Tag Archives: market turmoil
National real estate association adjusts its outlook, says sales will rise
By Kim Covert, Postmedia News
Stable interest rates and rising prices in Vancouver have proved to be positive factors for Canada’s housing industry, according to the Canadian Real Estate Association, which had forecast declining sales but now expects them to increase overall in 2011.
Sales and housing prices actually dropped in July from the previous month – sales edged down by 0.1%, and the national average price of a home during the month was $361,181 – the lowest it’s been since January, CREA said, though it’s 9.3% higher than in July 2010. While year-to-date sales are 1.6% below last year’s figures, transactions are up 12.3% from the same month last year.
“This increase reflects weakened activity in July 2010, when levels for the month reached their lowest point since 2002,” CREA said.
The Ottawa-based industry group represents about 100 boards across the country.
While it had been forecasting a slowdown, it now says there will be 450,800 sales in 2011 – a 1% increase from a year ago. It says rising prices in Vancouver have helped push its forecast for the average sale price in 2011 to $363,500, a 7.2-per-cent increase from a year ago.
“While there had been some talk of potential interest rate increases, that hasn’t happened,” said CREA president Gary Morse. “In fact, rates have actually come down, and are now expected to remain low for the remainder of this year and into 2012.”
CREA expects sales to fall less than one% in 2012, while prices will flatten.
“Canadian housing remains surprisingly robust, thanks to still-low interest rates and solid job growth,” Douglas Porter, deputy chief economist at BMO Capital Markets wrote in a note responding to CREA’s data.
“While the recent financial market turmoil may temporarily weigh on activity, sales should ultimately find support from continued exceptionally low borrowing costs.”
Sonya Gulati, an economist with TD Economics, says while low interest rates will continue to support sales, the bank is still forecasting a slowdown in housing market activity.
“With uncertainty permeating markets regarding the state of the global economic recovery, we continue to expect that real estate activity with temper over the next 18 to 24 months,” Gulati wrote in a note. Prices in Toronto rose 0.8% in July over June’s figures – though sales declined 0.8% – and while prices and sales both declined in Vancouver, by 2.5% and 3.2%, respectively, “going forward, a correction is ripe for these cities in order to bring both markets in line with balanced territory,” Gulati said, though pricing declines will be gradual, with the biggest cuts coming in late 2012 and early 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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Housing starts climb unexpectedly in July
By Ka Yan Ng – Reuters
Canadian housing starts unexpectedly climbed 4.3 percent in July, setting third-quarter new home construction off to a strong start and maintaining its role for now as a key support to the economy.
Starts, elevated by a big jump in construction of multi-residential buildings such as condominiums, rose to a seasonally adjusted annualized rate of 205,100 units, Canada Mortgage and Housing Corp (CMHC) said last Tuesday.
That is up from a downwardly revised 196,600 units in June, which were originally reported at 197,400 units. The median forecast of 19 analysts surveyed by Reuters was for a modest decline to 196,000 starts.
“Detracting slightly from the headline’s positive cast, this month’s gain was concentrated in the multiples segment, which tends to have a lower valued added,” said Peter Buchanan, senior economist at CIBC World Markets.
“Today’s report and the recent resilience of both permits and sales suggest housing continues to be one of the economy’s strongest sectors, although sentiment among purchasers obviously remains vulnerable to recent market turmoil.”
Unlike the United States and many other developed countries, Canada’s housing sector has been a strong source of support for the economy, helping draw it out of the recession.
Analysts credit low interest rates and banks still willing to lend. But they also warn that recent financial market volatility could hurt consumer sentiment and hit demand for new and existing homes.
However, the turmoil could also help to keep Canadian interest and mortgage rates lower for longer. Market expectations for Canadian interest rates, as measured by overnight index swaps, show traders have actually priced in the prospect of a rate cuts by year end.
The outlook has swung wildly in recent sessions. Traders pared back bets on rate hikes on Tuesday as world stocks put the brake on steep losses. Toronto’s main stock index clawed back some of its near 9-percent drop over three sessions.
HOUSING STILL SEEN SOFTENING
The housing numbers follow other July data that has delivered mixed signals, even as investors hope for signs of underlying strength following a sickly second quarter.
“While many economic indicators have pointed to much softer growth through the summer, Canadian housing starts is not one of them, still likely responding to a firm rebound in sales activity in the second half of 2010,” said Robert Kavcic, economist at BMO Capital Markets.
