« March 2009 | Main | May 2009 »
Realtors win a green concession
Ontario eases home energy audit requirement
Ontario Energy Minister George Smitherman has backed down from a plan to require energy audits each time a house is sold. A new amendment to the province's Green Energy Act will allow home buyers to waive their right to the $300 audit, as long as they do so in writing.
The change will provide more flexibility in cases where the buyer intends to knock down the property or do major renovations, Smitherman said. But he said he's not anticipating that many buyers will opt out of an audit.
"I rather suspect as people are making the most important investment of their life, they're going to find that to be very valuable and important information," he said. "But we could see some scenarios where the home at question really isn't worthy of an audit, if you will."
Ontario realtors have complained the additional costs would hurt homeowners in what are increasingly difficult economic times. The Liberal government is backing off from the audits because it's afraid of the public backlash, said interim Progressive Conservative Leader Bob Runciman.
Many homebuyers will also be hit with additional costs when the province merges its eight per cent sales tax with the five per cent federal GST, he said. "They know that this is a problem for them and they have to back away, and this is one area where they can make some adjustment," he said.
The legislation will also be amended so residents will have an easier time objecting to wind turbine projects near their homes.
April 28, 2009 in Selling Toronto Real Estate | Permalink | Comments (1) | TrackBack
The Toronto Real Estate Dilemma:
To buy or not to buy, that is the question; Whether 'tis nobler on the pocketbook to suffer the outrageous rent, or to take up a sea of mortgage payments, and by doing so, retire with equity.
See article in the Toronto Star »
April 28, 2009 | Permalink | Comments (2) | TrackBack
Toronto Real Estate Board reports:
3,681 transactions in the first half of April.
Greater Toronto Realtors reported 3,681 transactions in the first half of April, down seven per cent compared to 3,955 during the same period last year. “In lock-step with the favorable March results, resale housing market conditions in the first half of April were markedly improved compared to the winter time,” said TREB President Maureen O’Neill.
“Households that were on the sidelines at the beginning of the year are now taking advantage of lower interest rates and lower home prices.” The average price for MLS® sales was $383,161, down four per cent from $399,117 last year. “The average home price in the GTA stabilized as resale market conditions tightened over the past two months,” according to Jason Mercer, TREB’s Senior Manager of Market Analysis. “Existing home sales increased relative to new listings”, Mercer said.
April 17, 2009 | Permalink | Comments (8) | TrackBack
Canadian sales down 13.5% in March
Realtors say March home sales data contains promising signs.
The number of existing homes sold last month was down from a year ago, but continued an upward trend that began in February, the Canadian Real Estate Association reported on Wednesday. The trade association, which represents real estate brokerage firms, also reported that the national average price for homes fell again in March compared with the same month last year.
"Housing markets are starting to show signs of buyer interest because of lower prices and interest rates," CREA president Dale Ripplinger said in a statement.
Sales of existing homes listed with the industry's MLS service totalled 35,225 units across Canada in March. That's 13.5 per cent below actual sales in March 2008, but CREA said it's the smallest year-over-year decline in six months.
The association also noted that, on a seasonally adjusted basis, March sales were seven per cent higher than in February, which was 10.3 per cent above January.
The association said the number of transactions in March was 18 per cent higher than in January, when activity was the lowest in a decade.
The average house price in Canada fell to just under $289,000 - down 7.7 per cent from March 2008 - also the smallest year-to-year decline in six months.
Robert Kavcic, of BMO Capital Markets, wrote in a separate analysis saying that "the improvement in recent months is an encouraging sign that the Canadian housing market has crossed the halfway point for this downturn."
He noted that the number properties put up for sale fell in March, but the ratio of listings-to-sales remained slightly elevated at 2.2.
"Despite two months of improved sales activity, buyers are still in control of the Canadian real estate market," Kavcic wrote.
"Further price declines and low mortgage rates will ultimately help trigger a recovery, but a reversal in the wave of job losses is one major pre-requisite still outstanding."
April 16, 2009 in Canadian Real Estate Market | Permalink | Comments (2) | TrackBack
Real estate markets unpredictable
First-time home buyers could find a welcoming market ...
but approach with caution.
