Tag Archives: gta
New mortgage rules have affected home sales
Ann Hannah – Toronto Star
A moderate number of resale home transactions took place throughout the GTA in November, with 5,793 homes changing hands. This represented a 16% decrease from 6,908 sales in November 2011.
In Toronto, 2,308 transactions took place last month compared to 2,952 sales a year ago, a decline of nearly 28%. Meanwhile, 3,485 homes changed hands in the 905 regions, a decrease of more than 13% from 3,956 sales in November 2011.
A key factor that has influenced the dip in sales is because of the changes in mortgage lending guidelines that came into effect in July. The changes reduced the maximum amortization period from 30 years to 25 years and set a purchase price ceiling for government-backed insured mortgages at $1 million. These regulations have resulted in some households putting their decision to purchase on hold while they save up more money for a down payment and/or experience an increase in their income.
Adding to this situation in the City of Toronto is the additional Land Transfer Tax, which takes money from homebuyers that could otherwise be used to offset the high costs of home ownership.
While sales decreased year-over-year in November, a modest overall price increase was reported with the average price of a GTA home reaching $485,328. This represented an increase of 1.6% compared to a year ago.
The 905 regions, with an average price of $463,779, showed a price increase of 4% compared to a 0.5% decrease in the City of Toronto average home price, which was $517,866.
The pace of average price growth in November was slower than what was experienced for much of 2012, especially in the lowrise segment of the market. This was largely due to the fact that the mix of single-detached homes sold in Toronto in November changed relative to last year. Specifically, the share of homes that sold for over $1 million was down considerably.
While the mix of home types sold may have changed, market conditions remained tight for lowrise home types. This is evident when we consider the GTA’s MLS Home Price Index (HPI), which tracks the price change for benchmark homes – in other words, a home with the same attributes over time. When we look at price through this lens, we find that the benchmark price for major home types was up by 4.6% in the GTA as a whole and 3.9% in Toronto.
News on the employment front was positive in November, as the Toronto seasonally adjusted unemployment rate decreased to 8.2% from 8.6% the previous month. Interest rates remain largely unchanged, with a five-year fixed-rate mortgage of just over 3%.
At this time of year I am often asked whether it is prudent to list one’s home for sale and there are, in fact, many benefits to doing so. Consider that those viewing homes at this time of year are more likely to be serious buyers. As well, homes often look their best when they are decorated for the holidays and a favourable emotional response to a property often prompts an offer.
I encourage you to talk to a Greater Toronto realtor about the many other factors you should consider before choosing to make your next move.
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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.
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The fall condo market: Is perception reality?
George Carras – Yourhome.ca
With all the gloomy headlines this fall declaring a declining Toronto condo market, one has to wonder: What’s really been happening out there?
An insider’s look at the monthly sales activity yields insights that may challenge some commonly held perceptions.
Take new condo sales in October, for example. Were they way down or just average? It all depends on your perspective.
There were 1,914 new condos sold in October. While that’s 38% lower than the total sales in October of last year, remember that 2011 was a record year.
Over the long term, there has been an average of 1,821 new condos sold during October. So if you compare this October to the average October, new condo sales were actually 5% higher than the average.
This interpretation of market activity doesn’t lend itself to sensationalistic headlines quite like the perception that sales have dropped off by 38%.
For added perspective, consider sales statistics on a year-to-date basis.
Year-to-date, by October 31 there were 16,564 condos sold in the GTA. If you compare these sales figures to year-to-date 2011 — which was a record-breaking year — sales volumes in 2012 are down 30%.
But if you compare those sales statistics to average year-to-date new condo sales, 2012 comes in as the fourth best year on record.
The takeaway: If you compare results from this year to those of a record year — 2011 — you may tend to think the current condo market is heading on a downward trajectory.
But a well-informed and balanced interpretation of the 2012 condo market must take into account long-term average sales figures.
Let’s start by looking at average monthly sales.
September sales on average have been 23% higher than August sales. So if you compare September 2012 with August 2012, it was actually 43% higher than the average.
October sales are on average 12% higher than September sales. If you compare October 2012 with September 2012, it was in fact 79% higher than the average.
Comparing 2012 fall condo market sales to last year’s record results will inevitably lead you to a negative perception of where the market is headed. But if you compare this year’s fall market to the average results over the long term, it’s clear that the market is in fact gathering momentum at an above-average rate.
What about November? While it’s too early to tell officially, it appears the same trend is taking shape.
