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Toronto real estate proves resilient
One in five Toronto neighbourhoods have surpassed their pre-recession average price levels.
In the midst of the recession, approximately twenty per cent of single-detached homes and condominiums in Greater Toronto Area neighbourhoods managed to post an increase in average price, according to RE/MAX. The firm's Return on Investment Report found that 11 (17 per cent) of the 65 Toronto Real Estate Board (TREB) districts reported an upswing in the value of a single-detached home in the first six months of 2009, despite one of the worst first quarters on record.
Beach home price increases lead the GTA
The Beach (E02) saw the greatest percentage increase year-over-year at 3.79 per cent, with average price rising to $715,422, up from $689,278 in June, 2008. Pickering (E13) placed second, with the average price of a single-detached home climbing 3.72 per cent to $389,536, up from $375,577 from one year earlier. Willowdale, Newtonbrook (C14) ranked third, with a single-detached home rising in value from $754,470 to $779,537 -- a 3.32 per cent increase. Rounding out the top five neighbourhoods are newcomers Downsview, Weston (W04) – where prices have climbed 2.25 per cent to $384,485 from $376,007, and Rouge, Malvern (E11) where a 1.99 per cent uptick has brought year-to-date housing values to $345,468 (from $338,738).
“Purchasers clearly moved to take advantage of greater affordability in the marketplace in the first half of the year,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Prices were down in virtually every neighbourhood surveyed; supply of homes listed for sale was at an all-time high; and interest rates were at historic levels. If you’re a buyer, it doesn’t get much better than that.”
Given their more affordable price point, condominium properties fared slightly better than single-detached homes, with 13 (22 per cent) of 59 TREB districts posting an increase in average price. Condos in Cliffcrest, Guildwood (E08) in the city’s east end saw the greatest appreciation in value, with average price climbing 6.45 per cent to $175,855, up from $165,197 one year ago. North Toronto, Cricket Club (C04) ranked second with a 6.1 per cent increase in average price, bringing condominium values to $301,065 (up from $283,746). Downsview, Weston (W04) clinched third spot, with a 4.37 per cent increase in average price to $173,083 in June 2009, up from $165,834 one year earlier. Mississauga’s thriving Port Credit community (W12) experienced a 2.63 per cent increase in condominium values year-over-year – with average price hovering at $304,954. Bendale, Woburn, and West Hill comprise E09, where the average price of a condo appreciated 2.46 per cent over figures reported one year ago to $201,830.
“But that was then and this is now,” says Polzler. “Lower inventory levels combined with increased demand -- comparable to what we’ve seen in recent months -- is expected to place renewed pressure on housing values for the remainder of the year. As a result, average prices are forecast to be at par or slightly ahead of last year’s levels by year-end in almost all neighbourhoods.”
Case in point is areas like Toronto’s east end, where bidding wars are breaking out on single-detached properties daily. The average sale-to-list price ratio in E01 and E02 approaches 100 per cent. Average prices are up in four of the 18 East District neighbourhoods. Overall average price in the east is down less than one per cent to $346,597 from the January to June 2008 figure.
The areas with the highest percentage decreases in the average price of a single-detached home have also seen the greatest increases in the number of properties sold. The overall average price of a single-detached home fell by 5.17 per cent in the Central District to $884,036, down from $932,198 one year ago, while the North District dropped 4.49 per cent in value to $526,693, down from $551,452 in June 2008. Sales are up in both areas, with 2,000 homes changing hands in the central area (up 4.28 per cent over one year ago) and 4,249 properties sold in the north (up three per cent from June 2008).
Only one district reported an overall increase in the average price. Condominiums in the North District – comprised mostly of York Region – posted a 0.26 per cent increase in values – and now hover at $275,822, compared with $275,113 one year ago.
“The momentum going forward is expected to be healthy – buoyed by positive economic data and a return to stability in the financial sector,” says Polzler. “There may be some bumps along the road, but all in all, the worst is over for the residential real estate in the Greater Toronto Area.”
July 28, 2009 in Toronto Real Estate Trends | Permalink | Comments (3) | TrackBack
Toronto Commercial Real Estate
Over 500,000 Square Feet Leased In June.
