Tag Archives: housing market recovery
Toronto Real Estate 2009 Year In Review
The Toronto Real Estate Board President’s Column as it appears in the President’s Resale Homes & Condos
North Districts
Sales growth in the Toronto Real Estate Board’s north districts followed the trend for the GTA as a whole, with sales slightly more than double the level experienced in November 2008. “The north districts encompass a broad array of housing alternatives, from large single-detached homes on estate style lots through condominium apartments pointed at first-time buyers.
Because the existing home stock caters to the majority of home ownership preferences that exist in the GTA, it makes sense that sales growth in the north districts would follow that of the GTA as a whole,” commented Jason Mercer, TREB’s Senior Manager of Market Analysis.
The north districts also experienced the largest decline in average days on the market compared to last November, dropping 45% to 29 days. Over the same period the average sale price to asking price ratio increased to 99%.
Mercer expects that growth in ownership housing demand will remain strong over the long-term: “The GTA is the single greatest beneficiary of immigration into Canada. Many new comers chose to move into York region between 2001 and 2006 according to the 2006 Census of Canada. This speaks to the diversity of employment opportunities and amenities the northern GTA has to offer.”
East Districts
The average home price for the Toronto Real Estate Board’s eastern districts remained lower than the averages for the west, central and north districts. “The combination of comparatively lower home prices and very low mortgage rates has been attractive to households looking to take advantage of affordable low-rise home ownership opportunities.
In some cases, for example, a household could purchase a single-detached house in Durham Region for the average price of a condominium apartment in downtown Toronto,” explained Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis. While the eastern districts have the lowest average price, it is interesting to note that they also exhibited the strongest year-over-year price increase in November, at 17%.
“As in other Toronto Real Estate Board districts, demand for ownership housing has increased relative to the supply of listings in the market. The result has been strong growth in home prices,” continued Mercer. “It is also important to realize that if the composition of home sales changes, this also impacts average price. For example, if the share of single-detached home sales was greater this year than last, that would influence the growth rate of average price.”
West Districts
The Toronto Real Estate Board’s western districts experienced strong annual price growth on average, climbing 12% to $397,184. According to Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis, “tighter market conditions have been one of the key factors behind the strong annual price growth experienced in the second half of 2009. Sales have risen strongly relative to listings.
As we move into 2010, however, more sustainable annual price increases are expected to re-emerge. More households will list their homes for sale, as they react to the strong rates of sales and price growth experienced through the end of 2009. Increased choice in the marketplace will likely see the rate of price growth move into the single digits.”
Mercer also commented on the diversity of housing types available in the west: “Transactions in the western districts are spread across many different home types and price ranges. In some parts of the west we have seen the construction condominium apartment projects catering to many different walks of life.
At the same time, there also exists a wide array of low-rise housing that attracts first-time buyers right through to households looking for luxury accommodation priced over one million dollars.”
Central Districts
In November, the Toronto Real Estate Board’s central districts experienced the largest year-over-year increase in sales at 111%. According to Jason Mercer, the Toronto Real Estate Board’s Senior Manger of Market Analysis, “the reason for the large reported increase in sales is two-fold.
First, we have definitely seen a resurgence in consumer confidence regarding the home ownership market. Interest rates are very low and we have seen increasing signs that the economy is on the recovery path.
Second, we also have to remember that we are comparing sales during the housing market recovery this year with sales during a steep market decline last year. This is known as the base year effect.” The central districts also experienced the shortest average days on the market and largest sale price to listing price ratio.
Mercer added that “sales have risen strongly relative to listings over the past year. With less supply in the market compared to demand, transactions have occurred at a quicker pace and substantial upward pressure has been exerted on the average resale home price.”
Tom Lebour is President of the Toronto Real Estate Board, a professional association that represents 28,000 Realtors in the Greater Toronto Area.
I just wanted to add a summary. Here are the 2009 monthly totals, for both sales and average price:
Jan: 2,670 | $343,632
Feb: 4,120 | $361.305
Mar: 6,171 | $362,050
Apr: 8,107 | $385,641
May: 9,589 | $395,609
Jun: 10,955 | $403,972
Jul: 9,967 | $395,414
Aug: 8,035 | $387,921
Sep: 8,196 | $406,877
Oct: 8,476 | $423,559
Nov: 7,446 | $418,460
Dec: 5,541 | $411,931
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Home prices show return to sales cycle, not a boom
Real estate company expects low gains in pricing next year
Canwest News Service
Canadian home prices are continuing to recover from the economic downturn, but that doesn’t mean the market is heading for a boom, according to real estate group Royal LePage.
