started” once the concrete foundations are poured. Starts for single detached homes, considered a key segment rose to their highest level of the year.

“Residential construction will be firing on all cylinders as we head into 2010,” said the CMHC.

The Toronto uptick broke the national trend, which saw starts down by more than four per cent across the country.

In a separate report by Royal Lepage, Toronto home prices for detached homes and bungalows are up slightly from a year ago, but condominium prices are down.

The price of an average existing bungalow increased barely, to 0.8% or $436,857 compared to the same quarter last year.

A standard two-storey home is up in value to $561,725. However, average prices for a condominium dipped by 3% to $300,526 according to the real estate company.

“The economic recession interrupted the flow of the real estate cycle, but it is essentially back on track,” said Phil Soper, president and CEO of Royal LePage. “There is an illusion of a boom in the market, but in fact what we are experiencing is the end of a normal, short term correction.”

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Helen Morris, National Post

Sales and home prices are on the rise in Toronto, at least compared with the rather testing times during this period last year.

Toronto real estate sales were up 23% in the first two weeks of September compared with the same two weeks last year. According to the Toronto Real Estate Board, Toronto real estate agents reported 3,361 sales in the first two weeks of this month. The average price for these sales rose, to $393,818 – an 8% rise on the same period last year.

“An increasing number of positive reports pointing to economic recovery coupled with low interest rates have kept households confident in purchasing a home,” said Toronto Real Estate Board president Tom Lebour in a release.

Sales numbers for the year to date also rose, to 61,676, a 3% increase on the same period in 2008. Average prices for this period rose 1% to reach $386,302 compared with an average price of $383,776 for sales in the same period last year.

“Tighter market conditions since May, as evidenced by rising sales relative to listings and declining average days on the market, have resulted in stronger average price growth,” said Jason Mercer, the Toronto Real Estate Board’s senior manager of market analysis in a release.

New-home sales also showed muscle this summer. The new-home builders’ association, Building Industry & Land Development Association (BILD), said this week that sales of new homes rose 62% in August when compared with the same month last year. The report noted that condo sales in Toronto were relatively stable, but a 163% rise in single family sales (single-detached, semi-detached and townhouses) boosted the overall sales figures.

BILD reported that, according to RealNet Canada Inc., 3,074 new homes and condos were sold in the GTA in August.

BILD president and CEO Stephen Dupuis said in a release that the spike in sales was due to good prices, low interest rates as well as the entry into the market of new buyers.

“It’s the exhilaration of a bargain,” said Mr. Dupuis. “The return of the first-time buyer is always a very healthy sign and is a clear indication of the great value that builders are offering today.”

However, Mr. Dupuis cautioned against reading too much into one month’s numbers. Year-to-date new home sales are still down 18% on the same period in 2008.

“This is a relative recovery which needs to be nurtured,” said Mr. Dupuis. “We are not out of the woods…”

South of the border, the housing market is still making its own efforts to push through a very dense undergrowth.

The Federal Housing Finance Agency monthly house price index rose 0.3% in July compared with June. This represented the third straight monthly rise, but was below market expectations.

The calculation of the FHFA monthly index is based on purchase prices of houses with mortgages backed by Fannie Mae or Freddie Mac.

According to the FHFA, for the 12 months ending in July, U.S. home prices declined 4.2%. The index is now 10.5% below its April 2007 peak.

“Despite the smaller-than-expected rise in home prices, there is growing evidence that the U.S. housing market may have stabilized,” notes Millan Mulraine, economics strategist at TD Securities, “though a full-fledged recovery in the sector may be some months away.”

Numbers for U.S. existing home sales released this week by the National Association of Realtors back the assertion that a full recovery is still some way off.

Sales of existing homes in August fell 2.7% to a seasonally adjusted annual rate of 5.10 million units compared with 5.24 million in July. However, the rate is still 3.4% above the 4.93-million-unit level in August 2008.

“Home sales retrenched from a very strong improvement in July but continue to be much higher than before the stimulus,” notes Lawrence Yun, NAR chief economist in a release. “The decline demonstrates we can’t take a housing rebound for granted.”

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By Mario Toneguzzi, Calgary Herald

Millions of dollars in economic activity are a spinoff benefit of residential income property transactions across the country, says the Canadian Real Estate Association.

And a new study of that economic reality underscores the need to remove tax barriers to property re-investment, adds the association.

A new Altus Group economic study prepared for CREA on the economic impact of commercial multi-unit residential property transactions in Calgary, Toronto and Vancouver between 2006 and 2008 says those benefits totalled $137 million per year over that period. A total of $287,850 in extra spending was generated by the typical multi-unit residential property transaction in these three areas.

The report also said these transactions, which account for about 15% of all commercial transactions, generate direct and indirect employment in the Canadian economy – an estimated 762 direct and indirect jobs across Canada on an average annual basis during the period between 2006 and 2008.

The average multi-unit residential property transaction produces fees for professional services such as lawyers, real estate agents, appraisers and financial institutions in addition to fees and tax revenue to government. They can also precipitate capital expenditures to upgrade the buildings.

CREA says many income property owners are reluctant to sell and re-invest because of the capital gains tax and recaptured capital cost allowance.

“Allowing tax deferral on income property re-investment would provide a needed kick-start for the ailing commercial real estate market,” said Dale Ripplinger, CREA’s president. “The spinoff activity from income property sales would help strengthen other sectors hard-hit by the economic downturn, and the resulting renovations and redevelopment that would help revitalize communities across the country.”

The Altus Group analysis found that for transactions valued under $3 million, the average ancillary spending was $124,400 and it was $582,000 for property transactions $3 million and over.

The estimated annual expenditures generated by the average multi-unit residential property transaction in the report’s selected cities were $476,800 in Toronto, $233,472 in Vancouver and $168,011 in Calgary.

Between 2006 and 2008, an average of 476 multi-unit residential properties changed hands annually in Toronto, Calgary and Vancouver. Property transactions under $3 million represented 64 per cent of all sales but only 20 per cent of the transaction value over that period.

In those three years, those transactions contributed about $412 million in spinoff benefits to those three cities, said the report.

“The impact on the Canadian economy of multi-unit residential property transactions in Toronto, Calgary and Vancouver is large,” said the report. “The ancillary spending generated in these three cities produce spinoff benefits and employment not only within the respective provinces but also across Canada. Multi-unit residential property transactions in Toronto, Calgary and Vancouver represent only a fraction of transactions across the Canadian economy, therefore, the aggregate impact of multi-unit residential property transactions across the entire Canadian economy is likely greater.”

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While there may still be some challenges down the road, the worst is definitely behind us in the real estate industry

Virginia Galt – Globe and Mail

Canada’s real estate market has weathered the recession relatively well and now seems poised for “significant growth” in the final quarter of this year, real estate firm Re/Max said.

“While there may still be some challenges down the road, the worst is definitely behind us in the real estateindustry,” Elton Ash, executive vice-president of the firm’s Western Canada region said in releasing a report on Canadian home sales and prices.

“The bounce-back that began in early spring has made this recession one of the shortest on record for real estate,” the firm said in its report. “Low interest rates, pent-up demand, and improved affordability levels have all played a role in the recovery now under way,” Re/Max said.

Strong sales in Ontario

“Despite dire forecasts for a long and drawn out recession, real estatesales have soared in the Greater Toronto area in recent months, with more than 58,000 properties changing hands between January and August 2009. Average Toronto prices are up 0.3 per cent to $385,978.

In Ottawa, unit sales are up 2.5 per cent and the year-to-date average price of $301,684 is up 3.3 per cent from the comparable period in 2008.

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