Last month, Toronto Real Estate Board Members reported 560,425 square feet of leased space, in comparison to the 1,017,518 leased square feet recorded in June of 2008, Commercial Council Chair Garry Lander reports. "The pace of activity remains below last year, in line with the performance of the general economy," Mr. Lander noted.
Prices were mixed in June. Industrial space in all size categories leased for $4.79 sfn, down 17% from the $5.78 recorded in June 2008. Commercial space traded for $13.47 sfn, down 20% from the $16.75 figure seen during the same month last year. Finally, office space traded for $14.69, up 24% from last June's $11.81 sfn figure, a possible indicator that higher quality office space is being listed on the MLS in the face of a challenging market.
Sales Market Highlights
Toronto Real Estate Board Members recorded 59 sales of IC&I properties in June, including 28 industrial buildings of all size categories which averaged $82.91 per square foot. This compares to the $65.26 per square foot obtained from non-MLS sources.
Members of the Toronto Real Estate Board's Commercial Division adhere to a strict Code of Ethics and Standards of Business Practice, only those who have met the standards established by their peers are eligible to become Members.
Source: Toronto Real Estate Board
July 21, 2009 in Toronto Real Estate Update | Permalink | Comments (6) | TrackBack
Toronto Real Estate Board:
GTA Realtors report sales up first two weeks of July
In the first two weeks of July, Greater Toronto Realtors reported 4,437 sales up 27 per cent compared to the first two weeks of July 2008. The average price for these transactions was up four per cent year-over-year to $394,750.
“The resurgence in home ownership demand experienced in the spring has continued into the summer. Home buyers continued to take advantage affordable market conditions in the first half of July,” said Toronto Real Estate Board President Tom Lebour. “If the mid-month results carry forward, we may see the best July on record.”
Year-to-date sales, at 45,213 are down four per cent compared to 2008. Average price, at $384,645 is down one per cent.
“The GTA housing market has held up very well this year given the current economic climate, especially relative to past economic slow-downs,” explained Jason Mercer, TREB’s Senior Manager of Market Analysis.
“The cost of borrowing has been key. With inflation in check, the Bank of Canada has been able to aggressively lower interest rates – an option that wasn’t available in the early 1990s or early 1980s.”
Source: Toronto Real Estate Board
July 20, 2009 in Toronto Real Estate Update | Permalink | Comments (2) | TrackBack
Reflections on buying a home
Protect yourself in a real estate transaction.
It’s no wonder that buying a home ranks high on the list of the most stress-provoking events one can experience, up there with the death of a loved one and divorce. There’s a lot at stake, financially and emotionally when you buy a new home. A good or bad outcome can affect your net worth, as well as your sense well being.
There are a lot of factors involved in the home-buying process that are beyond your control. For example, interest rates could jump unexpectedly, or an inspector might uncover a defect that you were unaware of. However, there are steps you can take to maximize your chances for a successful outcome.
The first step is to hire the right professionals to help you accomplish your goal. If you don’t already have a real estate agent, mortgage broker and a real estate lawyer that you’ve worked with successfully before, ask friends and associates for recommendations. Take the time to interview each referral carefully to make sure that there’s a good fit. Check references. If you have any doubts about a candidate, continue the search until you find qualified professionals with whom you have good rapport.
A common mistake home buyers and sellers make is to underestimate the time it takes to get the job done. Resist the urge to pile additional work on yourself while you’re in the midst of a home purchase or sale. By doing so, you’ll be better able to manage the stress.
One of the keys to ensuring that your real estate venture will have a happy ending is to make a commitment to stay involved in the process every step of the way. Even though you hire professionals to assist you, they aren’t the decision-makers. You are.
Let your agent know that you want to be kept informed of developments as they arise. The sooner you know about a problem, or potential problem, the sooner you can work on resolving it.
Don’t be shy about asking for an explanation of a facet of the business, or your transaction, that you don’t understand. If you don’t buy real estate on a regular basis, you shouldn’t expect yourself to know the ins and outs of the business.
As tedious as it might be, it’s important to read and understand every document before you sign it. Make sure you receive copies of everything you sign. It’s a good idea to retain these documents, even after the transaction closes. If there’s a problem during or after the transaction, this documentation could prove invaluable in proving your case.
It’s also wise to keep a transaction log. This can be something as simple as a notepad on which you record important transaction-related conversations. Keep the log with your other transaction documentation in case you need to substantiate facts later.