Real estate experts say low mortgage rates and more affordable homes in many markets are drawing out first-time home buyers in droves, but one independent analyst says the correction in Canadian home prices hasn't been nearly as dramatic as some believe.
Phil Soper, chief executive of Brookfield Real Estate Services, which operates under the Royal LePage banner, said prices are falling and lenders are lowering their rates making the market more attractive to people looking to buy their first home.
"The uptick in first-time home buyer purchases across the country is quite astonishing," said Soper, speaking Tuesday at a BMO conference on Canada's housing market.
"Affordability in places like Vancouver has improved for the first time in a very long time."
BMO senior economist Sal Guatieri said the average mortgage payment has fallen by one-third or $600 a month from its peak, while average resale home prices have fallen 14 per cent from their highs.
Guatieri said he expects resale prices to fall "moderately further" this year for a cumulative decline in prices of approximately 20 per cent.
But Peter Norman, a consultant with independent real-estate adviser Altus Group, said the dramatic drops in home prices seen in places like Vancouver, Edmonton and Calgary are the exception rather than the norm.
"This is not a housing adjustment period in Canada," Norman said in an interview.
"Certainly housing demand has slowed down because the economy is the pits, but housing supply has slowed down a lot as well as a result.... Outside of a couple of sub-markets there hasn't been much of a downward adjustment on price."
Still, other changes in the market are making this a good time to buy a first home - as long as the buyer can afford it, Norman said.
"There are a lot fewer of those stories of really rapidly selling houses, bidding wars, all that kind of stuff, so I think it can be a bit more of a sane market for somebody who's trying to buy right now," Norman said.
"It may take away some of the anxiety or it may help you make a better decision."
And most importantly, overall affordability in the housing market has improved.
"If it wasn't for the recession and the aversion to financial risk that people have right now, it would probably be a very active market and a very good market," Norman said.
The Canadian Real Estate Association reported that house prices and sales continued to slide across Canada in February - the latest month for which data is available - compared to the same time last year, but activity was up for the first time since September.
The association said resale home prices fell 9.2 per cent across Canada in February to an average of $281,972 while sales fell 31 per cent to 25,373 units, the smallest year-over-year decline since October 2008. Seasonally adjusted sales fell 26.8 per cent.
Meanwhile, the number of homes that traded hands on the multiple listing service, or MLS, was up 8.6 per cent above seasonally adjusted levels in January.
April 14, 2009 | Permalink | Comments (11) | TrackBack
Renovate or buy a home?
New perspectives on an old dilemma
You are desperate for more living space and now face the big decision – renovate your current home, or buy another one? Chartered Accountant Gerald Tracey, Investment Advisor, ScotiaMcLeod in Windsor, advises that this decision should be made in a two-step process.
“The current economic downturn makes it even more critical to look ahead and consider different scenarios. Both renovating and buying have pros and cons, and both are stressful, so make the bigger decision first – decide what you want and where you want to live. Then decide whether to renovate or buy. If you like your current neighbourhood, renovation may make sense, provided that the renovated value of your home is in line with the values of other homes in your area.”
“Three key factors are also important to consider in making this decision,” adds Chartered Accountant Albert Yu, Re/Max Hallmark Realty Ltd. in Toronto. “Financial costs, non-financial costs and resale value.”
From the financial perspective, one simple rule is to determine what it will cost to move. This cost generally equates to about 10 per cent of the current value of your home and includes real estate commissions, land transfer tax, and moving and legal costs. Compare this cost to the cost of renovating, and if renovating is less then take the less expensive route.
“However, homes are much more than dollars and cents, so you should also think about the non-financial costs of relocating either yourself or your family – including the stress and upheaval involved in a potential move and the time it will take you to find services and professionals in your new community. If you do have children, consider how a new school, with new friendships will impact the kids.”
Resale Value
“Your home is one of the largest investments you will ever make” continues Yu, “So its resale value is always a major consideration.”
“It’s a good time to move up in the real-estate market right now because higher-value properties have declined more in value. At the same time, it’s a cooler market for sellers. If you decide to move up, think resale and follow the number one rule – location, location, location.
“If you are renovating, spend your money wisely – some renovations add more value than others to the final selling price. A kitchen or bathroom renovation will potentially return 100 per cent of your costs. A basement, family room or deck is another good investment, while landscaping upgrades only return about a quarter of your costs. Putting in a pool depends on your area so talk to your Realtor first — ideally it pays to be the worst home on the best street.”
