Toronto at Home - A Real Estate Blog

Toronto Rental Market Report

2004 rental transactions up 14 per cent over 2003

The Toronto Real Estate Board's annual Rental Market Report for 2004 reveals a much more active market, with total transactions reaching 6,643 condominium apartments and townhouses leased, a 14 per cent increase over 2003. Rental prices, however, fell from last year, with the two bedroom apartments averaging $1,730 per month, a marginal decline over 2003's $1740, and two bedroom townhouses falling 10 per cent to $1,551 per month. See report details [PDF file].

Toronto resales up in early January

Early 2005 sales up 18 per cent over last year.
Beaches, Bloor West Village push price hikes.

by THERESA BOYLE

The new year is off to a good start for home sales, according to the Toronto Real Estate Board.

In the first two weeks of January, there was an 18 per cent increase in sales of existing, single-family homes to 1,310, compared to the same period last year.

The price of homes during that time jumped to $301,372 from $295,989.

"We're off to a great start. I expected it would be good, but not this good," said Ron Abraham, president of the board.

Areas pushing the price hikes include the Beaches, Bloor West Village, King Township and Oakville.

Abraham said the early numbers are a good indicator of what to expect for the rest of the year.

"Strong early numbers in January bode well for a good start to 2005 as the market begins to gear up following the holiday season," he said.

Supporting the strong sales is a healthy economy, the board said.

The latest numbers from Statistics Canada show that the national unemployment level fell 0.3 percentage points in December to 7 per cent.

That was the lowest level since 2001.

In Toronto, 1,000 jobs were added over that time.

"A positive economic climate continues to exist, keeping home ownership a realistic goal," Abraham said.

Most analysts expect the Bank of Canada to moderately raise interest rates.

They will likely rise by about 50 basis points over the course of 2005, due at least in part to the rising dollar.

"The prospect of a slight rise ... will not be likely to scare off consumers," Abraham said.

Meanwhile, the Canadian Real Estate Association is celebrating a record number of home sales for 2004.

There were more than 25,000 sales for the eleventh month in a row, including December last year.

This is the longest monthly run above that level ever.

Sales by real estate agents on the multiple listing service came in at a record 316,386, up 2.7 per cent from the 307,971 sold in 2003.

The Select-Plan Real Estate Story

Fraser Beach began his real estate career in 1977, working as a salesman in Pickering Village. After two years of successful selling, he obtained a broker's licence and moved on to become a branch manager. He subsequently established successful new branch offices for two major brokerage firms and later became the senior marketing executive of one of those firms. At the same time he continued his formal real estate education, completing the qualifications for the F.R.I. and C.R.B. professional designations. After all of this, Fraser had established himself well, in a position most people would be happy to occupy until they could collect their pension.

But Fraser believed that changes were needed in the real estate brokerage business. The established firms were not meeting emerging demands of vendors for higher standards of quality and value. The real estate business was over populated with sales- people, all providing virtually the same service, for the same fee, to a declining number of home buyers and sellers.

It was a vicious circle. The inefficiency of too many salespeople chasing too little business sustained high commission fees. At the same time, the prospect of earning the high fees attracted more and more salespeople into the business. Vendors felt they were paying too much, while brokers and agents were earning less and less. The process had to become more efficient because no one was prospering.

Fraser believed the answer lay in eliminating the duplication of effort resulting from too many salespeople competing for the same inventory. Efficiency could also be improved by reducing overheads like the head office expenses of big brokerage organizations and the substantial franchise fees paid on the business done by franchised operations.

So, after years of working with the big names in the business Fraser decided to establish an alternative brokerage service. He would provide a full range of professional services but reduce much of the overhead expenses which burden the established firms. He could then offer the same services at a very attractive price.

Fraser reasoned that if he didn't have to spend time chasing after listings and could focus on the productive activity of marketing listed properties, he could afford to offer effective service at a much lower fee. And there would be equal incentive for all of the other Realtors to sell the company's listings because they would get the customary "co-operating" selling fee for their effort.

So in the summer of 1991, Fraser and his wife Joanne established Select/Plan Real Estate Inc in Pickering Village.

