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Category Archives: Selling Real Estate

May Sales Still Seeing Increases

Greater Toronto Area Real­tors reported 4,476 trans­ac­tions through the Toronto MLS sys­tem dur­ing the first 14 days of May. This result rep­re­sented a decline of 9.7% com­pared to the same period in 2012. Sales declines were larger for the City of Toronto, at 11.4%, ver­sus the sur­round­ing regions where sales were down by 8.6% year-over-year.

Com­ment: We should also note that new list­ings were down 3.3% over all, so the decline was more like 6.4% if we take that into account. And really, both 9.7% and 6.4% are marked improve­ments over Q1′s decline of 17%!

Despite fewer sales this year com­pared to last, com­pe­ti­tion between buy­ers in most seg­ments of the mar­ket remained strong enough to pro­mote annual rates of price growth above the rate of infla­tion. A house­hold earn­ing the aver­age income in the GTA can com­fort­ably afford the mort­gage pay­ments asso­ci­ated with the pur­chase of an aver­age priced home,” said Toronto Real Estate Board Pres­i­dent Ann Hannah.

Com­ment: And that is all that mat­ters. Price-to-income and rent-to-price ratios be darned.

The aver­age sell­ing price dur­ing the first two weeks of May was $543,838 – up by 5.4% in com­par­i­son to the same time frame last year. Price growth was strongest for low-rise home types, but pos­i­tive price growth for condo apart­ments in the City of Toronto was also reported.

Com­ment: It would seem that rumours of the condo market’s demise have been greatly exag­ger­ated. Again.

Con­tin­u­ing the pre­vail­ing trend over the last year, the low-rise seg­ment of the mar­ket drove over­all price growth dur­ing the first half of May, as months of inven­tory remained below his­toric norms for key home types,” said Jason Mer­cer, TREB’s Senior Man­ager of Mar­ket Analysis.

Sum­mary of Toronto MLS Sales and Aver­age Price – May 1–14

City of Toronto (“416″)
2012 Sales: 1,685 | Avg Price: $594,789 | New List­ings: 3,499
2013 Sales: 1,901 | Avg Price: $573,137 | New List­ings: 3,767

Rest of GTA (“905″)
2012 Sales: 2,791 | Avg Price: $513,077 | New List­ings: 5,661
2013 Sales: 3,054 | Avg Price: $480,578 | New List­ings: 5,089

All of the GTA
2012 Sales: 4,476 | Avg Price: $543,838 | New List­ings: 9,160
2013 Sales: 4,955 | Avg Price: $516,089 | New List­ings: 8,856

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

Lau­rin & Natalie Jef­frey are Toronto Real­tors with Cen­tury 21 Regal Realty.
They did not write these arti­cles, they just repro­duce them here for peo­ple
who are inter­ested in Toronto real estate. They do not work for any builders.

—————————————————————————————————–

Analysis: Canadian housing — bursting bubble or gentle landing?

Andrea Hop­kins – Reuters

It’s look­ing like an unset­tling spring in Cana­dian hous­ing, a mar­ket that has proven far more even-keeled and less scary for investors in recent years than in the United States.

In what is tra­di­tion­ally the best sea­son of the year for real estate agents, Toronto agent Ecko Jay says the indus­try is see­ing far fewer buy­ers, a result of tighter lend­ing rules, high prices and fear of a bub­ble. In Toronto alone, sales dropped 40 per­cent in the first quar­ter from a year ear­lier, mak­ing home­own­ers and investors jumpy.

Com­ment: That is total BS. Sales dropped 17%, NOT 40%. Please, try to keep the exag­ger­a­tions from sound­ing like out­right lies.

Some peo­ple want to cash in and pull out now,” said Jay, a 26-year vet­eran of the Toronto hous­ing mar­ket, not­ing some are spooked by worst-case pre­dic­tions of a 20 per­cent drop in prices from cur­rent levels.

Com­ment: And those who did that before lost a lot of money. The sin­gle pre­dic­tion of a 25% drop was made over a year ago – and prices ROSE 6% since then. So do you really believe that when it has been shown to be wrong?

