Toronto Condo and Real Estate Blog

GTA Resale Housing Remains Steady Throughout Summer Months

The Greater Toronto real estate market closed out the last full month of summer at a steady pace, Toronto Real Estate Board President Maureen O’Neill reported today.

The Greater Toronto Area (GTA) average price increased one per cent, to $364,886 when compared to last August’s figure of $361,890. Compared to the $338,192 figure recorded two years ago though, the average GTA has increased eight per cent.

In the City of Toronto the average price declined one per cent to $377,990 from last August’s $381,681. Compared to the August 2006 figure of $344,419 however, the average price in the City of Toronto has increased 10%.

In the 905 Region the average price increased two per cent to $356,657 from last August’s $348,563. Compared to the August 2006 figure of $334,245 the average price in the 905 Region has increased seven per cent.

“These healthy figures substantiate that when undertaken as a long term investment, buying a home is one of the smartest financial moves you can make,” said Ms. O’Neill.

With 6,318 transactions recorded last month, sales in the GTA declined 22% compared to the record August 2007 figure of 8,059. Volumes were off just nine per cent however, from the 6,976 sales recorded in August 2006.

In the City of Toronto, there were 2,437 sales in August, a 25% decline from the 3,243 transactions recorded a year ago.

Compared to the 2,706 sales recorded in August 2006 though, this represents a 10% decline. Sales increased 20% between August 2006 and August 2007.

The 905 Region’s 3,881 sales last month were 19% off the August 2007 figure of 4,816 but declined nine per cent from two years ago, when 4,270 sales were recorded.

“Despite August’s moderate sales, the 57,364 transactions that have occurred this year are within 14% of the 67,146 figure recorded a year ago,” said Ms. O’Neill. “In light of the fact that 2007 was a record year, our current market can certainly be characterized as stable.”

There are currently 25,076, properties available for sale in the GTA, which represents a 31% increase from the 19,145 active listings a year ago. Increased choice has resulted in properties remaining on the market for an average of 36 days compared to 33 days a year ago.

Several neighbourhoods throughout the GTA experienced increased sales activity last month compared to August 2007.

In Pickering (E13) transactions rose six per cent based primarily on strong semi-detached home sales.

In Halton Hills (W27) strong attached/row house sales activity lead to a three per cent increase in transactions overall.

Condo and detached home transactions drove Rosedale (C09) to an 81% increase in overall sales.

Detached home transactions also contributed to an 11% overall increase in sales in Aurora (N06).

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By Lori Mcleod - Globe and Mail

Ontario will likely follow major cities in Western Canada into a decline in real estate prices, and while its slide should be shallower it will be more worrisome due to the province’s weaker outlook, an economist says.

The average price of a resale home in Canada fell by 3.6% last month, continuing a decline that started in June when prices lost ground for the first time in more than nine years, according to data released yesterday by the Canadian Real Estate Association (CREA).

So far, the drop in average home values has mainly radiated from Calgary and Edmonton, where July prices fell by 7.8% and 5.3% respectively from the previous year.

It wouldn’t be surprising to see prices in these and other large Western cities slump by as much as 20% in the near term in a correction of markets that got ahead of themselves, said Benjamin Tal, senior economist at CIBC World Markets Inc.

“You don’t have to be an economist to predict that prices will go down in Saskatoon and Regina, but in terms of the fundamentals all the pieces there are still fine - a healthy economy, energy boom and rising food prices,” Mr. Tal said. “Other than people who bought last year thinking prices would keep doubling over breakfast, most people there [Western Canada] should still end up ahead.”

Of more concern is Ontario’s softening real estate market, he added.

Hit hard by the slump in the auto sector, Windsor-Essex became Ontario’s first major market to post year-over-year house price declines. Toronto also appears headed for a drop, with prices rising a scant 1.5% in July, while sales fell by 12.4% and new listings surged by 17.8%.