Although the economy is climbing out of recession, Royal LePage said the “increase in sales activity and firming of house prices are the product of a normal market correction and not the beginning of another aggressive expansionary cycle.”
What’s providing the “illusion” of a boom is the return to the normal sales cycle, which was disrupted by the recession, and a tight supply of homes for sale.
“There is the illusion of a boom in the market, but in fact what we are experiencing is the end of a normal, short-term correction,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services. “Once housing supply returns to normal levels, we believe the economy will support low pricing growth into 2010.”
The recession seems to have helped the housing market as much as it hindered it in the early stages, as it created a pent-up demand that started driving the recovery once housing prices and interest rates fell, according to the report.
Affordability initially attracted first-time buyers in the spring, then “move-up” buyers, and finally in the third quarter those seeking high-end properties re-entered the market, it said.
“With the widespread availability of affordable mortgage financing, and only modest increases in home prices, affordability is better now than it has been in a number of years. We expect house prices and interest rates to remain relatively stable into next spring which would keep affordability levels intact,” said Soper.
The high unemployment rate is one factor that will keep the market from rapidly expanding even as the economy recovers, he added.
The average price of a two-storey home in the third quarter was up just 0.1% from the same quarter last year, at $409,335, while the average price of a detached bungalow rose 0.06% to $341,146, and condominiums were 0.09% higher, at $243,748.
There is something of an east-west divide in the housing market recovery, with the Atlantic provinces showing strong increases in prices year-over year, while the Prairies and British Columbia, whose resource-dependent economies took a big hit in the economic downturn, are slower to recover.
The market in Central Canada, despite the manufacturing downturn that hurt the economies of southern Ontario and Quebec, remained relatively stable throughout.
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Consumer confidence fuels housing recovery
By Rose Simone, Waterloo Record
When John Geha, president of Coldwell Banker Canada, was recently booking a trip from Toronto to Calgary, he was told every single flight was oversold. He has also learned that car rental companies are adding cars to their fleets and hotel managers are seeing business travellers coming back.
To Geha, who runs the Canadian branch of a real estate network that has 267 offices in Canada and 3,600 worldwide, these are all strong signs that an economic recovery is well underway.
“It’s not just in the number of houses being sold,” Geha said Tuesday during a visit to the Coldwell Banker Peter Benninger Realty offices in Kitchener. “I know the consumer is out there,” he said.
There are signs of life in the housing market as well, he said. Despite some “pockets of concern” in areas such as Windsor, which is closely tied to Detroit and the automobile manufacturing sector, resale home sales have been up in recent months in many regions across the country, he said.
Builders in the western regions, including parts of British Columbia, are now also seeing a surge in new home building, and “that will trickle its way across the country,” he said.
Geha said he is not in a position to make pronouncements about whether all of this signals the end of the recession that started at this time last year, but he sees the return of consumer confidence as a big factor fuelling the housing market recovery.
Canada was always on more stable ground with its banking and housing sector compared to the United States, but the global recession did have a big impact on Canadian consumer confidence, which in turn affected the housing market last year, he said.
“There was a period of six to eight months where we had a dramatic slowdown, but we were never in the crisis that the United States was in. The foundation did not crumble underneath us.”
Today, there are numerous signs consumer confidence is bouncing back, in both Canada and the United States, he said.
Regardless of the economy, real estate is a good investment because people will always need shelter, Geha said. But speculation is always risky, and he urged people to make careful decisions by looking at real estate as a long-term investment and using real estate professionals to guide them in making a decision.
“You can build wealth with real estate, but don’t think of it as a quick fix, or as something that can be flipped tomorrow,” he said.
Geha said many first-time buyers who are young career-focused people, ages 25 to 40, particularly among women, are entering the market. They may have delayed getting married and having children, but they have been working and saved money, so they are ready to buy.
“There is a very serious female consumer contingent out there that we need to pay attention to,” he said.
Despite the return of consumer confidence, Geha said he doesn’t think interest rates will start to skyrocket. “We are concerned about inflation and interest rates but we are convinced that both the federal and provincial governments will see the need for the real estate industry to thrive.”
For every home that sells, people spend an average of about $48,000 on remodelling, redecorating and buying appliances for that home, which creates retail jobs, he said.
For every new home that is built, an average of 360 retail products are manufactured to go into that new home, he added.
There is also an infrastructure for every home, including cable, schools, libraries, retail shops and services, all of which generates employment. “Real estate does drive the economy, so when real estate is moving, jobs are created,” he said.
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