Current Economy and Financing Options
Tracey explains that while mortgage rates are very attractive right now, financial institutions are more demanding. Today more than ever, he cautions people about taking on any extra debt, especially in an uncertain job market, and he encourages them to manage their existing debt.
“If you are buying, check that you qualify for the size of mortgage you require. With the downturn in the real-estate market, financial institutions are looking harder at a home’s appraised value (which is probably lower than it was a year ago) and will only lend a lower percentage of that value.
“If you are selling your home, look at its current appraised value and make sure you can get your equity out of it – if not, it may not pay to either move or renovate. Renewing your mortgage may also be tricky. Weigh the costs of other financing options such as a mortgage insured by CMHC (Canada Mortgage and Housing Corporation.”
If you are renovating, Eco-Energy Retrofit grants – available for items including a furnace or insulation – will help reduce your costs. The new Home Renovation Tax Credit is also available on expenditures made before February 2010. This is a 15-per-cent federal tax credit on eligible expenditures between $1,000 and $10,000, which produces a maximum credit of $1,350 — http://www.cra-arc.gc.ca/gncy/bdgt/2009.
Source: Institute of Chartered Accountants of Ontario
April 13, 2009 in Home Maintenance Matters | Permalink | Comments (9) | TrackBack
Overpriced and Overbuilt
TD Bank Economics summarizes the current state of the Canadian real estate market.
During Canada’s “Housing Boom”, which ran roughly from 2002 to 2008, unsustainable price increases drove unsustainable levels of building. Our view is that house prices exceeded the value of housing that was justified by fundamentals by approximately 9% nationwide. This overpricing compelled a level of residential construction that exceeded its fundamental-justified level by approximately 12%, an excess that was exaggerated in the past three years.
By “overpricing” we mean that prices detached from their fundamentals, as witnessed by a steep erosion of affordability. The current unwinding of house prices reflects both a cyclical downturn and a return of house prices to fundamentally justified levels.
We consider “overbuilding” of two forms: “demanddriven” where homebuyers buy up too many houses and that this demand cannot be sustained; and “supply-driven” where builders accumulate excessive inventories. Although there is evidence of both types, we contend that Canada’s “overbuilding” was mainly of the first type, where homebuyers pushed homebuilding to an unsustainable pitch that is now being rapidly reined in.
While most markets won’t face U.S.-style overhangs, the construction of too many new homes over the boom means a deepened slump. This overbuilding will likely weigh on markets over the next few years. Even as Canada recovers from the cyclical downturn, house price growth will remain choppy and new residential construction will be dampened, owing to this structural weakness. Construction is now undershooting fundamentals and we expect this to persist over 2009 to 2011. We anticipate that nationwide residential construction will fall further to around 125,000 starts over 2009 with a trough around 115,000 units in the fourth quarter.
To quantify the degree of overpricing and overbuilding, we first develop an empirical model, based on long-run fundamentals of house prices and housing starts in each province. Affordability is the key concept behind home values since house prices should track incomes over the long-run. Since homebuilders build to meet demand, we regard housing prices and household formation as the drivers of residential construction.
To examine the degree of overbuilding, we employ a “counter-factual,” asking what level of residential construction would have occurred if housing had been priced optimally. We find that actual homebuilding exceeded this fundamental-justified level by about 12%. Although new units were being absorbed, homebuyers simply bought too many houses at prices that exceeded fundamentals.
Regionally, we see the greatest strains on the Prairies, where housing demand will further contract under waning population inflows. Saskatoon, Calgary and Edmonton are already witnessing surges in their unsold new homes at the very time that the resale market has swung into strong buyers’ territory. Homebuilding in the Atlantic provinces has been relatively balanced but, while not plagued by structural weakness, will be singed by the downturn nonetheless.
Québec shows signs of strain – especially given the strange accumulation of unabsorbed multiples on l’Île de Montréal – but recent building has been relatively balanced, given the province’s history of under-building and low ownership rates. While Ontario homebuilding will reel from a cyclical downturn, the degree of structural weakness appears limited – with the important exception of the Toronto condo market. Both in Toronto and Vancouver, historically high levels of apartment-style units presently under construction mean that record numbers of condos will reach completion during 2009.
