Tag Archives: inventory levels
Condo prices set to rise in 2013 as demand continues to grow
With 325 condominium projects on the market and another 173 towers under construction, Toronto’s skyline is spiking with condo units and cranes, with more new buildings underway than in any other city in North America.
Sunny Freeman – The Canadian Press
A new condo report suggests first-time buyers, retirees and population growth will continue to fuel demand and price growth for the compact living spaces over the next few years.
The study by Genworth Canada found that average condo resale prices are expected to rise next year in seven of the eight metropolitan centres studied.
Prices in Toronto are projected to jump 2.5% to $312,352.
The highest increase however, is expected to be in Edmonton where prices could rise 3.2%.
Vancouver is the only city where condo prices are expected to drop, by 2% to $348,152.
The report stands in contrast to warnings from economists and officials that the condo market in some hot markets is reaching bubble territory that could soon burst.
Comment: And many of us who work in the industry. We know who is buying condos, we know why. We help investors find tenants, or even help renters go through bidding wars to find, yes, a rental condo. Our boots are on the ground, yet we are never consulted and our opinions are always deemed biased. But yet, sometimes other “experts” agree with us.
The Bank of Canada and federal Finance Minister Jim Flaherty have cautioned Canadians repeatedly to moderate borrowing on real estate, declaring household debt to be the domestic economy’s number one enemy.
Comment: We should all moderate borrowing on EVERYTHING. Not just real estate, but cars and TVs and vacations.
The central bank noted certain segments of the housing market that have a persistent oversupply – such as condos in Toronto – face a higher risk of a price correction.
Comment: Yet, the inventory levels have remained mostly constant for almost a decade. Immigration to the city is constant, if not rising. New households are being created at a rate of some 30-50,000 per year. With 25-28,000 condos being completed each year. There is still very health demand for a supply that is not quite high enough yet. And remember, if condo completions drop to 20,000 this year or next, the households creation level stays stead – thus increasing demand.
Genworth – which earns revenue from selling mortgage insurance – notes that rising prices for single-detached homes are driving first-time buyers to condos, but retirees also continue to prop up demand.
Comment: And empty nesters, snowbirds, renters and those who simply prefer living downtown to the suburbs.
It suggests that the population is expected to grow in all eight cities studied over the next few years, while employment growth and low interest rates should also support the market.
“This data corroborates our view that the demand for condos in Canada, particularly at the price-point we insure, is well supported by our economy and our population,” said Brian Hurley, chairman and CEO of Genworth Canada.
“For those seeking to own a home affordably in urban centres, condos remain a good option.”
The Genworth Canada report, produced with the Conference Board of Canada, reviewed trends in Quebec City, Montreal, Ottawa, Toronto, Calgary, Edmonton, Vancouver and Victoria.
Census figures for 2011 released in February show multi-unit dwellings – a category that includes condominiums – making up roughly half of all new housing stock, a category traditionally led by detached homes.
The numbers also indicate that Canadians are flocking to urban centres. Toronto’s population jumped more than 17% over the previous census period in 2006.
Comment: And they all need somewhere to live!
A recent CMHC report said housing starts and home sales have been strong in 2012 – particularly when it comes to multiple-dwelling units such as townhouses, condos and apartments – but will soften moderately in coming months into 2013.
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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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Busy spring real estate market expected
The Canadian Press
Major Canadian housing markets have continued to show “exceptional resiliency” so far this year, setting the stage for a busy spring, according to a major Canadian real estate organization.
In its market trends reports, Re/Max said its survey has found that 12 of 15 Canadian centres, or 80%, reported sales activity in January and February that was ahead of last year’s levels.
More than half of the cities reported double-digit increases, “with the strong demand and diminished supply setting the stage for a heated spring 2012.”
Re/Max said low interest rates, coupled with strong consumer confidence levels and a mild winter played a significant role in the upswing, ushering in an early start to the spring market.
Average prices climbed in 14 of 15 markets, with three markets — Toronto, Winnipeg and St. John’s, N.L. — posting gains in excess of 10%.
