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Canadian homes sales down 6.8%

Sales of existing homes fell 6.8 per cent to 117,051 units in the first quarter of 2008 compared with the previous quarter, the Canadian Real Estate Association said Tuesday. The figures were the third consecutive quarterly decline since activity peaked in the second quarter last year. Fewer transactions in February and March in Toronto as well as fewer sales in British Columbia helped to drive the figures down. Sales activity in Toronto accounts for almost one fifth of all existing home sales in Canada, according to the association.

It is also important to remember that 2007 was another record year for MLS residential property sales in Canada," said association president Cal Lindberg. "Any comparisons with last year means comparing with a record year. What the statistics indicate is that the residential housing market is easing back towards more historically typical levels."

Not all provinces saw a decline. Seasonally adjusted sales activity set a new quarterly record in Saskatchewan, and quarterly transactions reached their second highest level ever in Newfoundland & Labrador.

In March, around 38,128 properties traded hands via the Multiple Listing Service on a seasonally adjusted basis - a decline of 0.4 per cent from February, the association said. The number of MLS residential new listings hit the highest quarterly level ever in the first quarter. A seasonally adjusted total of 223,405 homes were listed in the first three months of 2008, up 5.5 per cent over the fourth quarter last year.

There were record quarter-over-quarter gains in new listings in Alberta and British Columbia, which offset a quarterly decline in new listings in Toronto.

The CREA_report said that the MLS housing market became more balanced in every province except Saskatchewan. The market in Alberta remained the most balanced in the country, while sellers' markets persisted in Saskatchewan and Manitoba.

"Housing markets are becoming more balanced and price gains are becoming more modest as a result," said chief economist Gregory Klump. "This trend is forecast to continue, as rising mortgage carrying costs and property taxes erode affordability."

The more balanced market was reflected in more modest price gains. The average residential price rose 6.4 per cent year-over-year to $312,583 in the first quarter of 2008. This increase represented the smallest year-over-year advance since the fourth quarter of 2001.

However, in Manitoba and Newfoundland and Labrador, average residential prices posted the biggest year-over-year increase ever in the first quarter of 2008.

"The credit crunch has had limited impact on Canadian mortgage lending to date. Resale housing activity will continue to be supported by rising after-tax incomes, high employment, and declining interest rates," said Klump.

Residential unit sales March 2008 (% change from March 2007):

Source: Canadian Real Estate Association

April 30, 2008 in Canadian Real Estate Market | Permalink | Comments (7) | TrackBack

Canada's best places to live

Toronto ranks as number 51

The third annual list of Canada's Best Places to Live has just been published by Canadianbusiness.com. The list is designed to help measure as many different aspects of a community living as possible. You can use their findings in several ways. Perhaps you're planning to relocate. Perhaps you're looking to invest in real estate. Maybe you simply want to know how your community stacks up against its neighbours. Whatever your situation, there are some interesting facts here.

They've taken weather into account, of course. Jobs and home prices, too. They've also looked at crime, the availability of doctors, how easy it is to walk or bike to work, and more than a dozen other factors.

Unlike most listings of best cities, their ratings aren't about who has the best scenery, or the best restaurants, or the best beaches. Instead, they've tried to suss out the factors — many of them quiet and unobtrusive — that make a community a good place to live. Where a city ends up on their list is not based upon judges' opinions or popularity polls. It's based on hard numbers. That means their Best Places to Live rankings are a relatively unbiased guide to Canadian communities.

This year, they provide you with information on 154 communities, up from 123 last year. Thanks to improved sources of data, they are now able to break out metropolitan areas into separate listings for communities of 100,000 or more. So while they previously ranked all the various communities within the Greater Toronto Area as one unit, they can now separately rate locales such as Mississauga, Markham and Oakville that used to be lumped together under the Toronto label. Similarly, they can break Vancouver down into separate entries for the City of Vancouver, Burnaby, Surrey and other surrounding communities.

To make their listings as useful as possible, they included factors such as air quality, in their 16 indicators for each community. The maximum number of points a community could earn was 104.

Here's this year's ranking of Canada's best places to live »

April 29, 2008 in Location, location, location | Permalink | Comments (3) | TrackBack

Toronto pockets up as market cools

Prices jump in Trinity Bellwoods, Leslieville and Old Mill but fall in Richview and Graydon Hall

Blustery winter weather cooled Toronto's resale housing market in the first three months of the year, but pockets such as Old Mill and Trinity Bellwoods stayed sheltered in their own hothouse micro-climates. Meanwhile, most of the rest of Toronto saw more tepid price increases or — in some cases — outright declines.