In returning to his roots, Fraser gave homeowners in Ajax, Pickering and Whitby the very best in professional service. The firm acquired all the computer tools, including direct links to the listing databases of MLS® services and the Internet. Thus, all of the Realtor MLS listings immediately go "on-line" to Realtors throughout Greater Toronto Area.

Cost savings and efficiency are not the only solutions for better value that Select/Plan gives its clients. As an Internet guru, Fraser uses that powerful medium to best effect. For example, Select-Plan promotes each property on high volume Internet portals. The internet exposure provides pictures and descriptions of property to the people who are most likely to buy them.

In November of 1999 Select-Plan moved to a state-of-the-art electronic office at 2 Ritchie Avenue - at the corner of Highway #2.

Our purpose is to combine the latest Internet technology with professional real estate services to effectively meet our clients every need ... and all at lower cost.

That's our story ... and we're sticking to it.

Canadian home prices seen rising

from Reuters

What goes up, must come down, but for the Canadian housing market, the fall isn't in sight just yet.

For the past several years, Canadian cities have seen record home sales and record growth in home construction, prompting concerns of a painful correction. Analysts say the furious pace will ease -- in some places more than others -- but prices will continue to climb this year.

"I don't expect to see price declines, is the upshot," said Bob Dugan, chief economist with Canada Mortgage and Housing Corp., the country's national housing agency.

CMHC figures show that both housing starts and resales are up dramatically since 2002. House prices rose 10.4 percent in 2002 and more than 9 percent in 2003 and 2004.

The agency sees prices rising 5.3 percent this year in the second most active sales year on record after 2004.

The strong market, a boon to the overall economy, has sparked comparisons to the bubble property markets of the late 1980s and early 1990s -- which burst as interest rates began to soar.

But analysts say today's low mortgage rates and a relatively balanced market, where supply is close to demand, mean that won't happen this time.

"A lot of analysts have argued that inflation-adjusted home prices have surpassed the peak in the late 1980s, early 1990s, and therefore we might be venturing into bubble territory," said Dugan. "We don't really think that's the case."

The Bank of Canada's key interest rate now stands at a modest 2.5 percent, compared with 1990, when it peaked at just over 14 percent.

"We're in a much more comfortable position now ... and that's why we expect the market to continue to be very strong," said Ron Abraham, president of the Toronto Real Estate Board.

Analysts expects the central bank to leave interest rates unchanged in the first half of 2005, after hiking them twice last fall, and to raise them only modestly after that.

The low rates have resulted in another difference between now and the late 1980s: home prices have climbed across the country, rather than in regional pockets.

In the late 1980s, prices were high in Ontario and Quebec -- leaping by as much as 36 percent in Toronto in one extraordinary year -- but remained quite modest elsewhere.

"By having all markets growing at the same time ... there's no offset like there was in the late 1980s," said Dugan.

The Canadian market's growth has also been more modest than in other countries, such as Australia and Britain, where housing prices have rapidly outpaced income growth in recent years, according to International Monetary Fund figures.

Incomes in Canada have kept pace with prices, Dugan said. "If you just compare what's going on in Canada to other countries, the expansion here has been very, very mild."

Analysts expect home prices in Toronto, the country's biggest city, will rise less quickly in 2005 after several sizzling years.

Independent economist Will Dunning believes the resale market in Toronto has peaked as the strong Canadian dollar slows job growth and hits the local economy.

"To me, job creation is what really matters in a housing market," he said. "Areas that are more (natural) resource dependent, they'll actually do very nicely economically over the next couple of years."

That bodes well for Calgary, Edmonton and other western cities, where housing markets will continue to perform well as the region's oil and gas sector booms.

Toronto real estate market update

Toronto real estate market off to a fast start for 2005

In the first two weeks of this month, sales of single-family dwellings are up 18 per cent to 1,310 over the same period in January 2004.

Prices are also up in the first days of 2005, to $301,372 from January 2004's end-of-month figure of $295,989.

Toronto Real Estate Board President Ron Abraham says that a good beginning can lay a solid foundation for the year.