November 2011 was a very strong month, with 3,855 condo sales. Average sales for November over the long term are 1,690. So, while average sales in the month of November decline by 7% from October, based on confirmed sales at the time of writing, the probable sales outcome for November 2012 will likely be above average.
So was 2012 a good fall market or a good market fall? It all depends on the perspective you choose to take. But a wise market-watcher should always take into account the long-term view.
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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.
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November continues downward trend
Greater Toronto Area Realtors reported 2,687 transactions through the Toronto MLS system during the first two weeks of November. This result represented a 17.5% decline compared to the same period in 2011.
“The reduction of the maximum amortization period to 25 years translated into higher mortgage payments. Some households will have to save more money for a down payment before purchasing a home, in order to offset these higher mortgage costs. This is more difficult in the City of Toronto, where households must pay an additional land transfer tax up front. The abolishment of this tax would allow buyers to have a larger down payment,” said Toronto Real Estate Board (TREB) President Ann Hannah.
The average selling price during the first 14 days of November was $488,647 – up by 1.7% in comparison to the first 14 days of November 2011. The median selling price over the same period was up by a greater rate of 4% to $416,000. The stronger rate of growth for the median selling price suggests that fewer high-end homes sold this year compared to last.
“During the first half of November, there were fewer luxury detached homes sold as a percentage of total transactions compared to last year. The year-over-year change in the mix of detached homes sold in the GTA, rather than a change in market conditions, was responsible for a lower than normal increase in the average detached home price,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.
City of Toronto (“416″)
2012 Sales: 1,055 | Avg Price: $522,852 | New Listings: 2,221
2011 Sales: 1,373 | Avg Price: $524,434 | New Listings: 2,164
Rest of GTA (“905″)
2012 Sales: 1,632 | Avg Price: $466,536 | New Listings: 3,033
2011 Sales: 1,884 | Avg Price: $448,111 | New Listings: 2,907
GTA
2012 Sales: 2,687 | Avg Price: $488,647 | New Listings: 5,254
2011 Sales: 3,257 | Avg Price: $480,285 | New Listings: 5,071
Comment: Now I think we have truly turned the corner. This is almost 4 straight months now, with everything going down. Each month seems to be in the same range, with a high teens percentage decline in sales. I think this is now the new normal. With each month showing a similar drop, I can see us leveling out with sales volume in the low to mid 80,000 range in 2013. But we have had a LOT of ups and downs in the past few years:
2006: 81,000
2007: 93,000
2008: 74,000
2009: 87,000
2010: 86,000
2011: 89,000
(All figures rounded up or down to the nearest 1,000. Average is 85,000)
So we are likely to drop from our record to the recent 5-7 year average. Things are NOT crashing folks! But, the new mortgage rules, that drop in amortization from 30 to 25 years, that knocked the bottom out of the market. Not a bad thing, really, as the harder it is to buy, the stronger the real estate market is as a whole.
As for prices, the rises keep dropping. Mind you, we saw only 4% in July, up to 8.5% in September (the first month of new mortgage rules and the first month sales fell) to 6.2% in October to 1.7% now. Prices might finally be plateauing… I think with 4 months of data, we might be seeing a trend, but it is hard to say – still. I still don’t think we are going to see any sort of sustained drop, but who knows at this point. To those who made predictions before the new mortgage rules, if prices do go down, you still weren’t right. Prices would not have fallen without the stricter lending guidelines. I did not think they would have such a strong effect, but I also waited to see, waited for data. Truly, we need a full year to know for sure. We need to have this discussion next September and see where we are at.
I still think that any drop in prices now is just going to fuel a crazy spring market that is going to see things shoot up again. We likely just have people waiting. Waiting to save up a larger down payment, waiting for prices to fall, waiting for a raise, you name it. But once they are done waiting, we are going to see a new surge.
And even – if hell freezes over and the Leafs win the cup (no less likely during the lockout) – we see prices fall 10% in Toronto, that really only puts us back to 2010 prices. Everything needs perspective. A sales fall puts us back into the recent average and a 10% price drop puts into 2010 territory. This is how strong the Toronto real estate market has been. A slight pull back, nothing like what happened in the US. But that is a whole other story…
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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.
—————————————————————————————————–
Incoming search terms
Related posts:
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- Over 3,600 Sales in November Greater Toronto real estate agents recorded 3,640 transactions last month,...
- Toronto Real Estate Prices Rise While Volume Slows Some households have put their home purchase plans on hold...