Across the Greater Toronto Area, the average price increased 4.5 per cent to $379,006 in the first quarter, compared with the same period last year, according to data from the Toronto Real Estate Board. The number of single-family homes that changed hands dipped to 17,521 in the first three months of 2008, compared with 20,463 transactions in the same period last year.

Amid the art installations and retro lounges of Queen Street West, resale house prices in the urban Trinity Bellwood neighbourhood jumped 29.4 per cent in the first quarter, compared with the same period last year.

To the west, prices in the Old Mill area near the banks of the Humber River rose 13.2 per cent from the same time last year. And to the east, Scarborough Village was the hot spot, with the average price up 11 per cent over the average in the first three months of 2007. Other trend-defying neighbourhoods include Allenby, Beaconsfield, Hillcrest and Parkdale.

Chill continues

Meanwhile, the chill that permeated the market in the opening months of 2008 appears to have continued into the spring: The GTA resale housing market saw 3,955 homes change hands in the first half of April, down 5 per cent from the same period last year, TREB reported. And across Canada, the resale market is "sound but cooling," says Cal Lindberg, president of the Ottawa-based Canadian Real Estate Association.

On a seasonally adjusted basis, existing home sales in Canada's major markets in the first quarter of 2008 declined by 7.1 per cent, compared with the previous quarter, and by 10.6 per cent from the same period the previous year, to 81,747 units, CREA reports.

Changes in the average resale price in Toronto varied widely by neighbourhood. Toronto pockets where the average price fell include Richview, with a slide of 14.3 per cent, Armour Heights with a 33.8-per-cent tumble, Graydon Hall with a 41.2-per-cent decline and Lawrence Manor with a 21-per-cent fall. In the east end, L'Amoureux fell 7.23 per cent while Leslieville jumped 21 per cent. Price changes were recorded across the price spectrum: In the tony market of Forest Hill, for example, the average price fell 25.1 per cent to $825,439.

Source: Globe and Mail, Toronto Real Estate Board

April 27, 2008 in Toronto Real Estate Update | Permalink | Comments (2) | TrackBack

First-time buyers remain challenged

While higher housing values and tight inventory levels have hampered home-buying activity so far this year, longer amortization periods and alternative housing types have offset the impact on most major Canadian markets, according to a report released by RE/MAX.

Despite a higher degree of frustration in the marketplace than in previous years, the RE/MAX Affordability Report found that first-time buyers, in particular, remain steadfast in their determination to purchase a home. In fact, entry-level purchasers are adjusting their expectations by sacrificing size, location, and even long-term financial freedom, to overcome challenges such as rising prices and serious supply issues. Innovative financing has become key to homeownership in today’s environment – with longer amortization periods gaining favour in 62 per cent of the major centres surveyed. Low or no down payments were popular with first-time buyers in 38 per cent of markets.

“Doom and gloom reports coming from south of the border have yet to hinder overall momentum,” says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. “First-time buyers are still leading the charge, taking advantage of every resource available to achieve homeownership. They’re determined to get into the market sooner rather than later. If suburban locations, smaller condominiums and town homes, or a little sweat equity is what it takes to get into the market, these purchasers are game.” Inventory levels, however, remain one of the foremost concerns facing purchasers across the country. A shortage of available entry-level product was identified as a major obstacle impeding buyer intentions in three-quarters of markets surveyed in the report, including St. John’s, Moncton, Fredericton, Halifax-Dartmouth, Ottawa, Greater Toronto Area, Hamilton-Burlington, Niagara Falls, Winnipeg, Regina, Saskatoon, Greater Vancouver, Victoria and Kelowna. “First-time purchasers continue to play a pivotal role at both a local and national level,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “The impact they have on the housing market is significant, as they are the impetus for sales in the mid-to-upper price ranges. As long as this segment of the market remains healthy, the real estate outlook will continue to be favourable.”

Although average price is the barometer for housing values in most major centres, first-time buyers looking to achieve homeownership consider starting prices a more meaningful gauge of affordability. Starting prices can be substantially lower than the market average. For example, average price now approaches $400,000 in the Greater Toronto Area, while the starting price for a detached home can be as low as $300,000 in areas east and west of the city.

The best value for the dollar continues to be found in the suburbs. For those unwilling to sacrifice on location, small condominium units in new developments and condominium conversions of rental buildings offer up the next best alternative. Condominium conversions in some of the country’s major centres can be picked up as low as $150,000 to $175,000.

