Tag Archives: housing values
Remax warns not enough homes for buyers
Julie Fortier, Financial Post
With new mortgage rules, a new harmonized sales tax in some provinces and the possibility of higher interest rates all set to kick in this summer, Canadian home buyers are on a tear and it is only going to get busier leading up to this summer, according to the Re/Max Market Trends Report 2010 released Wednesday.
The report, which examined real estate trends in 16 markets across the country, found that unusually strong activity in January — traditionally one of the quietest months of the year — has led to a sharp decline in active listings in 81% of markets surveyed. Too many buyers and not enough homes will probably be the main problem in coming months, according to the report.
Markets experiencing the tightest inventory levels include Toronto (-41 per cent), Kitchener-Waterloo (-33 per cent), Ottawa (-30 per cent), Victoria (-30 per cent) and Greater Vancouver (-27 per cent), which also had some of the highest year-over-year sales gains.
The highest year-over-year sales gains were reported in Greater Vancouver (152 per cent), Kelowna (121 per cent), Greater Toronto (87 per cent), Victoria (69 per cent), Hamilton-Burlington (58 per cent), London-St. Thomas (55 per cent) and Calgary (47 per cent), the report said.
Western Canada dominated the list of centres with the greatest increases in price, with Victoria home prices jumping 25.5 per cent in January compared with the same month a year before. Kelowna jumped 22 per cent and Greater Vancouver rose 19.5 per cent. St. John’s saw an increase of 23 per cent and Toronto rose 19 per cent.
“While home ownership is still within reach in many major centres, levels are slipping. There is a growing sense, on both sides of the fence, that the time to act is now,” Elton Ash, regional executive vice-president at Re/Max of Western Canada said in a release.
With the Harmonized Sales Tax, which will add more tax to home buying in two of the biggest and most squeezed markets – Ontario and B.C. – set to start July 1, and the Bank of Canada’s record-low interest rates expected to rise around the same time, that pace of growth could slow dramatically in the second half of 2010. Last week, Finance Minister Jim Flaherty also said starting April 19 all borrowers must meet standards for a five-year fixed-rate mortgage, even if the buyer wants a variable rate mortgage, among other mortgage rule changes.
“There have never been so many motivating factors in play at once,” Michael Polzler, executive vice-president of Re/Max Ontario-Atlantic Canada said in a release. “We’re in for a heated spring market that will, in all probability, spill over into the summer months, as the window of opportunity draws to a close. The supply of homes listed for sale has been drastically reduced, housing values are once again on the upswing, and banks and governments are moving in unison toward stricter lending policies.”
————————————————————————————————————
Contact the Jeffrey Team for more information - 416-388-1960
————————————————————————————————————
Related posts:
- Easy credit, soaring prices raise new housing fears Canadians are in the midst of a mortgage binge,...
- First-time buyers boost house and condo sales despite erosion of affordability Heated Spring real estate market forecast from coast-to-coast March 20/2007...
- Condos to remain an attractive option for many home buyers TD Canada Trust Canada’s condo markets have delivered a strong performance...
- Sales growth slows as pent-up demand peaks The Canadian Real Estate Association said yesterday that 97,663 properties...
- Housing toughest sector on the block Sales of existing homes in June were up a seasonally...
Housing credit squeeze likely to keep bubble at bay
By David Olive – Toronto Star
Finance Minister Jim Flaherty has headed off any last chance of a housing bubble developing in Canada.
Comment: No one but The Star thought there was any chance of a bubble anyway. You just threw the words around because it made for good press. All of the data supports the exact opposite. Look at the numbers from 1988–1991 versus 1996–2010 and notice that they are not at all alike. People – do not believe the hype, check the data for yourself and come to your own conclusions!
Not that there was much likelihood of a bubble forming, despite the astonishing recovery in Canadian house prices in recent months, fuelled by pent-up demand and record-low interest rates. The fears on that score are overblown. So are those of a crash in prices when the non-existent bubble implodes.
Here’s why the Canadian housing market is heading into a period of stability:
Ottawa has just signalled it will slam the brakes on the real estate market if it shows signs of spinning out of control.
Mortgage-tightening rules Flaherty unveiled Tuesday are gentle and highly targeted. They’re aimed at discouraging Canadians from using their homes as ATM machines. And to make life difficult for speculators who buy six-packs of condo units in the hope of flipping them for a quick buck.