Be nice, but let your real estate team know what you expect from them. This should include regular updates. If you’re not receiving the service you need, let this be known. Don’t expect the people working for you to read your mind.
You should expect that issues of some sort will arise during the course of your home purchase. How you work through the problems has everything to do with the parties involved and how well you communicate with one another
July 18, 2009 | Permalink | Comments (5) | TrackBack
Real Estate Recovery Underway?
Pent-up demand for residential housing has bolstered sales in Canada’s major markets—a clear signal that the housing sector has shifted into recovery mode, says RE/MAX.
More balanced market conditions have emerged, effectively ending the stronghold that buyers had on the market over the past six to eight months. Canada’s largest markets, Toronto and Vancouver, led the charge—with June sales among the highest in history for both local real estate boards. Close to 11,000 properties changed hands in Toronto, up 27 per cent over one year ago, setting a new record for sales in the month of June. The figure was just slightly off the all-time peak of 11,146 units. Residential sales in Greater Vancouver increased 75.6 per cent over one year ago, to 4,259 units, just short of the record breaking 4,333 sales, which occurred in June 2005. Overall, major markets began to recover in March, posting escalating sales in April, May and June. The impetus is expected to continue throughout the remainder of 2009, with most centres now forecasting year-end sales on par or ahead of 2008 levels.
“The strength of the market, amid the most significant global recession in recent history once again underscores its relevance to the nation’s economic engine,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Canadians believe in homeownership --a fact best illustrated by the purchasers who ventured forward in recent months and snapped up some of the best real estate deals this market has seen in years. Those who chose to sit it out on the sidelines are now facing a market in transition, characterized by the threat of rising interest rates, low inventory levels, and upward pressure on housing values.”
The recent surge in resale activity can be attributed to three key factors—pent-up demand, low interest rates, and greater affordability. The combination—in conjunction with declining inventory levels—has created heated market conditions in hot pocket neighbourhoods, prompting a resurgence in multiple offers in June. Average prices are holding steady or climbing, days on market are down, and inventory levels continue to tighten, especially at entry-level price points.
“While sales are the leading indicator, there are other clear signals that recovery is indeed underway,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “Renewed consumer confidence, albeit cautious, has been key, supported by improved economic news. In addition, we’ve seen sale price-to-list price ratios climb across the country, rising as high as 105 per cent in some communities. Vendor incentives have also come off the table, both for resale and new housing stock.”
Although the current pace may be unsustainable, all markers point to greater stability in the market, leading to healthier activity in the long run, with inventory levels a key variable influencing pent-up demand.
Market by market overview:
St. John’s
Strong consumer confidence, buoyed by a vibrant local economy and a healthy employment picture, has kept St. John’s real estate engine moving at a steady clip. With billions of dollars in capital works projects planned or underway, in-migration remains positive and demand for resale housing continues to be solid. Improving inventory levels have shifted the market slightly into buyers territory, giving purchasers the necessary traction to make their moves. The threat of interest rate hikes has further stimulated home buying activity, pushing fence-sitters off the sidelines and into action. Residential sales in June 2009 (354 units) are slightly ahead of June 2008 (351 units) figures. The year-to-date average price recorded a 24 per cent increase to $211,221, compared to $170,500 for the same time period last year, bolstered by greater momentum in the mid-range. Corporate transfers have been a significant stimulus. Entry-level homes, priced between $100,000 and $200,000, are being snapped up at an unprecedented pace given the sharp upswing in pricing. Listing inventory levels are higher and the upper-end continues to move well, supported by the relocation market. Inventory will be a key factor influencing St. John’s housing sector in the months ahead. The pace is expected to continue, with sales rounding out the year at or ahead of 2007 levels, but below record numbers reported in 2008.
Halifax-Dartmouth
Improved purchasing power, combined with the threat of rising interest rates, effectively spurred fence-sitters back into the resale housing market in June, halting the trend of double-digit declines in sales. The number of homes sold was up five per cent to 805 units in June 2009, compared to one year ago. Despite the increased momentum, buyers remain firmly in the driver’s seat, benefiting from increased inventory and negotiating muscle, as motivated vendors adjust pricing to position their homes more competitively. Although sales remain down year-over-year, the gap is narrowing. Affordability and the stability of Halifax-Dartmouth’s relocation market continue to prop up activity, and first-time buyers remain the driving force. Opportunity exists for purchasers in the mid-to-upper price ranges, where demand and conditions have generally been softer. Consumer confidence is strengthening once again. With the upswing expected to extend into the fall, more balanced market conditions are forecast to emerge, and Halifax-Dartmouth may once again find itself a market in transition.