However, tighter inventory levels at entry-level prices have sparked bidding wars — particularly in the Winnipeg and the Greater Toronto Area — with similar conditions starting to emerge in Saskatoon, Regina, London-St. Thomas, Hamilton-Burlington, Ottawa, St. John’s and Halifax-Dartmouth.
Comment: In Toronto, we are seeing an average sale price that is 100% of asking. We are also seeing fully 50% of houses in the $600-900,000 range going for OVER asking. Demand is so far ahead of supply right now, this is the tightest sellers market I have ever seen.
“Given the current economic climate, the strength of the country’s housing market clearly reflects the value Canadians place on home ownership,” said Michael Polzler, executive vice-president of Re/Max.
In terms of sales volumes, the best performing markets heading into the traditionally busy spring period were Halifax-Dartmouth, up 35%, Saskatoon (21%), Saint John, N.B., (20%), Regina (16%), St. John’s (12.5%), Greater Toronto Area (12%) London-St. Thomas (11%) and Edmonton (11%).
Only Vancouver, Kitchener-Waterloo, and Winnipeg have experienced softening in housing activity so far this year. Sales are down 16% in the Greater Vancouver, 4.5% in Kitchener-Waterloo, and Winnipeg down 0.2%.
Meanwhile, despite expectations of continuing strong sales, price gains are likely to be “much more moderate that in years past,” said Elton Ash, regional -vice-president for Re/Max in Western Canada.
Comment: What? 14 of 15 cities have prices moving up (but for Vancouver, which is a different story entirely) with 3 – 20% – showing gains of 10% or more. We have 12 of 15 cities with higher sales volume than last year. And we are going to a moderate price growth this year? I don’t think so…
“We expect this will remain the trend moving forward, in line with the Canadian economy, as GDP growth also moves ahead at a more subdued pace.”
However, Ash said local conditions vary, with inventory shortages driving prices in some markets while others, such as in the case of Saskatchewan and Newfoundland, the local economy has shown extraordinary strength.
“On the whole, this is a very stable and healthy housing market in line with traditional norms, with few exceptions,” he said.
Re/Max said first-time buyers have been driving demand in both the smaller and major markets, in turn sparking strong sales activity among move-up purchasers at higher prices.
“As a result, the upper-end of the market has also held up well. There’s no question that the spring 2012 market will see all segments working in tandem.”
Comment: It is only low supply that will keep 2012 from breaking sales records in Toronto, trust me. And if we do not see price gains in the 8-10% range, I will eat my hat. Or your hat… I don’t wear a hat…
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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
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Toronto home values up in January
Kit Kadlec – Canadian Real Estate Magazine
Toronto home prices enjoyed upward momentum in January, rising 2.7% from the previous month and now 4.1% higher than a year earlier.
The gains were highest in detached houses, but condos were also still higher in price than a year ago, according to the Toronto Real Estate Board’s January Market Watch report. Overall sales were also up 8.8% from a year ago.
The average price of a detached home was $586,098 in January, up 8% from a year ago. A condo apartment average price was $321,475, up 5%. Townhouses showed the largest gain, up 9% to reach $359,467.
“Low inventory levels have kept competition between buyers strong, resulting in robust annual rates of price growth over the last year,” said Jason Mercer, the TREB’s senior manager of market analysis. “Strong price growth is expected to attract more listings.”
As the listings grow, price growth will slow its increase, especially by the second half of 2012, he said.
Comment: IF listings increase, which is a very big IF. Sales outpaced listings by 4% last year, we are still way behind. If listings went up 10% tomorrow, that might begin to satisfy the pent-up demand.
Condos have already started to show some decline, as the average price dropped 2.6% from December. At the same time, houses and townhouses continued to see price gains over the last month.
But even as prices rise, they haven’t pushed buyers out of the market, as sales remain brisk, said the TREB report.
“A favourable affordability picture bolstered by very low posted fixed mortgage rates has kept home buyers confident in their ability to achieve the Canadian goal of home ownership,” said TREB President Richard Silver.
The TREB will be taking part in a new way of reporting price increases, led by the Canadian Real Estate Association. The new MLS Home Price Index will be announced on Feb. 6 and is being touted as a less volatile measure of home prices and home price changes than the traditional median and average price measurements.
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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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