That activity drives up housing values across the board, fostering the illusion of a sustainable rise in demand and prices that, in fact, is built on sand. These were culprits in the record run-up in U.S. housing values in the previous decade that ended with an epic collapse, as U.S. house prices abruptly plunged between 40% and 70% from their 2007 peak.
If Flaherty’s new measures don’t ease house-price inflation, he’ll reach deeper into his toolbox for a mallet, and now every player in the market knows it. Flaherty said Canadians can withdraw only 90% of the value of their homes when refinancing, down slightly from the current 95%. In the next round of disciplining the market, if required, Ottawa can drop that amount to 85% or still lower.
Ottawa will now require a 20% down payment on government-insured mortgages for what it describes as “speculative” investment properties.
Real estate agents, mortgage brokers and even some economists feared Ottawa might apply that 20% requirement on all housing purchases. That could dampen not only real estate values, but also the wider economic recovery.
But Ottawa has bared its teeth: If the upward spiral in prices continues, Flaherty might broaden the application of the higher down payment requirement to, say, principal residences.
The Canada Mortgage and Housing Corp., the principal insurer of Canadian home mortgages, already has tightened its rules on approving insurance on mortgages that show the slightest potential for default. And it has eliminated non-down-payment mortgages.
One of the classic characteristics of a bubble is that in the midst of one, no one thinks it’s a bubble. If they did, they’d quickly clear their winnings off the table. That fears of an emerging Canadian housing bubble have preoccupied economists, lenders, policymakers and buyers since last fall is a sure indication that the market is not caught up in an irrational buying frenzy.
There has been little speculative activity in the housing market. This dangerous phenomenon shows up in volume as much as prices, as the number of transactions soars with the rampant buying of non-owner-occupied homes. Yet in this market, as prices have risen strongly, volume has been close to flat.
The housing market is about to endure two cold showers. The Harmonized Sales Tax (HST) will kick in July 1 in Ontario and B.C., two of the biggest and most buoyant markets. And the Bank of Canada’s low-low interest rates – the main cause of today’s robust prices – are expected to rise this year.
The fundamentals of our economy don’t support another leap in prices.
No question, the Canadian housing market has recovered with startling speed and strength. From the trough a year ago last month, average Canadian home prices have soared 23%, in the teeth of a global recession with no equal in modern times. The average Toronto house price has jumped 19% in the past year, to $409,058 last month.
But Canadian personal income slipped 1% in 2009, and total employment was down 1.4% from 2008. And in a report Tuesday, the Ottawa-based Vanier Institute of the Family warned that Canadian household debt reached a record average of $96,000 last year. The incidence of late mortgage payments soared 50% in 2009, and credit-card holders at least three months behind in their payments was up 40%.
Under those circumstances, deferred gratification will trump irrational exuberance in most dinner-table discussions of family finances.
————————————————————————————————————
Contact the Jeffrey Team for more information - 416−388−1960
————————————————————————————————————
Incoming search terms
Related posts:
- Easy credit, soaring prices raise new housing fears Canadians are in the midst of a mortgage binge,…
- Optimism returning to housing market, RBC survey finds Optimism is reflected in the most recent sales statistics –…
- Tone down the real estate speeches Tales of an overheated housing market show why Bank of…
- Flaherty announces mortgage crackdown The new rules, which go into effect April 19, mean…
- Housing bubble or just heated? Last November, the economy was said to be on the…
Heated housing activity throughout 2009 lends little air to bubble theory
Single-detached housing values remain slightly off 2008 levels in 27% of Toronto Real Estate Board districts
Despite limited inventory levels in the Greater Toronto Area (GTA) in the latter half of the year, double-digit price appreciation failed to materialize in the single-detached housing category in 2009.
In fact, an in-depth analysis 63 districts within the Toronto Real Estate Board found that detached housing values in 27% of districts remained slightly off 2008 levels, while 57% reported price appreciation of less than 5% in 2009. Sixteen percent of districts recorded an increase in average price in excess of 5%. No double-digit gains were noted.
