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April showers don’t dampen sales
The Toronto area resale housing market got off to a strong start in April, with mid-month sales coming in one per cent ahead of mid-April 2006, Toronto Real Estate Board President Dorothy Mason announced today.
The 4,175 transactions recorded in the first half of the month surpass the mid-April total of 4,140 sales recorded in 2006. Meanwhile, year-to-date figures for 2007 are nearly two per cent ahead of last year’s pace.
“We are very encouraged by the stability of the GTA market,” Mrs. Mason said. “Activity is strong yet controlled, and great economic fundamentals continue to keep things moving in the right direction.”
The average price of a home in the GTA reached $372,169 in the first half of April, up one per cent over the same timeframe in April 2006 when prices averaged $366,878. The median price rose three per cent to $315,000. Active listings were down five per cent from the same time in 2006, to 22,711.
Strong activity across all housing types in the Beach (E02) helped push overall sales up 44 per cent compared to mid-April of 2006.
The condo boom in Mississauga’s city centre (W15) was largely responsible for an overall sales increase of 41 per cent in the area, compared to mid-April of last year.
Toronto’s Forest Hill neighbourhood (C03) saw 54 per cent more overall transactions than to the same point a year ago, fueled mostly by detached home sales.
In Bayview Village / Hillcrest Village (C15), overall transactions increased by 36 per cent compared to the same timeframe in 2006.
“Consumers are showing a lot of confidence in this market,” Mrs. Mason said. “Their investments are showing steady returns, yet the market is still accessible to a variety of buyers.”
April 18, 2007 in Selling Toronto Real Estate | Permalink
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"U.S. Homebuilders Face Bankruptcy Risk in '08, Lawyers Say
By Steven Church
April 14 (Bloomberg) -- The collapse of the subprime mortgage market may push some big U.S. homebuilders toward Chapter 11 beginning next year, according to bankruptcy advisers and lawyers who specialize in the real estate industry.
The weakest publicly held builders are staying out of bankruptcy by relying on the profits they made when sales boomed and on the public debt they sold in those years, said Ronald Greenspan, a lawyer and financial adviser to the creditors of four bankrupt subprime mortgage lenders. Homebuilders issued $3.6 billion in public debt in 2005 and 2006, though only $600 million of that comes due this year, Greenspan said.
``There is no sword over the industry's head yet,'' said Greenspan today at a conference of the American Bankruptcy Institute in Washington. ``That doesn't mean the industry is not wounded. Instead, the breaking point could come in 2008 or 2009.''
The real estate market has been powered the past few years by subprime homebuyers who typically have shaky credit histories. Now that those loans are no longer being made, demand for new homes will plunge, pushed down even further by the more than 1 million homes currently in foreclosure, Greenspan said. At least 30 home lenders halted operations or sought buyers in the past 12 months, including five that went bankrupt since last November, according to Bloomberg data.
Signs of Trouble
None of the major, publicly traded homebuilders have declared bankruptcy, though there are signs many are in financial trouble, Greenspan said, declining to name specific companies. The value of shareholder's equity for some companies equals or exceeds the value of the undeveloped land the companies have under contract, he said. As the housing downturn continues, that land will fall in value.
The perceived risk of owning the bonds of some of the biggest U.S. homebuilders has increased since a wave of bankruptcies hit the mortgage industry that caters to homebuyers with poor credit histories.
Credit default swaps have more than doubled in price since Feb. 1 for the second-biggest builder by revenue, D.R. Horton, Inc.; the fourth biggest, Pulte Homes Inc.; and the biggest luxury home builder, Toll Brothers Inc.
The cost of swaps on $10 million worth of Toll Brothers debt, for example, jumped to $136,750 Friday from $58,500 on Feb. 1, according to according to CMA Datavision.
Credit default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They were conceived to protect bondholders against default.
Kara Homes Inc., the New Jersey builder known for so-called McMansions, became one of the first major, closely held home builders to file for Chapter 11 protection in October. Such regional builders are likely to precede any of the big public companies into bankruptcy, Kara's bankruptcy lawyer, David L. Bruck, said today in an interview at the conference.
``You are going to see the smaller companies get bit earlier,'' Bruck said. By next year, or the year after, some of the larger companies will be forced to restructure as the housing crunch continues, he said.
``It's only a matter of time,'' Bruck said.
To contact the reporter on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net .
Last Updated: April 14, 2007 15:44 EDT "
Posted by: huge bubble | Apr 19, 2007 2:06:47 PM
Toronto has very healthy real estate market. If you take a look the recent "International House Price Survey " and check around the price in Praire area and price for metro cities around the world. You will see there is no bubble in Toronto at all.
Posted by: aKing | Apr 19, 2007 1:20:27 PM
We are in a huge bubble when it comes to housing. The average price of a home in the GTA reached $372,169 in the first half of April, but the average family income can not support the current average home price. Time isn't on the bubble side.
Posted by: dom P | Apr 18, 2007 3:22:30 PM