See the RE/MAX Affordability Report

April 24, 2008 in Buying Toronto Real Estate | Permalink | Comments (8) | TrackBack

Bank of Canada Cuts Rate by .5%

The Bank of Canada lowered its benchmark rate by half a point to revive an economy that's growing at its slowest pace in 16 years, and signaled more easing may be needed. Governor Mark Carney and his five deputies cut the rate on overnight loans between commercial banks to 3 percent, the lowest since December 2005, a move predicted by 28 of 32 economists in a Bloomberg News survey.

The projections for growth and inflation in the central bank's statement today indicate policy makers may ease again as soon as their next meeting on June 10, economists said. The bank cut its 2008 growth forecast to 1.4 percent, the lowest since 1992, from a January prediction of 1.8 percent, and said inflation will stay below their 2 percent target until 2010.

"The main concern for the Bank of Canada is that economic growth is going to be well below potential," said Craig Alexander, deputy chief economist at TD Bank Financial Group in Toronto. The bank today sent "quite a strong signal," he said, "and we expect another rate cut at the next meeting."

April 22, 2008 in Arranging Mortgage Financing | Permalink | Comments (2) | TrackBack

Canada's real estate markets cooling

Prices of resale homes edged up in Canada last month, but at a more moderate pace, signalling further cooling in the once red-hot sector, the Canadian Real Estate Association said this week. The average price of a resale home in Canada's major markets was $329,383 in March (up from $327,477 in February and $325,183 in January). That leaves the average sale price up 4.0 per cent from March of last year.

For the first three months of the year, average prices realized through MLS sales were up 5.5 per cent from the first quarter of 2007. That's the smallest year-over-year price increase in seven years.

CREA figures show that overall sales fell last month by 18.7 per cent from a year earlier, while new listings grew in the first quarter. "Many major markets are becoming more balanced and price gains are becoming more modest as a result," said CREA chief economist Gregory Klump. "This trend is forecast to continue as rising mortgage carrying costs and property taxes erode affordability," he said.

Housing boom officially over

CREA president Cal Lindberg said the days of constantly setting price records are over. Economists agreed. "Canada’s six-year housing market boom is officially over," declared Doug Porter of BMO Capital Markets.

Still, the latest figures show that five major markets managed to set price records in March — Saskatoon, Winnipeg, Hamilton-Burlington, Ottawa and Halifax.

As usual, the most expensive real estate could be found in Greater Vancouver, where the average resale last month cost $616,496, up 11.1 per cent in a year.

The next most expensive markets were:

  1. Victoria - $504,194 (up 13.3 per cent)
  2. Calgary - $419,396 (up 1.0 per cent)
  3. Toronto - $380,338 (up 4.1 per cent)
  4. Edmonton - 343,760 (up 5.6 per cent)

The cooling trend in Canada still stands out from the situation south of the border, where average house prices have fallen 10 per cent in the past year amid a meltdown in the U.S. subprime mortgage market.

Not a single major Canadian market that CREA tracks reported lower year-over-year prices in the first quarter.

Sources: CREA and CBC News

April 20, 2008 in Canadian Real Estate Market | Permalink | Comments (5) | TrackBack

Toronto Real Estate Board reports:

GTA resale housing market down but still healthy

The Greater Toronto Area resale housing market saw 3,955 homes change hands in the first half of April, down five per cent from the same time period last year, Toronto Real Estate Board President Maureen O’Neill announced today. “The first half of April brought sales activity within five per cent of mid-April 2007,” said Ms. O’Neill.

In the City of Toronto sales are down 11 per cent compared to a year ago, with 1,514 transactions taking place. Inthe 905 suburbs, sales are down just over one per cent to 2,441 for mid-month April 2008 from 2,477 sales midmonth April 2007.

Throughout the GTA prices have risen seven per cent compared to the same timeframe last year, to an average of $399,117. In the City of Toronto the average stands at $454,211 up 10 per cent over mid-April 2007. The 905 Region has seen a six per cent increase compared to a year ago, with a current average price of $364,939.

The number of listings on the market is one per cent greater than last year with current inventory sitting at 22,985.

This indicates that inventory is on the rise. The positive news is homeowners are selling their homes with an average of 28 Days on Market compared to 30 a year ago. The slight increase in inventory levels and house prices are encouraging factors.

A number of GTA neighbourhoods showed strong sales activity during the first half of this month.

Willowdale (C07) saw a 75 per cent overall increase in transactions, driven by strong, detached, condo-apartment, and condo-townhouse sales.

In Vaughan/Thornhill (N02), transactions increased by 53 per cent compared to mid-April 2007, as a result of strong detached home sales.