They say, ‘Before it gets low, let’s sell,’” Jay added. “And some of my clients want to sell and rent, hop­ing that when it goes down they will pick up some­thing at a bet­ter price. Nobody has a crys­tal ball.”

Com­ment: But prices are ris­ing, every month. Why would any­one sell? There are no indi­ca­tions of a drop com­ing, noth­ing at all. Sup­ply is less than demand, demand is strong, rates are low, rentals are tight, immi­gra­tion is high, incomes are ris­ing – where is the trig­ger for any­thing to fall? Nowhere!

But then there are Cana­dian pol­i­cy­mak­ers, econ­o­mists and mar­ket watch­ers who have the next best thing to a crys­tal ball. Their data and analy­sis point not to a burst­ing of the bub­ble like in the United States in 2007-08, when prices from peak to trough dropped 35%, but rather a gen­tle eas­ing in Cana­dian hous­ing prices, or per­haps just a momen­tary pause.

Com­ment: And there you have it, the voice of rea­son. Some areas of the coun­try will see a lit­tle drop, some a flat­ten­ing, some just slower growth. But over­all, the trend will be flat or small increases. Over any 5–10 year period, prices will only ever go up.

Naysay­ers believe Canada may be too opti­mistic and rely­ing heav­ily on that old saw that Canada is not nearly as reck­less as the United States. After all, the debt-to-income ratio of Cana­di­ans is at a record high, close to the lev­els expe­ri­enced in the United States before its mar­ket crashed, and home own­er­ship is at nearly 70%, also a record and five points more than its neigh­bors to the south.

Com­ment: Debt to income really does not influ­ence house prices. It only comes into play if things go south – which they are not going to do. What hap­pened in the US was due to lying banks, preda­tory lend­ing and out­right crim­i­nal activ­ity. That cou­ple with dumb buy­ers who did not read the fine print and mort­gages whose rates tripled from one month to another. There are no sim­i­lar­i­ties, none.

But Canada does have some things going for it, most notably a move by the gov­ern­ment to tighten mort­gage lend­ing rules four times in five years, most recently in July 2012, which has taken some buy­ers out of the mar­ket, damp­en­ing demand.

Com­ment: And made sure that those who did buy were put through very strin­gent guidelines.

If you look at the devel­op­ments over the last year in Canada and com­pare them to the sit­u­a­tion in the U.S. before the cri­sis, there is a clear dif­fer­ence,” said Julien Rey­naud, an econ­o­mist at the Inter­na­tional Mon­e­tary Fund who fol­lows Canada.

It is not just a ques­tion of hous­ing sup­ply and demand; it is rather a dif­fer­ence in the sys­tem of mort­gage finance.”

Cana­di­ans have more equity in their homes than Amer­i­cans did, the default rate is lower, the sub-prime mar­ket is tiny, and mort­gage inter­est is not tax-deductible, so there’s no incen­tive to build up debt.

Com­ment: Their default rate hit 35% in some areas, fully 1 in 3 mort­gages were not paid. Our rate in Canada is 0.34%. Barely a third of a per­cent. To put that in per­spec­tive, their rate is 100x higher than ours. And in absolute num­bers, with 10x the pop­u­la­tion, it means the US had 1,000 times more mort­gage defaults than Canada. Three orders of mag­ni­tude. So yeah, our default rate is just a lit­tle lower.

Finally, mort­gages are struc­tured as recourse loans in which assets other than the house are held as col­lat­eral. That makes Cana­dian home­own­ers less likely to walk away than their Amer­i­can cousins.

What makes Cana­dian hous­ing dif­fer­ent makes it stronger,” says Tom Lewandowski, who analy­ses Cana­dian banks for Edward Jones in St. Louis.

LEARNING FROM THE NEIGHBORS

Lewandowski believes Canada will not suf­fer a U.S.-style hous­ing crash sim­ply because pol­i­cy­mak­ers had the ben­e­fit of watch­ing it hap­pen next door.