"Strong early numbers in January bode well for a good start to 2005 as the market begins to gear up following the holiday season. The beginning of the spring season for the real estate market is generally considered to be the end of January, at which time sales volumes tend to rise".

Meanwhile, the latest numbers from Statistics Canada show that the national unemployment level fell 0.3 percentage points in December to seven per cent, the lowest level since 2001. In Toronto, one thousand jobs were added over that same time frame.

Despite some analystsè predictions that Canada's economic growth will slow somewhat from the pace of 2004, on the whole the situation is quite favourable.

"A positive economic climate continues to exist, keeping home ownership a realistic goal." Mr. Abraham said.

"Most analysts expect the Bank of Canada to moderately raise interest rates, probably by about 50 basis points over the course of 2005, due at least in part to the rising dollar. The prospect of a slight rise however; will not likely to scare off consumers."

Resale home prices up 10% in 2004

Canada's real estate market had another good year in 2004, with a double-digit increase in the average price of an existing home, the Canadian Real Estate Association said Monday.

But the association warned Canadians that 2005 will likely bring a slowdown in the pace of price increases.

"An increase in new listings and a return to a more normal pace of activity will cause the resale housing market to become more balanced over 2005," CREA chief economist Gregory Klump said in a release.

"A more balanced market will also keep a lid on average price increases," he said.

Klump forecasts that price increases will begin to moderate in the spring, and predicted that the average increase over the rest of 2005 would range between 3 and 5 per cent.

The average home resale sold through the Multiple Listing Service last month was priced at $252,767 in Canada's major markets. That was up 10.7 per cent from December 2003.

Vancouver continued to be home to Canada's most expensive real estate. The average MLS-listed resale was $381,199 last month, up 10 per cent over the year.

Toronto was in second place, with an average resale price of $315,761 in December, up 10.8 per cent from the year before.

The biggest price increases, in percentage terms, came in Saint John, New Brunswick (up 36.9 per cent to $132,056; Trois-Rivieres, Quebec (up 29.7 per cent to $104,131); and Hull, Quebec (up 26.6 per cent to $169,662.

The real estate association said the average resale price of all MLS-listed properties sold in Canada's major markets in 2004 was $245,149, up 10.1 per cent over 2003's figures.

Major market MLS home sales were a record 316,386 units last year.

New sales records were set in Calgary, Edmonton, Toronto, Hamilton, London, Ottawa and St. John's.

Starts slowed at year's end

Toronto housing starts reached 42,115 in 2004, the fourth-highest level on record, despite a softening in the market during the latter part of the year.

According to Alex Medow, Ontario regional economist for the Canadian Mortgage and Housing Corporation, factors fuelling demand for housing in Toronto include low interest rates and a spike in population.

"These days, the largest component of population growth is immigration. More than half of the immigrants coming to Canada choose Ontario, of which most settle in Toronto. There is some outflow to other provinces, but this number is dwarfed by the number of people coming into Ontario, and specifically Toronto," he says.

As for factors contributing to Toronto's weaker year-end activity, down 7.4 per cent from 45,475 in 2003, Ted Tsiakopoulos, CMHC senior market analyst, points to a dichotomy in the resale and new home markets.

"During the second half of 2004, resale was quite strong while demand for new homes was easing. Detached housing starts were down because of rising prices, land constraints, as well as increased listings in the resale market, which offered buyers alternative choices."

He notes annual numbers for the GTA typically come in at around 10 per cent higher than the larger Toronto CMA (Census Metropolitan Area).

Nationwide, new-home construction hit an estimated 233,000 starts, representing 6.7 per cent growth over 2003.

Urban Home Ownership Rising

by PJ Wade

In almost all Canadian metropolitan areas, home ownership rates rose throughout the 1990s, particularly between 1996 and 2001. This improvement was a response to factors that include accelerating income levels and low interest rates. Although the move towards home ownership promises to continue through 2005, not all Canadian families can join this trend whatever their dreams.