Strong detached home sales also drove Brampton East (W24) to 37 per cent compared to the same timeframe a year ago.

In Riverdale (E01) transactions are up 10 per cent, also as a result of strong detached home sales.

“We’re also seeing sellers achieve on average 99 per cent of their asking price, which is one per cent higher than a year ago,” said Ms. O’Neill. “April’s numbers point to a stable, healthy market for the Greater Toronto Area this spring. However TREB still remains wary of the Land Transfer Tax in Toronto.”

April 17, 2008 in Toronto Real Estate Board | Permalink | Comments (3) | TrackBack

The future of Toronto real estate?

From the April 28, 2008 issue of Canadian Business

Could it happen here? The U.S. housing market is bad and getting worse. Builders built too much through the boom, lured by skyrocketing prices that proved as unsustainable as the lending practices that fuelled them. As in any market, the emergence of a big supply/demand imbalance requires sellers to do two things: make less and discount more. So it’s been. Housing starts have dropped 54% from their peak. Home prices are falling in every one of America’s 20 largest cities, down by an average of 13% from their peak.

The scary thing is, though, that even these dramatic declines haven’t been nearly enough to stabilize the market. The supply of unsold new homes stood at 10 months’ worth of sales in February, up from less than four months at the height of the boom. That represents the most bloated inventory in 27 years. The American housing bust has yet a way to go.

Probably the most common question I get these days is, “Could this happen in Canada?” My answer is yes, it could happen here, not least because it has happened here. Canada’s housing busts have tended to be a bit more regionalized than what we’re seeing in the States, but no less profound. It took seven years for Calgary house prices to regain their 1981 peak. It took eight years for Vancouver house prices to regain their 1995 peak. It took 12 years for Toronto house prices to regain their 1989 peak.

See article by David Wolf in Canadian Business »

April 16, 2008 in Selling Toronto Real Estate | Permalink | Comments (6) | TrackBack

Toronto Commercial Real Estate

Leased Space Breaks 900,000 Square Feet

In March, Toronto Real Estate Board Members reported 933,299 square feet of space leased through the TorontoMLS system, Commercial Council Chair Garry Lander said today. "This figure is up 10 per cent over February's figure of $844,348 square feet. The Commercial market is clearly accelerating as we head into the spring months."

The price for Industrial space (all size categories) registered at $5.59 sfn in March, and the price for Commercial space came in at $14.16 sfn, down two and five per cent respectively from their levels at the same time one year ago.

Sales Market Highlights

Toronto Real Estate Board Members reported 56 sales of Industrial/Commercial properties in March, and of these 26 were industrial properties (all size categories), which sold for an average of $112.67 per square foot. This compares to a figure of $74.27 per square foot derived from non-MLS sources.

See Full Report »

April 15, 2008 | Permalink | Comments (0) | TrackBack

Ontario's Top Ten Towns

Real estate expert Don Campbell and the Real Estate Investment Network have just released the top ten Ontario towns for real estate investors. Compiled from the research conducted by REIN, the top towns for real estate investment are:

1. Kitchener, Waterloo and Cambridge - Comprising Canada's Technology Triangle, the region is quickly becoming known worldwide as a competitive area in which to build a high-tech business. The area is so strong economically that the Real Estate Investment NetworkTM research team has dubbed it the "Economic Alberta of Ontario".

2. Barrie and Orillia (tie) - Barrie is an attractive community for people seeking the nearness and vitality of Toronto but with a slower pace of life. Orillia, with a rising population and expansion of post-secondary institutions, has tremendous opportunities for investors to provide student housing.

3. Whitby, Ajax and Pickering -The ripple outward from the Toronto toward this region has been picking up steam over the previous decade. However, until quite recently much of this demand increase has been from commuters wishing to locate in a lower housing-cost region of the GTA. Now, the area is attracting an increasingly diverse list of local employers.

4. Markham - Markham is known as the high-tech capital of Canada, with over 900 advanced technology and life science companies. This influx has led to the area outperforming many other areas of the province, in terms of both economy and real estate.

5. Hamilton and Brantford (tie) - Hamilton is transforming itself into a more diversified economy. A revitalization of key areas, a soon-to-be-opened new transportation route, and a stock of older, quality homes, will help keep Hamilton on the top ten list for many years to come. Brantford is strategically located and offers affordable housing. The multiple satellite secondary education campuses already located in the city provide a vibrant and younger population base.

6. Brampton - The city has a diverse and growing economy that, if anything, is growing a little faster than the infrastructure. Revitalization and densification of existing older areas will be a real key to Brampton living up to its ultimate potential.