What we expe­ri­enced here in the U.S. with hous­ing mar­kets and reg­u­la­tors goes directly to the atti­tude and changes the min­is­ter of finance has made in Canada. A reg­u­la­tor who is being proac­tive is tak­ing Step One in mak­ing sure the hous­ing mar­ket doesn’t find itself in a bub­ble,” Lewandowski said.

Both Bank of Canada Gov­er­nor Mark Car­ney and Finance Min­is­ter Jim Fla­herty have been on the march against a hous­ing bub­ble for years, aware how low rates and loose lend­ing stan­dards in the United States ignited a boom and bust there.

The cen­tral bank has held rates low since the global finan­cial cri­sis because growth remains tepid and global woes weigh on Canada’s export mar­ket, and Cana­di­ans can find a five-year mort­gage rate below 3%.

But the government’s grad­ual tight­en­ing of rules for bor­row­ers – a firm admis­sion that the mar­ket was hot­ter than any­one was com­fort­able with – has taken some steam out of the mar­ket, and econ­o­mists, like Car­ney, seem to believe a soft land­ing may be at hand.

We’re encour­aged by the fact the level of hous­ing starts has come down to slightly below demo­graphic demand, as we see right now, there’s still more adjust­ments to go,” he said in tes­ti­mony to Par­lia­ment last week. “We’re encour­aged by the evo­lu­tion of house prices in a num­ber of mar­kets. We’re on the path to a bal­anced evo­lu­tion of the house­hold sec­tor and we all have to con­tinue to be vigilant.”

—————————————————————————————————–
Con­tact the Jef­frey Team for more infor­ma­tion – 416−388−1960

Lau­rin & Natalie Jef­frey are Toronto Real­tors with Cen­tury 21 Regal Realty.
They did not write these arti­cles, they just repro­duce them here for peo­ple
who are inter­ested in Toronto real estate. They do not work for any builders.

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  • Toronto real estate: Wet, cold month leaves home-sellers looking for ray of sunshine

    Tra­di­tional spring mar­ket for Toronto real estate feels added damp­en­ing effect — weather.

    Susan Pigg – Toronto Star

    In a city stacked with cookie-cutter con­dos, Chris Parry has a rare win­dow on the world.

    The 400-square-foot rooftop patio is Parry’s favourite “room” in his west-end con­do­minium town­house and one of its biggest sell­ing features.

    Until this week, things had been a lit­tle wet and frosty on his third-floor perch — so wet that it’s the first April he hasn’t been able to oil the wood deck­ing, put out plants and hang his hammock.

    More impor­tantly, Parry has been delayed by weeks in list­ing his place at King and Nia­gara Sts. for sale, all because of the weather.

    The rooftop is one of the biggest upgrades in my unit and one of the rea­sons I bought the place,” says Parry. “If I didn’t want to show it off, the place would have been listed two months.”

    Thanks to one of the dingi­est Aprils in recent mem­ory, this much-anticipated spring real estate mar­ket has been, at least until now, far more soggy than sunny.

    Com­ment: But now the weather is bet­ter and buy­ers are out in droves. Just had 50 peo­ple come through my open house!

    Across the GTA, proud home­own­ers like Mel Mills have been fran­ti­cally watch­ing the Weather Chan­nel and press­ing their real­tors to hold off list­ing — in Mills’ case, until he could open the pool at his Glen Abbey home and the expen­sive land­scap­ing on his ravine lot was in bloom.

    In the end, Mills had to make do with buds and slapped up a for sale sign last week. He was finally able to fin­ish off exte­rior paint­ing late this week, just as the buds were giv­ing way to a few blooms.

    We really shouldn’t have listed it yet,” says Mills. “When all the leaves and flow­ers are in, our back­yard is com­pletely secluded. None of that is show­ing off. We’re miss­ing out on one of the big sell­ing fea­tures of our home.”

    Weather is always “a very large fac­tor” in kick-starting the peak spring house-buying spree, says Queen’s Uni­ver­sity real estate pro­fes­sor John Andrew.