Ottawa
Solid economic fundamentals in the nation’s capital continue to prop up housing activity. Year-to-date sales for January to June are slightly ahead of 2008 levels, with the number of properties sold in June (1,895) up 12.5 per cent over one year ago – the third consecutive record setting month. Pent-up demand has been a major factor, with purchasers who put their home buying decisions on hold during the late fall and early winter now entering the market en masse. As a result, the balanced market that prevailed in recent months is now shifting in favour of the seller. Multiple offers are occurring on desirable properties in virtually every price range. Inventory levels, which peaked in April, are now falling. With less product on the market, certain segments are experiencing serious shortages—in fact, single family homes priced between $275,000 to $375,000 are few and far between. In the past four to six weeks, the upper-end has also started to rebound as all segments of the market work in tandem. While the threat of an upcoming election will have some impact on the market, healthy sales activity is expected to continue throughout the remainder of the year, with sales ahead of 2008 levels.
Greater Toronto Area
Pent-up demand for residential housing continues to fuel home buying activity across the Greater Toronto Area. The number of homes sold in June – at 10,955 -- came close to the historic record of 11,146 units set in May 2007, while pressure on average price is sending housing values higher than one year ago. Although balanced market conditions prevail, there are those communities that have clearly transitioned into sellers markets. Inventory is key, with the number of properties currently listed for sale down approximately 30 per cent from 2008 levels. Over the past six weeks, momentum has been building, with demand strongest for homes priced between $300,000 and $600,000. Multiple offers are once again commonplace, especially in the city’s coveted hot pocket neighbourhoods.
Affordability – in terms of low interest rates and housing values – has been the impetus for first-time buyers. Luxury home sales have also experienced solid demand in recent months, with 291 homes changing hands over the $1 million price point in June – a new record. The threat of higher interest rates and home prices are expected to stimulate a flurry of home-buying activity in the months ahead. By year-end, sales are forecast to exceed 2008 levels.
Regina
Positive economic performance continues to bolster home buying activity in Regina. Despite a 10 per cent decline in year-to-date sales (1,778 vs. 1,977 units) from levels reported January to June 2008, the gap is narrowing as purchasers move to take advantage of low interest rates and greater affordability. Sales in May and June were up in double-digit territory over one year ago and momentum is building. First-time buyers remain the most active segment of the market, sparking sales under $275,000. Inventory levels have been responsible for the steady upward pressure on housing values in the lower-end of the market. Limited supply of starter product in Regina has most properties in good condition, in desirable communities, moving quickly – some in multiple offers. The top-end of the market has also seen some bounce back, with sales between $400,000 and $450,000 up about 25 per cent over one year ago. Condominium sales, however, have softened year-over-year, with an oversupply of product currently listed for sale. Although conditions currently favour the buyer, the market is transitioning. More balanced conditions are expected to emerge in the months ahead. Given a continuation of current economic fundamentals, the number of homes sold in Regina by year-end is expected to match 2008 levels.
Calgary
Balanced conditions have returned to Calgary’s resale housing market. Strengthening momentum—residential sales at over 3,000 units were up in double-digit territory in June —has already begun to place upward pressure on prices in the entry level. With increasing competition among first-time buyers, the supply of starter homes is tightening. Buyers who moved in spite of doom and gloom forecasts in the Fall, Winter, and early Spring realized considerable savings, while those who hesitated are discovering it has cost them. Multiple offers are re-emerging in a few choice neighbourhoods on well-priced product, although there are still a few good deals to be had in the mid-range. Prices on the whole, however, are stabilizing. Signs of a transitionally stronger market include rising sales-to-new listings ratios, shorter days on market, and fewer incentives from vendors/builders. Activity is expected to remain better than average this summer, as those who paused over the past six months dive back in before interest rates rise. Momentum will continue to build into the fall, with overall 2009 sales edging slightly ahead of 2008 levels by year-end.