7. Ottawa - Higher home-ownership costs, immigration and youth employment lifted rental demand in Ottawa. It is forecast that the city will pass from a very hot resale market with solid price augmentation to a more balanced market that will be more sustainable in the long-term.

8. Toronto - Taken as a whole, Toronto's real estate market will under-perform many of the surrounding regions, yet key neighbourhoods will have breakout years. Older condo units and ground oriented units in the areas such as Bathurst Manor, Armour Heights, and The Junction will do well in both average price increase percentage and potential cash flow. New high-rise condos located downtown and along the waterfront will still see demand. Other great transition areas include the Danforth, Palmerston-Little Italy, Woodbine, Gerrard and Jones.

9. Oshawa - The re-development of the downtown and many other developments about to be announced for the area will put the spotlight on a previously underperforming area of the city.

10. Whitchurch-Stouffville - This continues to be a town with tremendous potential. With low vacancy rates, no substantial increase in the number of rental units planned for the future, and a rising demand for the "country in the city" lifestyle, the town's biggest problem will be dealing with its growth.

April 13, 2008 in Location, location, location | Permalink | Comments (3) | TrackBack

Softer sales to cool real estate market

Canadian housing markets should cool down some this year and next with softer sales, construction and price growth from coast to coast. But an expected cut in interest rates by the Bank of Canada will likely soften the blow, says a forecast from TD Economics.

"Canada's real estate markets have been a pillar of strength this decade," TD deputy chief economist Craig Alexander said in his report, released yesterday. "But the recent U.S. housing correction certainly highlights the risk that booms can rapidly turn into busts."

Over the past five years, Canadian real estate, driven by demand in the western provinces, has seen an average 10 per cent gain annually. But the latest data show the market has already started to cool, with growth having peaked in some cities, including Calgary and Edmonton, where prices have fallen. "A weakening in affordability is a strong signal that it is only a matter of time before sales moderate and market conditions become more balanced," Alexander said.

In Toronto, home sales have fallen for three straight months since the beginning of the year. The low figures could be distorted due to poor weather conditions and the introduction of a land transfer tax, the report said. "As a result, a rebound in the spring may be in the cards, but then a renewed moderation should unfold."

Short-term rates are forecast to be lower by one and a half percentage points by the end of the year. Five-year fixed rates are not expected to come down significantly because of continuing problems in the credit markets. The Bank of Canada is forecast to gradually tighten rates by late 2009 and leading into 2010.

Real estate conditions would have likely cooled sooner if not for new financing products such as extended 40-year mortgages, which has delayed the impact, the bank's report says. The mortgages, preferred by some first-time buyers, have been criticized for adding massive debt to consumers who may never pay off their homes.

One concern remaining is over condominium building – Toronto is North America's largest site for this type of product. But TD said it's impossible to figure out how many speculators are in the market to make an accurate forecast. "The main concern on the condo front is the extent to which purchases are being made for speculative purposes which would make them more vulnerable to price swings," Alexander said.

April 11, 2008 in Canadian Market Forecast | Permalink | Comments (2) | TrackBack

Housing markets on shaky ground

There's no shortage of housing markets that look like bubbles waiting to burst, but economists say Canada has become one of the safer places in the developed world to own residential real estate. In the aftermath of the global credit crunch Canada is less vulnerable to a large drop in house prices than any other major advanced economy except Austria, according to the Washington, D.C.-based International Monetary Fund's World Economic Outlook.

Canada and Austria were the only two of 17 countries included in the study in which house prices appeared to be at or lower than where they should have been at the end of the period from 1997 to 2007, Mr. Cardarelli said. His study was based on growth in house prices as a function of macro-economic issues including income growth and interest rates.

The study, house price growth was modelled as a function of the following: an affordability ratio, growth in disposable income per capita, short and long-term interest rates, credit growth, changes in equity prices and changes in the working age population. The study used data from 1997 to 2007.

A "gap" occurred when house prices were higher or lower than where these economic fundamentals suggested they should be.

Canada is in better shape than many other countries and home prices here aren't expected to drop this year, said Benjamin Tal, senior economist at CIBC World Markets Inc. But that doesn't mean home owners should expect, or want, to see the big gains of past years, Mr. Tal said.

"If we see continued double-digit price growth in Canada over the next two or three years then we would enter bubble territory, but this is unlikely," Mr. Tal said. "I believe this spring, for the first time in seven years, there will not be a sellers' market in Canada."