According to a recent Statistics Canada report entitled "Evolving Housing Conditions in Canada's Census Metropolitan Areas, 1991 to 2001," housing conditions improved significantly in Canada's 27 largest urban areas during the late 1990s after deteriorating earlier in the decade. Despite this advancement, more than 30 per cent of households in metropolitan areas lived below one or more housing standards in 2001.

This Stats Can report, which was produced with Canada Mortgage and Housing Corporation (CMHC) in collaboration with the Cities Secretariat of the Privy Council Office, assessed how well Canadians were housed using three housing standards:

• Whether the dwelling needed major repairs.

• Whether it had enough bedrooms for the size and composition of household members.

• Whether it cost the household 30 per cent or more of its total before-tax income.

Most households living in below-standard housing were in that state in 2001 primarily because their home or apartment did not meet the affordability standard. Affordability remains a barrier to ownership today.

The objective of this and related reports is to provide statistical measures of trends and conditions in Canada's larger cities for use in urban planning and policy development. This information and the work of the Cities Secretariat will help Prime Minister Paul Martin fulfill his commitment to forge a New Deal with cities -- "the engines of Canada's growth."

The proportion of owned accommodation in Canada increased from almost 63 per cent in 1991 to nearly 66 per cent 10 years later. The largest increase during the decade occurred in Calgary where home-ownership rates jumped 10 per cent, but still fell short of the highest proportion of home ownership: in Oshawa, Ontario, more than three-quarters of all households owned their own home.

Households that rented were much less likely to live in affordable housing than property owners, meaning that they were more likely to spend 30 per cent or more of their total before-tax household income for shelter. Lower household incomes among these renters meant they could not qualify for "cheaper to buy than rent" mortgages that converted more financially-sound tenants into owners.

The net effect over the decade was that the proportion of owners living in affordable housing rose, while that of renters declined. As property values increased in the following years, these owners have benefitted financially from their initial investment.

CMHC's Rental Market Survey 2004, conducted each October to provide annual vacancy rate and rent information on privately-initiated apartment structures containing at least three rental units, reveals that the trend towards home ownership and higher vacancy rates continues:

• The average rental apartment vacancy rate in Canada's 28 major centres rose to 2.7 per cent in October 2004 from 2.2 per cent a year ago, the third consecutive annual rise in the vacancy rate. The increase in apartment availability is attributed to low interest rates which facilitate home ownership and to the creation of additional rental housing. This improved availability does not automatically mean an increase in affordable housing. Households forced to pay more than 30 per cent of their income for rent or to live in crowded conditions continue to need less expensive units or assistance with monthly shelter costs.

• Even finding an apartment is a challenge in British Columbia which has the tightest metropolitan rental market in Canada. In Victoria, vacancy rates fell by 0.5 percentage point to 0.6 per cent while in Vancouver, the rate declined by a bit more to 1.3 per cent. In comparison, the vacancy rate in Toronto, long the toughest city to rent in, increased slightly to 4.3 per cent, but affordability remains an issue.

• Average rents for two-bedroom apartments increased in all major centres, except Windsor, Ontario, where rents were unchanged. The highest average monthly rents for two-bedroom apartments were in Toronto (C$1,052), Vancouver (C$984) and Ottawa C$940).

Will 2005 be your year to join the Canadian trend towards home ownership?

Toronto real estate market cracking

Premium Toronto areas command higher prices
Cabbagetown sees 21% spike, but the Beach subsides

by TONY WONG
in the TORONTO STAR

Housing prices in the city of Toronto had a healthy appreciation in 2004. But signs of a cooling market are evident.

While certain neighbourhoods remained in demand, some types of housing that were particularly hot in past years either did not appreciate, or actually declined in value, according to a quarterly report released yesterday by Royal LePage Real Estate Services.

In the Beach neighbourhood of Toronto, for example, a standard two-storey home that would have gone for an average of $450,000 at the end of 2003, now commands $436,500, a 3 per cent decrease, said Royal LePage.

"The Beach has seen strong appreciation and remains a desirable place to live — but, in relation to some other areas, it didn't have the same kind of pop," Royal LePage president and chief executive Phil Soper said in an interview.