“There is simply no evidence of a housing bubble,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “While sales were up considerably over one year ago – and supply was tight in many of the city’s hot pocket areas – the expected surge in average price did not occur. Buyers remained cautious in their pursuit of homeownership – with most unwilling to overpay for the privilege. “
While one quarter of all Toronto Real Estate Board districts saw prices in the detached housing category soften in 2009, just over half declined by less than 2%. Those that saw prices fall by more than 2% were primarily upper-end neighbourhoods – the vast majority located in the central core – which were slower to rebound once the market regained momentum. By year-end, however, sales in all of these areas posted double-digit growth – a fact that clearly indicates a greater number of transactions at the lower end of the price spectrum. Inventory may have also played a role as sellers held off listing their luxury properties until market conditions improved.
Leading the GTA in terms of price appreciation was South Pickering (E12) where the average has risen 9.4% to $358,493; Malvern, Hillside, Rouge (E11) takes second place with a 7.3% upswing to $368,095; North Pickering (E13) was ranked third with values climbing 7.2% to $396,973; fourth spot goes to Port Credit (W12) in Mississauga where values have climbed seven% to $614,144; and rounding out the top five – the lone downtown Toronto district – was Riverdale, Leslieville (E01) where prices escalated 6.7% to $522,017.
Ballantrae, Cedar Valley (N13) ranked sixth with a reported 6.4% increase to $662,268. In seventh place is Richmond Hill – North End (N05) with a 6.3% increase in average price to $574,642. The Applewood, Rathwood neigbhourhoods (W14) in Mississauga ranked eighth in terms of price appreciation, rising 6.1% to $505,994, while Markham (N10) claimed ninth spot with a 5.3% escalation in detached housing values, bringing the average to $510,268. Bathurst Manor, Armour Heights (C06) in the city’s north end secured tenth place with a 5.1% upswing in average price to $597,025.
Top Toronto Neighbourhoods
The East clearly dominated the top five and affordability factored in heavily, with single-detached homes in both Pickering districts and Malvern, Hillside, Rouge, priced under $400,000. Young families – most buying their first home – were attracted to communities like Riverdale and up-and-coming Leslieville, while move-up buyers looked to Port Credit, which has steadily increased in popularity in recent years.
“First-time buyers were a driving force throughout much of the year, but their role was most noticeable in early 2009,” says Polzler. “Almost one in every two homes sold was priced under $400,000 in the first quarter of the year. An entirely different picture emerged in the final quarter when just one-third of homes moved under the $400,000 price point.”
As the move-up segment swelled, so too did demand for more upscale properties across the board. Yet, despite the upswing, average price registered only a small percentage increase. In the central core, for example, where the average price ranges from $572,529 in Don Mills to as high as $1,717,190 in Rosedale, overall values rose 1% to $919,838, compared to 2008. Unit sales in C-district jumped 31% to close to 4,000 units.
The number of homes sold in the city’s north end saw the greatest percentage increase at 32% to 8,843 units. Average price in North district, which ranges from $398,864 in Newmarket to $700,499 in King City, rose 2% overall to $555,616. Housing sales climbed in the west, where values range from $298,136 in Brampton to $790,060 in the Kingsway, by close to 19% to 12,453 units. West district’s average price rose a nominal 1.5% to $467,227. The increase in sales was more moderate in the East End (including Scarborough and Pickering, Ajax), where values range from $325,393 in Bendale, Woburn to $691,128 in the Beach. The number of detached homes sold increased 15% year over year to 6,690. Average price in East Toronto rose 2.6% overall to $400,813.
“After a dismal start, the stats confirm that 2009 returned to the healthy, upward trajectory that we have followed for much of the last decade,” says Polzler. “We see detached homes continuing on that course in 2010, with moderate gains expected. The detached housing category continues to be a solid gauge of the market’s overall performance, accounting for approximately half of the activity in GTA.”
————————————————————————————————————
Contact the Jeffrey Team for more information - 416-388-1960
————————————————————————————————————
Incoming search terms
Related posts:
- Toronto real estate resilient in first half of 2009 In the midst of the recession, approximately 20% of single-detached...
- Double-digit gains characterize average price appreciation in most Toronto neighbourhoods in 2010 Toronto's housing market roared back to life in the first...
- First-time buyers boost house and condo sales despite erosion of affordability Heated Spring real estate market forecast from coast-to-coast March 20/2007...
- Toronto Real Estate Forecast 2010 MLS® sales in the GTA will hit a record high...
- Toronto Real Estate 2009 Year In Review Sales growth in the Toronto Real Estate Board's different districts...