In the first quarter of 2008, home prices rose in every major Canadian market except Edmonton, according to recent data from Royal LePage Real Estate Services. The average price of a detached bungalow was $336,836, up 8.3 per cent from the year before. Two-storey homes rose 7.1 per cent to $400,647, and standard condo units by 6.9 per cent to $240,423.

Ireland, the Netherlands and the United Kingdom fared the worst in the IMF study, with house prices at the end of 2007 sitting about 30 per cent higher than what economic fundamentals would suggest. House prices have already started to fall in Ireland and the U.K., and other vulnerable countries identified by the study include France, Spain and Norway.

A decline in interest rates is part of the reason Canadian home prices haven't shot past the country's economic fundamentals, Mr. Cardarelli said. Canada was also in the bottom five countries in the study in terms of real house price growth over the past 10 years, he added.

The U.S. came out better than many countries in the study, but that was partly because a correction was already under way there and this was captured by last year's data.

Fewer speculators and more conservative lending practices have helped protect Canada from a big housing market downturn like that in the U.S. and some European markets, said Sherry Cooper, chief economist at BMO Nesbitt Burns Inc.

"There's been a real market for flipping homes [in those countries]. We just haven't seen that develop at all in Toronto or even out West, where we have seen big increases in house prices," Ms. Cooper said.

In 2004, the U.S. was in the same state of "equilibrium" Canada is now in, but blew it when banks started providing exotic mortgages, creating an artificial demand for houses, Mr. Tal said.

Canadians should take this lesson to heart when considering products such as longer amortization mortgages and those with lower down payments, which add flexibility to the market but shouldn't be abused, Mr. Tal said.

"Remember that things were fine there [in the U.S.] in 2004. Then rates went up, and bankers with imagination created this bubble," he said.

What $750,000 will get you

In Toronto

4-bedroom detached home on a 51- by 93-foot lot

In Dublin

4 bedroom semi-detached home in Clonsilla

In London

A three-bedroom 1930s property in Neasden, England.

In Barcelona

An apartment

April 10, 2008 in World View [of real estate] | Permalink | Comments (2) | TrackBack

What is home staging?

Home staging is the design process of de-personalizing a private residence prior to putting it up for sale in the real estate marketplace. This is often achieved by re-arranging, de-cluttering and improving on certain items.

The goal of staging a home is to help it sell quickly and for the most amount of money by appealing to the largest amount of prospective buyers. Staging focuses on improving a home’s potential by transforming it into a ‘neutral’ property because the way we live in our home is completely different than the way we should sell our home. Staging creates a living space buyers can "see" themselves in, similar to how model home displays are presented.

Staging also helps create an environment that will lead a buyer’s eye to the home’s attractive features, while minimizing its flaws.

Many home-sellers agree that staging is a practical first step prior to selling any home, especially since the cost of staging a home is usually much less than the increased selling price often achieved from a professionally staged home.

April 9, 2008 in Curb Appeal | Permalink | Comments (0) | TrackBack

Real Estate Market shifts to Condos

Residential permits signal maturing real estate market.

The recent surge in multi-family dwelling building permits may reflect a maturing Canadian real estate market, not just in terms of the age of buyers but in prices, according to a Canadian market strategist. “The surge in demand for multi level units at 31% – that’s huge,” said HSBC Canada market strategist Stewart Hall of the trend revealed in the most recent data concerning builder intentions released from Statistics Canada Monday. “You can tell when a market begins to mature when you see demand shifting out of single units. Pricing pressure in single family homes is reaching a point where its pushing people out of the market.”

Thanks to the brisk pace of real estate price increases in Canada, Hall said would-be home buyers are shifting to more affordable condominium-style products. “It’s forcing them to say, ‘You know we want to get into the real estate game, but we can’t afford to buy a single family home,’” he said. Choosing a condo allows that segment of buyers to participate in the real estate market and build equity, he said.

Laurentian Bank economist Stephane Lavoie said he felt the increase in multi-family unit building permits reflects Canada’s aging demographics. “The population is getting older and we see new kinds of demands for housing,” he said, adding that ownership rates are higher among older demographics and that elderly people are more willing and able to pay higher prices for condos with extra services.

Lavoie said strong employment trends in Canada have helped to keep demand for residential construction healthy although he predicted housing starts in March might be down due to poor weather.

Hall agreed that a demographic shift is taking place in the residential real estate market. According to Hall, some of the shift is in demand but age isn’t the whole story. “It’s also a function of the market beginning to mature, and I use the word mature because I don’t believe we’re setting ourselves up for any implosion like we saw in the U.S.,” he said.