    Com­ment: Which is why last spring was so crazy, the weather was nice start­ing in Feb­ru­ary. Hard to com­pare a 20-degree March with one cov­ered in snow. Add in tighter mort­gage rules and it is easy to see why March 2012 had 17% more sales than March 2013. Then in April the weather got bet­ter and the dif­fer­ence was only 0.4%. Yet most of the press would have you believe that the sales dif­fer­ence was the begin­ning of the apocalypse.

    Many sell­ers aren’t keen to list until they can make top dol­lar from the tens of thou­sands they’ve plowed into decks, pools and back­yards. Buy­ers aren’t inter­ested in house hunt­ing, and chances are slim they’ll trip across a great house unex­pect­edly while out on their bike when it’s cold and wet.

    Even if things start to pick up this week­end, April is done,” says Andrew. “A lot of peo­ple, like me, were wait­ing to see if there was bit of turn-around with this spring mar­ket” in the face of house, and espe­cially condo, sales that started slump­ing last summer.

    I think April is going to be flat for sales, but hope­fully May traf­fic will pick up.”

    Sales, and prices, did pick up as expected in April over March, as is the sea­sonal norm, says Jason Mer­cer, senior mar­ket ana­lyst for TREB, but list­ings con­tinue to lag.

    Com­ment: April and May are the tra­di­tional busy months. Some arti­cles, in an effort to make things look bad, even claimed that Feb­ru­ary was the start of the “tra­di­tional” spring mar­ket – and thus, since sales were down, it meant the mar­ket was about to crash. Actu­ally, Feb­ru­ary is nor­mally a dead month and this past one had a bliz­zard every other day. So yeah, I think that was a more rea­son­able explanation.

    Toronto Real Estate Board num­bers show that list­ings were actu­ally up as of mid-April by about 15%, with 8,770 new prop­er­ties for sale across the GTA com­pared to 7,580 a year ear­lier. (Sales were down almost 6% year over year, and prices up 3.2%.) But it won’t be clear until full-month sta­tis­tics are released in the next few days what a damp­en­ing effect, if any, the lack of sun­shine and even lin­ger­ing snow flur­ries played in what’s tra­di­tion­ally one of the busiest home-buying months of the year.

    Real­tors like Adri­enne Far­quhar have been work­ing with clients for weeks now to get inte­ri­ors ready to go and antic­i­pates a flurry of new list­ings over the next two weeks as the weather improves.

    I see this spring mar­ket extend­ing far fur­ther into June, more aggres­sively and pos­i­tively than in the past,” says Far­quhar. “It might just be a later spring mar­ket than usual.”

    Com­ment: Makes sense to me.

    Diane Black, whose Stage­sense com­pany works with real­tors and sell­ers, largely in the Mis­sis­sauga and Oakville areas, to get homes ready for sale, describes this as “one of the worst springs I’ve seen.”

    Every­one was opti­mistic that we would see an upswing in the mar­ket in Jan­u­ary and Feb­ru­ary, but it didn’t really hap­pen. Then we got hit by the weather,” says Black.

    Our curb appeal, in some ways, has to be higher because there’s more of it” on big­ger sub­ur­ban lots. “But it also becomes more of an eye­sore when trees and shrubs haven’t filled in. Of course, you can use pic­tures to show what it usu­ally looks like, but that’s not quite the same.”

    This may all seem like small, silly stuff, but in the age of the “HGTV effect” — buy­ers who won’t set­tle for any­thing but a knock­out, no-work home — it all adds up in the final sale price.

    We know that buy­ers make their deci­sions quickly, and that the first deci­sion is made online,” says Black. “You can get a great feel for the inside of a house on MLS now, but the exte­rior is a big rea­son they are com­ing out to see the house.”

    Com­ment: And this is just one year, as was last year, as next year will be. They are all dif­fer­ent, for dif­fer­ent rea­sons. Don’t read too much into the variations!

    —————————————————————————————————–
    Con­tact the Jef­frey Team for more infor­ma­tion – 416−388−1960

    Lau­rin & Natalie Jef­frey are Toronto Real­tors with Cen­tury 21 Regal Realty.
    They did not write these arti­cles, they just repro­duce them here for peo­ple
    who are inter­ested in Toronto real estate. They do not work for any builders.

    —————————————————————————————————–

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