Edmonton
The residential resale market is springing back to life in Edmonton, with sales setting a new record for the month (June) and the third best month for unit sales in MLS history. While activity has been steadily improving in the second quarter, the heated momentum has yet to put any serious pressure on average price, which, although rebounding, remains down year-over-year.
The market has shifted, moving from buyer’s territory to more balanced conditions, prompted by the recent flurry in home buying and the slow return to more traditional inventory levels. Stability will characterize Edmonton’s housing sector going forward, with low interest rates, rising consumer confidence levels and affordability the impetus behind healthy demand. The frenzied climate of previous upswings will be conspicuously absent. While multiple offers have re-emerged—particularly in the $300,000 to $450,000 price point—they will continue to be the exception rather than the rule, driving sales price close to, but not typically over, asking price. Demand is expected to remain strong in the months ahead, bolstered by looming interest rate hikes and glimmers of positive news on the economic horizon, as consumers regain a cautious optimism.
Greater Vancouver Area
Growing consumer confidence levels have prompted a serious upswing in home buying activity in the Greater Vancouver Area, with sales in June (4,259) the second highest on record for the local real estate board. From White Rock to Vancouver, radiating out to the Fraser Valley, bidding wars are breaking out on well-priced product. In Kitsilano, an estimated 50 per cent of housing is selling in multiple offers. Low interest rates and increased affordability – average price is still significantly lower than one year ago – have served to stimulate market activity. Inventory levels have been on the decline in recent months, placing greater upward pressure on values. First-time buyers are driving freehold housing sales at the $600,000 price point, while those looking at more affordable alternatives are considering condominiums starting at substantially less. Balanced market conditions prevail overall. Pent-up demand has also been building, with local purchasers and international investors both active in the market. The upcoming Olympics, and the completion of the much anticipated Canada Line this Fall are expected to further bolster the cautious optimism characteristic of the Greater Vancouver market at present. Home buying activity, as a result, is forecast to continue at a healthy pace for the remainder of the year, with year-end sales slightly ahead of 2008 levels.
July 14, 2009 in Canadian Real Estate Market | Permalink | Comments (10) | TrackBack
Mortgage fraud hits home
RBC sues ex-worker for inflating Calgary real estate values.
The Royal Bank of Canada has filed an $8.9-million lawsuit against one of its former employees and members of his family over allegations they orchestrated a complex mortgage fraud scheme that has left the financial institution facing millions in losses for properties with artificially inflated values.
At the heart of the lawsuit are allegations the defendants -- including Ilan Levy, who worked with the bank as a mortgage specialist between August 2004 and March 2009 --approached people to allegedly buy real estate at prices that had been intentionally inflated over market value in exchange for fees between $20,000 to $70,000, according to court documents obtained by the Herald.
The defendants then apparently received payments of part of the mortgage loan proceeds, for Levy or companies under his control, that translated into at least $2.46 million, the documents allege.
As a result, the bank claims it was "intentionally misled" into agreeing to loan more money than the properties were worth.
In the documents filed by the Royal Bank last month in the Court of Queen's Bench, the bank indicates Levy was terminated because it was "discovered that he planned, organized, participated in and executed the fraudulent transactions."
The documents state Levy or companies under his control received at least $2.46 million from the proceeds of mortgages obtained fraudulently.
He is among eight people and six corporations named as defendants in the suit, including his wife, two of his brothers and a lawyer.
None of the allegations have been proven in court.
In all, the bank claims the group was involved in at least 20 transactions using a so-called straw buyer scheme, most for properties in the Elbow Valley area, some with mortgages for more than $2 million.
The bank, in its statement of claim, alleges Levy--whose duties included helping people apply for and obtain residential mortgages from the Royal Bank--organized, planned and executed each of the 20 transactions and that either he or another defendant found the properties, drafted documents and retained an appraiser for the fraudulent purchases.
July 12, 2009 in Arranging Mortgage Financing | Permalink | Comments (1) | TrackBack
Immigrants driving real estate market
At least two of Canada's big banks have found encouraging signs in the country's housing market, one financial and the other social. A commentary from TD Economics on Thursday said there are encouraging signs that a bottom may be forming under the Canada's depressed home building market, citing an 8% increase in housing starts in June on top of a 10.8% increase in May.