“The concern here is that the potential decline in Ontario would not reflect overshooting, but instead the further slowing of an economy that is probably already in recession,” Mr. Tal said.

“While I would expect a more modest drop in prices of about 5% in Ontario and the GTA, prices have not risen as much here and the decline would be more painful.”

July’s 3.6% drop in the average price of a resale home in Canada came on the heels of a 0.4% drop in June, according to CREA. The average price stood at $327,020 at the end of July, compared with $339,277 in July, 2007.

Listings also remained near record levels in July, with 50,782 properties listed for sale in major markets. It is the second-highest level on record, and down a slight 0.2% from the peak hit in May.

A sharp drop in consumer sentiment helped push sales down 10.9% from the year before, and the latest figures drive home the impact that excess supply is having on prices, Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc., said in a research note.

“While we still doubt that Canada will stage an instant replay of the trauma in U.S. markets, even a mild version would be bad news,” Mr. Porter said.

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By John Partridge - Globe and Mail

A little more steam seeped out of the Canadian real estate market last month, adding to evidence that the nation’s economic boilers are continuing to cool.

Figures from Canada Mortgage and Housing Corp. show housing starts slowed much more sharply than expected in July, as the fevered pace of condo and other multiple-unit dwelling construction in Ontario cooled, at least briefly.

Starts came in at a seasonally adjusted annual rate of 186,500 units, down from a revised 215,900 units in June, CMHC said yesterday.

That was well below an average forecast of 210,000 for July, and it marked just the first time since December and the fourth time in 5½ years that the rate has come in below 200,000. “This report was fairly ugly, and adds to the growing body of evidence pointing to the cooling in the Canadian real estate sector,” TD Securities economics strategist Millan Mulraine said. Combined with July’s large job losses reported Friday, the data point to broad weakness in the economy.

The housing start numbers also marked another nasty recent surprise for forecasters.

Last Thursday, Statistics Canada revealed that the value of building permits issued in June was $6.3-billion, down 5.3% from May, where Bay Street had forecast a dip of just 1%.

On Friday, meanwhile, Statscan shocked observers by disclosing that the nation lost 55,200 jobs last month, where forecasters had predicted a modest gain of 5,000 jobs. It was the largest monthly loss since the 1991 recession.

CMHC released its data yesterday as other figures from Statscan showed new housing prices increased at their slowest pace in more than six years in June - 3.5% year over year, compared with 4.1% in May. CMHC said multiple-unit starts fell 20.2% to 91,600, with Ontario, and more particularly, Toronto, accounting for virtually all the drop. Single home starts dropped 6.6% to 69,800 units, with the decline experienced across the country.

However, Jason Mercer, CMHC’s senior market analyst for the Greater Toronto Area, cautioned that construction timing for large-scale high-rise projects of the sort that have dominated recent housing development in the city and its environs have “routinely resulted in month-over-month starts volatility.”

The change in year-to-date, rather than monthly, housing starts, he added, gives a “more accurate reflection.” And for the GTA, the 15,832 multiple-family unit starts for the first seven months of 2008 are running 57.1% ahead of the comparable period last year.

Real estate industry consultant Barry Lyon also argued that housing starts data can be misleading because of time lags, and that sales are a more accurate guide to the true state of affairs. “Construction is often a year or two years behind sales, so the construction being reported now is a result of sales done a year or a year and a half ago,” said Mr. Lyon, who heads Barry Lyon Consultants Ltd. in Toronto.

TD’s Mr. Mulraine stressed the slowdown “is in no way comparable to the prolonged correction that we have been seeing in the U.S. “Royal Bank of Canada assistant chief economist Paul Ferley concurred. The average declines of 5.8 and 14.8% the bank is forecasting for this year and next, he said, “represent a modest pace of slowing in contrast to the plummet in activity in the U.S., where starts fell 26% last year and are expected to decline another 30% this year before modestly recovering 5% in 2009.”

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