Looking at the overall decline in total building permit value in February, Hall said the numbers have to be looked at in the context of the prior month. While February saw an overall 1% month-over-month decline in the total value of building intentions fuelled by a plunge in Ontario’s non-residential construction sector, the swoon comes after that same province saw a 69% gain in non-residential permits in January. Without Ontario, building intentions in Canada would have been up by almost 10%.

Nationally, the value of non-residential permits fell 25.6% to $1.9 billion due to double-digit decreases in permits for all three components: institutional, commercial and industrial. Ontario construction intentions fell 16% to $2 billion, the lowest value since April 2007. Non-residential intentions in the province fell 44.9% while residential intentions were up 21.3%. Meanwhile, residential permits were up 21.3%.

“The fact Ontario was leading the way down probably has a lot to do with the large spike in January to unsustainable levels. I don’t think I’d read to much into that particular happenstance,” said Hall.

However, Lavoie saw the poor Ontario performance as reflective of the uncertain economy in the province. Now is not the time to be building a large facility to be shipping goods abroad, he said of the central Canadian economic picture.

On the other hand, Western Canada has a decent economy but also other problems, he said.

“The challenge in the West is not should I build something or not, it’s what does it cost to build and do I have the resources to build it,” Lavoie said.

April 8, 2008 in Canadian Real Estate Market | Permalink | Comments (2) | TrackBack

Toronto real estate plummeting ...

by Philip Preville in Toronto Life:

Attention, homeowners: the starting gun for the Great Real Estate Meltdown of 2008 has now been sounded. It actually went off about a month ago, though you may not have noticed, since it was sounded in dulcet tones, with a prediction that home sales would “drop slightly.” So much for that: sales in March are down 22 per cent over last year.

There are three preferred theories for the drop in sales. Here they are, ranked by the degree to which they are made of wishful fantasy.

See article in Toronto Life »

April 6, 2008 in Toronto Real Estate Update | Permalink | Comments (5) | TrackBack

Prices Up - Market Down

Toronto's average price increases 11.3 percent to $432,679.

Canadian home-price increases moderated in the first quarter, but remained solid due to a strong economy, high immigration levels, and relatively low interest rates, according to a report released by Royal LePage Real Estate Services. Nationally, the average price of a detached bungalow climbed 8.3 percent to $336,834 in the first three months of 2008, according to their latest House Price Survey.

The price of a standard two-storey homes rose 7.1 percent year-over-year to $400,647, on average, and a standard condominium increased 6.9 percent to $240,423.

While those increases were down from the double-digit rises of previous quarters, they still stand in stark contrast to the hobbled U.S. housing market.

A crisis that began in the U.S. subprime mortgage sector has eroded the value of U.S. homes and threatens to push the country into recession.

"We know now that the Canadian real estate market has followed a markedly different path from that of the United States," said Phil Soper, president and chief executive of Royal LePage.

"While Canada will not escape the negative impact of a troubled American economy, Canadians' home equity should remain safe, as the market moves into a period of slow growth, but growth nonetheless."

Looking around the country, Saskatoon and Regina in the province of Saskatchewan had the hottest markets, with average prices for a detached bungalow soaring 50.3 percent to C$226,250 and 49.6 percent to C$158,500 respectively.

"In Saskatchewan, gold, diamond and uranium mining, along with prospering agriculture industries, have retained many would-be out-migrates, and the more moderate cost of living has also lured skilled workers from Alberta," the report said.

Despite the strong oil and gas economy in the province of Alberta, increases in home prices there have moderated from the frenetic pace of the past few years.

The price for a standard detached bungalow in Edmonton, Alberta, actually fell by 4.9 percent in the quarter to C$330,000.

In Calgary, Alberta, Canada's oil industry capital, the price for a standard detached bungalow climbed 9.9 percent to $442,852.

Vancouver, British Columbia, site of the 2010 Winter Olympics, remains Canada's most expensive real estate market. The price of a standard detached bungalow jumped 11.4 percent to C$852,750.

In Toronto, Canada's largest real estate market, the price increase was 11.3 percent to $432,679.

The price increase in Montreal was below the national average, rising 3.9 percent to $227,799.

The report noted that record snowfall in Central Canada left many city streets and sidewalks almost inaccessible to potential homebuyers during the quarter.

See the Royal LePage Market Report »

April 5, 2008 in Canadian Real Estate Market | Permalink | Comments (2) | TrackBack

Toronto real estate market in decline

Low inventory levels kept sales brisk but well off record levels, TREB President Maureen O'Neill announced today. "With 6,631 transactions recorded during March, the overall Greater Toronto Area resale market was down 22 per cent from the 8,518 sales of March 2007. Since inventory, at 20,533 listings, fell six per cent between these two time periods, a portion of this result can be attributed to a lack of suitable product. And this lack of product was at least partially caused by the severe winter weather that kept both buyers and sellers on the fence during the first half of the month."