Although homebuilding activity overall remains one-third below the pace of a year ago, the report by TD economist Pascal Gauthier noted that the June climb "marks the second consecutive monthly increase in starts after a long string of nearly uninterrupted slides that started last fall."
On a regional basis, June's urban starts increase was lead by a 59.4 per cent surge in the Prairie region, followed by a 25 per cent gain in B.C., and a more modest 3.1 per cent increase in Ontario.
On the flipside, urban starts slid by 6.3 per cent in Quebec and 3.9 per cent in the Atlantic region. However, the bank said regions east of Ontario have generally not seen the same extent of decline as elsewhere.
Overall, the figures "provide more evidence that the Canadian economy has certainly passed the worst of what can be expected in terms of residential investment contraction," TD said.
Meanwhile, Scotia Economics issued a report Thursday saying it has been recent immigrants who have been driving housing demand in Canada.
The report cited census data that showed 72 per cent of immigrants lived in a dwelling owned by a household member in 2006, up from 68 per cent in 2001.
By comparison, the percentage of people born in Canada living in a dwelling owned by a household member rose only two percentage points over the same period, from 73 to 75 per cent.
Because the analysis was based on 2006 data, it was unclear what effect the current recession might be having on the number of immigrants and others entering the housing market.
But it was clear from the report that Scotiabank expects that trend in real estate to continue.
"Given Canada's aging population and relatively low fertility rates, longer-term household formation and housing needs will be largely determined by immigration," said senior economist Adrienne Warren.
Based on standard assumptions regarding immigration, fertility and mortality rates, Warren said immigration could account for 75 per cent of the growth in Canada's population a decade from now, up from 60-65 per cent today, and for almost all of it by 2030. Most of this growth will be in Canada's urban areas.
Among other things, the report highlighted that the faster transition to home ownership among immigrants was supported in part by strong labour markets, which saw the employment rate for core working-age recent immigrants jump 3½ percentage points between 2001 and 2006 to 67 per cent.
This was faster than the 1½ percentage point gain among their Canadian-born counterparts, which rose to 82.4 per cent.
"The better labour market performance of recent immigrants may reflect a favourable skills mix, with many employed in high-growth industries such as engineering, construction and skilled trades," Warren said.
"It may also reflect a greater geographic mobility to meet shifting regional labour requirements," she added.
Of the more than one million immigrants that came to Canada between 2001 and 2006, 69 per cent settled in the three largest metropolitan areas, Toronto, Montreal and Vancouver, according to the data cited by Scotiabank.
See Scotiabank's report on Real Estate Trends »
July 10, 2009 in Canadian Market Forecast | Permalink | Comments (3) | TrackBack
Walk this way
It's healthy, green, in fashion ... and could increase the resale value of your home. Just how walkable is your neighbourhood?
Walkability has become a buzzword in real estate, as environmentalists and "green" planners advocate compact residential neighborhoods near businesses and public transportation. And some realtors say in this difficult market, houses with high walkability scores are easier to sell: Owners can save money by walking to mass transit, and by using less gas when running errands.
Although the idea of a compact town center is not new, walkability has become easier to quantify, thanks to Walkscore.com. The website's algorithm takes a previously subjective idea - being able to step out your door and walk to places you need to go - and boils it down to a single number. Now online real estate sites, including Zillow and ZipRealty, are beginning to add walkability ratings to their home listings.
"When people live in a walkable neighborhood, they are able to save a lot of time and money that they would otherwise be pouring in their gas tanks," said David Goldberg, communications director for Smart Growth America, a Washington-based coalition of organizations promoting smart planning and building, and an advisory board member of Walkscore.com. Goldberg notes that some of Boston's early suburbs, such as Watertown and Belmont, are very walkable.
On a grander scale, people who walk more and drive less have a smaller carbon footprint. And the exercise tends to keep them in better shape.
Walkscore.com calculates walkability by awarding points for amenities - such as a restaurant, store, park, school, or library - within 1 mile of an address. The number of points depends on the closeness of the amenity, with the most points awarded for those within a quarter-mile.
July 9, 2009 in What's next (in real estate) | Permalink | Comments (0) | TrackBack
Stable Real Estate Market Forecast
Housing market sees bounce back from 'awful winter' —
Royal LePage revises forecast to the positive.