If absorption rates fall, as cyclical factors would indicate, condo inventories could spike severely – particularly in Vancouver. However, while residential construction in B.C. will definitely droop, we anticipate that the West Coast will continue to benefit from inter-provincial and international migration over the coming years, which, along with improvements in affordability, will alleviate some of the pressure from overbuilding.
See the full TD Economics housing report »
April 8, 2009 in Canadian Real Estate Market | Permalink | Comments (3) | TrackBack
Toronto Real Estate Board reports:
March resale housing results show year-over-year sales down 7% and median price down 2.5%.
In March 2009, Greater Toronto Realtors reported 6,171 sales – down seven per cent from March 2008, representing the smallest year-over-year decline in the last five months. The average price for March transactions was $362,052 – down less than five per cent from the same month last year.
“The Greater Toronto housing market has stood up very well given the challenging economic times the world has experienced in recent months,” commented TREB President Maureen O’Neill. “In fact, over the past two months, the situation in the housing market has improved.”
“Sales in March increased at a rate over and above what would be expected from the normal spring-time bump,” said Jason Mercer TREB’s Senior Manager of Market Analysis. “A greater number of households have taken advantage of increased affordability in the housing marketplace.”
The seasonally-adjusted annual rate of sales increased to 65,600 in March – up 36 per cent from the ten-year low reached in January. Seasonally adjusting TREB MLS data removes recurring seasonal trends observed each year. For example, MLS sales are highest in late spring each year and lowest in the winter months. Removing the recurring seasonality, allows for the analysis of a meaningful trend reflecting actual changes in market conditions. By multiplying the monthly seasonally-adjusted figure by 12, creating an annual rate, we can compare how the current month relates to historical annual figures.
Median Price
The median price in March was $317,500 from the $326,000 recorded in March of 2008.
See the complete Toronto Market Watch report »
April 6, 2009 in Toronto Real Estate Update | Permalink | Comments (4) | TrackBack
Toronto real estate 'experts' speak:
What a difference a year makes. Last year’s Post City Magazines roundtable came at the height of the real estate boom, and their panelists were accordingly optimistic about the health of Toronto housing. Now, the market has plummeted, leaving sellers devastated and buyers with something they haven’t had in a long time: leverage.
Post City locked some of the top names in Toronto's real estate scene in a room and demanded to know: Is it time to sell, buy — or just cry?
See the Malcolm Johnston article »
April 6, 2009 in Toronto Real Estate Trends | Permalink | Comments (1) | TrackBack
Greater Montreal Real Estate Board:
Market activity and prices increase — slightly.
The drop in MLS sales evidenced over the last few months in the Montreal Metropolitan Area relented in March, registering a 12 per cent decrease compared to the same month last year. Property prices continued to increase slightly, with the median price of a single-family home reaching $227,000, reported the Greater Montreal Real Estate Board.
"Spring is the busiest time of the year for the resale market, and 2009 should be no exception," said Michel Beausejour, FCA, Chief Executive Officer of the GMREB. "Interest rates are at their lowest ever, and consumer confidence is up. In March, 39 per cent of consumers said that now is a good time to make a major purchase, such as a property, compared to 28 per cent last month," he added.
In terms of prices, the median price of a single-family home increased by 1 per cent in March 2009 compared to March 2008, to reach $227,000. The median price of condominiums grew by 2 per cent, while that of plexes increased by 3 per cent.
"This is good news for the Montreal real estate market," added Mr. Beausejour. "Not only has consumer confidence increased and the market become more active, but property prices are stable and are even increasing slightly."
Sales of single-family homes decreased by 11 per cent in March 2009 compared to the same month last year. Condominium sales decreased by 15 per cent and plex sales dropped by 6 per cent.
Geographically, sales on the Island of Montreal decreased by 11 per cent in March 2009 compared to the same month last year. Sales were down 14 per cent on the South Shore, 4 per cent in Laval, 11 per cent on the North Shore and 27 per cent in Vaudreuil-Soulanges.
On March 31, 2009, the number of active listings on the MLS system increased by 14 per cent in comparison with the same date last year.
April 3, 2009 | Permalink | Comments (1) | TrackBack