Sales were not evenly distributed across the Greater Toronto Area. In the City of Toronto (416 area code), they decreased 27 per cent to 2,527 from last March. However, the 905 suburbs saw only an 18 per cent decline, to 4,104 sales. Overall, average prices rose four per cent in the GTA to $380,338 over March of 2007. Within the City of Toronto proper, however, the average, at $404,361, increased only two per cent over the $394,199 recorded during the same period last year. Furthermore, City of Toronto districts bordering the 905 averaged $347,882, up less than one per cent from the same period last year.

Breaking down the total, 2,545 sales were reported in TREB’s 28 West districts and averaged $360,524; 1,114 sales were reported in the 14 Central districts and averaged $481,115; 1,390 sales were reported in the 23 North districts and averaged $424,742; and 1,582 sales were reported in TREB’s 21 East districts and averaged $302,235.

NEIGHBOURHOOD CORNER

The Beaches and Riverdale

In the first quarter of 2008, TREB Members sold 153 houses in The Beaches (E-2) for an average of $542,362, up 17% over the three month average in 2007 of $461,311. Riverdale (E-1) saw 173 sales averaging $438,453, up 13% over the $389,001 recorded during the same span last year.

See the Toronto Real Estate Board's Market Watch Report »

April 4, 2008 | Permalink | Comments (4) | TrackBack

Home resales down by 5.6%

Resale home sales dropped by 5.6 per cent in February compared with the previous month, with more than half the decline resulting from fewer sales in Toronto, according to data released by the Canadian Real Estate Association (CREA).

Sales dropped to 38,365 units in Canada in February from 40,646 in January, with 53 per cent of the national decline due to a cool-down in Toronto sales, CREA said.

“The buying activity peaked in Toronto in December, before Toronto's land transfer tax went into effect and well before the record-breaking winter storm activity,” CREA president Ann Bosley said in a statement.

On average, 18 per cent of the national resale activity for properties on the Multiple Listing Service is generated in the Toronto area, according to the Canadian Real Estate Association.

Sales also eased in British Columbia and Alberta. By contrast, resale activity hit its second-highest monthly level in Saskatchewan and its third-highest level in Prince Edward Island. In Saskatchewan and Newfoundland and Labrador sales in the first two months of 2008 were ahead of the same period in any other year.

Across Canada new listings also eased by 2.8 per cent from the previous month, although they still stood at their second highest level on record. There were 72,935 new listings in Canada in February, compared with 75,074 in January.

“Over all, the report highlights the moderating pace of housing activity in Canada, which will bring the level of activity to more sustainable levels. At the same time, the Canadian housing sector remains in much better shape than its U.S. counterpart,” Millan Mulraine, economics strategist at TD Securities Inc., said in a research note.

New listings reached new heights in Saskatchewan and Newfoundland, but declined slightly from the previous month in Ontario, B.C. and Alberta.

Across the country, price gains slowed, with the average resale home price rising 6.2 per cent year-over-year to $313,065. This was the smallest year-over-year price increase since November, 2004.

“Market balance for resale housing is evolving differently among provinces. British Columbia and Alberta are quickly becoming more balanced as higher prices pinch sales activity and new listings rise. Other provinces are also following suit,” CREA chief economist Gregory Klump said in a statement.

“By contrast, the resale housing markets in Saskatchewan and Manitoba remain very tight, and negotiations there highly favour the seller. For that reason, price increases are forecast to be biggest in Saskatchewan and Manitoba.”

April 3, 2008 in Canadian Real Estate Market | Permalink | Comments (1) | TrackBack

Calgary is now a buyer's market

A real turn of events for the real estate market is occuring in some of Canada's hottest urban areas. New MLS numbers from the Calgary Real Estate Board show it's now a buyer's real estaste market in that city.

Figures show listings up in March by more than 11 per cent, compared to the same month last year. The Calgary board's president says, "gone are the days of sellers naming their price."

Ed Jensen adds, "with one in five homes selling in today's market, this is a great time to buy a home."

The latest numbers also show the average sale price for a single family home in Calgary-metro in March, 2008 was $474,513. That is a 1.1 per cent decrease from March, 2007.

April 2, 2008 in Canadian Real Estate Market | Permalink | Comments (0) | TrackBack

 

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