Canada’s resale housing market recovered lost ground in the second quarter and is poised to stabilize for the remainder of 2009, after a very slow start to the year, according to the Royal LePage Market Survey Forecast and House Price Survey released today. As the economy begins to stabilize and consumer confidence improves, house prices are expected to appreciate slightly in much of eastern and central Canada. Greater than national average price declines are predicted for the western cities that saw the greatest price inflation earlier in the decade, including Edmonton, Calgary and Vancouver.
“Given the grim shape that Canada's real estate market was in this past winter, the turnaround we have witnessed in the second quarter is really quite remarkable. We believe this improvement represents a sustainable change across the country. While seasonally weaker conditions are to be expected in the fall, the plucky Canadian real estate market is stabilizing and a healthy level of activity is forecast for the second half of 2009,” said Phil Soper, president and chief executive officer, Royal LePage Real Estate Services.
During the second quarter, average house prices across most Canadian markets began to appreciate, recovering from the lows experienced during the winter months. Average national prices remain slightly behind those posted during the same period in 2008. Of the housing types surveyed, the price of detached bungalows declined to $327,964 (-3.5 per cent), two storey property prices decreased to $392,378 (-3.7 per cent), and standard condominiums price points fell slightly to $237,112 (-3.8 per cent), year-over-year.
Soper observed, “With our industry’s busiest quarter behind us, we feel comfortable revising our 2009 forecast to the positive. When the anticipated market decline struck last winter, it was with greater speed and intensity than predicted, but the strength of the rebound was equally surprising. If general economic conditions continue to improve, as we expect they will, 2009 will be characterized as a period of moderate housing market correction after several years of above-average price growth.”
The 2009 national average house price is forecast to decline marginally by 2.0 percent, to $297,500 by end of year and unit sales are projected to fall slightly by 1.0 percent to 430,000.
“Improved affordability, driven by flat or lower home prices and inexpensive mortgage financing, has been the principle catalyst in this recovery. Pent up demand is also a factor in the lift we see in the second quarter numbers. For six months straddling the year's beginning, buyers stayed away from the market in an understandable, emotional reaction to very unsettled global economic conditions. Canadians appear to be stepping beyond these fears and are once again moving onto and up the home ownership ladder,” stated Soper.
In early 2009, the precipitous drop in unit sales remains the most dramatic indicator of the recession's impact on Canada's real estate market. With spring, consumers appeared ready to believe the worst was behind them and returned to the market in force, driving increased activity across each housing type. Couple this with historically low interest rates and leveling unemployment, Canada’s residential real estate market got back on track during the quarter.
Undergoing an inevitable cyclical correction, price adjustments can be seen with marked variances across Canada’s provinces. As expected, British Columbia and Alberta posted the most significant price modifications, as home values in those markets retreated in the wake of several mid-decade years of unsustainable price inflation, and have now evolved to a more balanced state. Prices appear to have stabilized and it is expected that these regions will continue to see improvements into 2010. In particular, the impact of lower home prices has improved affordability to the point that people are buying homes again on the West Coast, where sales activity has increased substantially.
Alternatively in Atlantic Canada, homes continue to appreciate due to strong local economies, which have helped to shelter the region somewhat from the turbulence witnessed in other provinces. As well, the region's generally moderate home prices have helped keep demand strong. Newfoundland, in particular, stands out as a region that continues to see significant home price appreciation, as supply cannot keep up with the demand driven by vibrant and growing industries such as those in the province's oil and gas sector.
Meanwhile, home prices in Toronto declined slightly in the second quarter, reflecting the national average trend. In the early spring, it was first-time buyers who triggered the increased activity levels, now those looking to move up are also active in the market. Similar to the situation in other large cities in central Canada, the most desirable neighbourhoods experienced supply shortages, which put upward pressure on prices.
“Looking ahead to the second half of 2009, year-over-year price comparisons will likely appear increasingly more favourable. It is important to remember that the baseline for the latter half of 2008 was unusually low, particularly in the fourth quarter when the full impact of the global financial crisis was felt. Our expectation is that most Canadian regions will experience stable housing prices through into the spring of 2010,” concluded Soper.