In midtown Toronto and in Downsview, prices remained flat over the past year. Still, after years of healthy appreciation, a two-storey home midtown, which includes parts of pricy enclaves such as Rosedale and Forest Hill, now commands an average of $1.2 million, so there was little room for further explosive growth.

Other areas of Toronto continued to do well over 2004. The biggest winner was Cabbagetown; where a two-storey home a year ago would have cost $440,000, it now costs $530,000, a healthy 20.5 per cent gain.

"If you don't have $1.2 million to live in Midtown, but still want to be in the central core, there's Cabbagetown," said Soper. "That's a phenomenal increase. Bearing in mind that the average cost of a home in Manitoba just went over $100,000 this year, that's like adding the value of a home in Manitoba to your backyard."

In North Toronto, an average home that would have cost $565,000 at the start of 2004 now costs $650,000, a 15 per cent gain.

That is up significantly from the gain of the average Toronto home over 2004, which works out to a 7 per cent gain to $315,231 in figures released by the Toronto Real Estate Board this week.

The board also announced that 2004 was a record-breaking year, representing the highest total sales of homes in the 84-year history of the board.

Still, the type of housing as well as the neighbourhood that you purchased in made a difference in whether you experienced price growth.

In the Beach area, while detached two-storey homes and bungalows declined in value, if you had purchased a standard condominium, you would have experienced an 11.6 per cent return on your money from $275,000 a year ago, to $307,000 at the end of the fourth quarter.

One reason is that while some areas of the city are overbuilt in condominiums, certain areas such as the Beach do not have as much inventory.

Bungalows, meanwhile, were not as popular in North Toronto, where a standard bungalow now fetches $430,000, down 6.5 per cent from the $460,000 of a year ago.

Royal LePage is calling for a 2.5 per cent further increase in home prices in the Toronto area this year, just above inflation and the smallest margin since the start of the current housing boom. In the last eight years since the start of the current housing cycle, prices have increased by about 6 per cent annually on average.

"When the Bank of Canada raises interest rates is anybody's guess, but rates will eventually go up, and even a modest increase will start to see first-time home buyers possibly reconsidering their decision between buying and renting," said Soper.

Analysts are also saying 2004 will be a peak year, as the market cools moving into 2005. Inventory levels are also up, as move-up buyers put their existing homes on the resale market.

Strong real estate market in '04

from Canadian Press

The Canadian housing market roared to a close in 2004, with prices bucking the traditional year-end slowdown by rising uncharacteristically high in the last three months of the year, a leading real estate company said yesterday. The 15-city study by Royal LePage Real Estate Services of 78 markets found price increases for detached bungalows in 88 per cent of the markets, standard two-storey houses in 86 per cent and standard condominiums in 80 per cent.

Standard condominiums saw the highest average sales price appreciation -- 7.3 per cent, year over year, to $172,185. That was followed by the increase in prices for standard two-storey homes, which rose by 6.3 per cent to $302,107, and detached bungalows, up 5.8 per cent to $251,238.

Late last month, Royal LePage chief executive Phil Soper predicted that housing price increases in 2005 will moderate to about 4.5 per cent, well below the nine per cent surge seen in 2004 and 2003.

Despite the fourth-quarter pricing surge, Soper said yesterday he is sticking to his prediction the Canadian housing market will cool down from a red-hot 2004. He said the late 2004 price increases reflected a strong economy and continued low mortgage rates. More moderate weather than usual also provided a spark, making it more comfortable in various regions for prospective home buyers to shop for new dwellings.

"The market in the fourth quarter of 2004 remained, for the most part in most centres, a seller's market, but the winds of change were blowing and buyers will see better days ahead," Soper said .

Soper said inventory levels are rising and homes are staying on the market for longer than they were at peak periods last year -- factors which will impact prices this year.

"As these products sit on the market for longer periods of time, sellers' expectations for price increases will temper," Soper said. "It will become a fair ball game, with buyers having some choice and being able to include conditions in their offers, something that has been difficult in major markets over the last two years."

Fourth-quarter price increases were likely boosted by first-time buyers, with more of them entering the market after the Bank of Canada left its key policy interest rate unchanged in early December.