But the overall pace of housing activity, from starts to resales, are seen slowing in the coming months, partly due to tighter mortgage regulations.
The seasonally adjusted annual rate of urban starts was led by a 13 percent jump in multiple urban starts, such as condos, to 120,200 units. CMHC said Ontario, British Columbia and the Atlantic region showed the most strength in the multi-residential sector.
Partly due to shifting demographics, Canada has seen a boom in condominium construction which has filled the skylines of its biggest cities with cranes.
But the closely watched measure of starts of single-family homes decreased 7.8 percent in July to 65,000 units.
Economists at IHS Global Insight noted single-family new construction activity was 22.2 percent below their level last year, compared with multi-family starts, which are now at their highest level since October 2008.
Rural starts were estimated at a seasonally adjusted annual rate of 19,900 units in July.
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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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G20 bank closings ‘brutal’ for real estate industry
Tony Wong – Yourhome.ca
Forget about the fake lake. What if you can’t close on the sale of your property because your bank was shut down for the G20 Toronto summit?
While media attention might be on the uproar over the $1.9 million man-made lake and pavilion being built for the media at the meeting of world leaders, real estate and legal professionals are worried over a potential “disaster” in the making.
The last Friday in June is traditionally the busiest for house closings from buyers who have purchased in the spring market that saw record sales this year. If downtown banks close during that week thousands of closings could be affected creating major market turmoil, say industry professionals.
“It was already going to be brutal without the summit because we’ve been so busy. The timing couldn’t be worse,” says Andrew Zsolt, president of Coldwell Banker Terrequity Realty Brokerage.
Zsolt, who has 14 offices in the Greater Toronto Area, said he expects his agents to close about 500 sales at the end of this month alone.
“We usually tell buyers to try not to close in the last week of June because it’s so busy. It’s right after school and before full cottage season so they’re all in a rush. It could be a bit of a disaster,” says Zsolt.
On Tuesday the Law Society of Upper Canada issued an advisory to lawyers saying that they should make arrangements in case retail branches downtown are shuttered for security reasons.
“If you are a lawyer with a transaction that is pending, make sure you make alternative arrangements,” said Roy Thomas, spokesperson for the Law Society.
So far the policy has been in flux as banks monitor how they will be affected by the security perimeter.
“Recognizing the fact that employee and customer access will likely be impacted by summit related activity, we will be closing some branches in close proximity to the security zone,” says Ralph Marranca, spokesperson for Bank of Montreal. Marranca said no specific details on branch closings were available as yet, but some branches had been proactively reaching out to customers to advise them of any alternate arrangements.
Bank of Nova Scotia spokesperson Joe Konecny meanwhile says some branches in the downtown core would be open on Monday, Tuesday and Wednesday before the summit, but would be closed on Thursday and Friday.
“We are committed to taking all reasonable steps to provide for the continuity of business,” says Konecny. “We will adjust our business continuity plans as necessary.”
The Royal Bank of Canada, Canada’s largest bank said no closings were planned at the moment.
“There are continuity plans in place in case we have to make adjustments,” said spokesperson Don Blair.
Bob Aaron, a real estate lawyer and Toronto Star columnist, says he has written to his bank in frustration trying to figure out how the closings would have an impact on his business.
“My bank tells me I’m on my own to make arrangements for alternate banking on June 24 and June 25. That’s hardly the appropriate level of customer service,” Aaron complained to the TD Bank in a letter sent Tuesday.
Mohammed Nakhood, a spokesperson for the bank says TD was “evaluating potential bank closings” but had not made a final decision as yet. As for alternate arrangements, Nakhood says it would be “speculative” to guess what they would be at this point.
Aaron says that’s not acceptable, since lawyers would be left scrambling at the last minute to figure out how to close deals.
“There could be financial penalties and lawsuits because we have failed to close,” he says.
The summit of the top world leaders will take place in Toronto June 26 and 27, but a security zone will be in place before then. Some office towers surrounding the Metro Convention Centre will have severely restricted access as a result, with a security bill in the hundreds of millions of dollars.
Meanwhile realtor Zsolt says his wife, who works for TD Bank has been told to stay away from the office and work from home.
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Contact the Jeffrey Team for more information - 416-388-1960
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