Regional Market Summaries
Halifax
In Halifax, a stable economy has contributed to a healthy real estate market where average house prices increased modestly despite a slight dip in sales activity. The market is beginning to pick up following a slow first quarter. Pent up demand will see a return to a more active market in the last half of the 2009 with the anticipation of a slight boost in sales activity and average house prices growing at a leisurely pace.
Montreal
The housing market in Montreal experienced a solid second quarter, with average house prices for most property types expected to increase for the remainder of 2009. Higher inventory levels resulted in balanced market conditions seeing the number of new listings equal to the number of sales. Low interest and unemployment rates will help maintain the strength of the real estate market through to the end of the year.
Ottawa
Ottawa continues to remain a steady market for residential real estate, with sales activity in the second quarter coming out strong from a slow first quarter. Ranked number two among Canada’s large cities for affordable real estate and coupled with low interest rates, all types of buyers were drawn to the market. House prices are expected to remain stable throughout the remainder of year with numbers slightly higher than anticipated.
Toronto
In Toronto, the real estate market witnessed significant second quarter gains. The return of consumer confidence and an upswing in spring market activity brought house prices and unit sales down as buyers emerged to take advantage of affordable properties and low lending rates. As the market begins its transition from a buyer’s market to a balanced market, with indications of a seller’s market arising, it’s anticipated that the market will stabilize by the end of year.
Winnipeg
Winnipeg’s real estate market has remained relatively resilient in the second quarter with average house prices in key housing segments increasing from the first quarter of 2009. Real estate in Winnipeg is modestly priced when compared to other cities in Canada, creating ideal conditions for buyers in the province. Looking ahead, average house prices are anticipated to stabilize for the remainder of the year.
Regina
Regina’s real estate market started on the road to recovery in the second quarter of 2009 and is expected to further improve through the remainder of the year. An increase in unit sales helped diminish the city’s high inventory levels as buyers are beginning to initiate deals. Recovering manufacturing and resource sectors, new construction activity in Regina, and low interest rates have also helped to improve buyer confidence.
Calgary
With the economic downturn and the oil and gas industry struggling, the housing market in Calgary has been on the decline since 2008, after many years of price inflation at the beginning of the decade. Quarter one of 2009 revealed some signs of price increases and stabilization in certain areas in Calgary, but the second quarter reveals fluctuations in the market. These price fluctuations are occurring across Calgary in all housing types with the market forecast predicting price reductions for the remainder of 2009.
Edmonton
Housing market conditions in Edmonton were characterized by lower inventory levels and moderate house price increases. Buyer demand was strong during the second quarter as most buyers felt a sense of urgency to capitalize on the recent market conditions. This has led to a slight tightening in Edmonton’s housing market with appreciation in average house prices expected for the last half of 2009.
Vancouver
Vancouver’s real estate market stabilized in the second quarter of 2009 following a price correction that started last fall moving towards a balance between supply and demand. Properties priced at, or below, market value are generating multiple offers from buyers. Average house prices throughout the last half of the year are expected to inch upwards, but increases will likely be in the low single digits.
Royal LePage’s quarterly House Price Survey shows the annual change of prices for key housing segments in select national markets. View the chart here »
July 8, 2009 in Canadian Market Forecast | Permalink | Comments (1) | TrackBack
Toronto Real Estate Board reports:
GTA Resale Housing Market Posts Best June on Record.
In June 2009, Greater Toronto realtors reported a record 10,955 sales, up 27 per cent from June 2008. The seasonally adjusted annual rate of sales in June was 100,700.1 "The record result in June is testament to the fundamentally sound housing market in the GTA," said the Toronto Real Estate Board’s newly appointed President Tom Lebour. "An increasing number of households have been confident in purchasing a home in the region’s affordable and diverse resale housing market."
The average price for June transactions was $403,972 – up by two per cent compared to the same month last year. "The re-emergence of seller’s market conditions has exerted upward pressure on home prices," explained Jason Mercer, TREB's Senior Manager of Market Analysis. "Look for sales to remain high relative to listings in the second half of the year. This will keep home prices growing." Summary Of June Sales And Average Price.
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.
See a complete copy of the Toronto Market Watch Report »
July 6, 2009 in Toronto Real Estate Update | Permalink | Comments (10) | TrackBack
