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New MLS listings down in August

The number of properties listed via the MLS systems of real estate boards in Canada retreated in August 2008 from record levels in the previous four months, according to statistics released today by The Canadian Real Estate Association (CREA). With new listings down from the recent peak, the resale housing market is stabilizing in most provinces.

"These days, Realtors in Canada face a lot of questions about the real estate market, real estate price bubbles, and the value of a home. That's because we are at the end of an unusually active period in Canadian real estate - 2007 was a record year for many of the things we use to monitor the real estate market, including the average MLS residential price," said the President of The Canadian Real Estate Association, Calvin Lindberg.

"We must remember that all markets go through cycles, and the national housing market is actually made up of different communities. Real estate markets are local, and every community, and every area, is different in terms of trends and pricing," the CREA President added.

"Slower activity in some of Canada's pricier housing markets compared to year-ago levels will continue weighing on the national average price," explains CREA Chief Economist Gregory Klump.

"As our analysis shows, the Canadian housing market is stable and home sellers are not under pressure to sell. This is in stark contrast to the U.S. housing market, where there are a large number of distress sales. In Canada, with price gains diminishing and homebuyers taking more time to shop, the number of active MLS listings may continue to ease so the Canadian housing market would stabilize further."

The detailed statistical analysis for all MLS activity in Canada is attached as reference. The average price information quoted can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods, or account for price differentials between geographic areas.

September 30, 2008 in Canadian Real Estate Market | Permalink | Comments (0) | TrackBack

Luxury home sales holding steady

While housing sales in the Toronto area have slowed considerably from last year’s hectic pace, the top end of the market remains relatively strong.

The RE/MAX Upper-End Report, which highlights trends and developments in 15 housing markets across the country for the first seven months of 2008 found Vancouver, Victoria, Regina, Saskatoon, Winnipeg, London, Kitchener-Waterloo, Ottawa, Halifax-Dartmouth, and St. John’s all experienced an upswing in sales activity, while declines were noted in Kelowna, Calgary, Edmonton, Hamilton-Burlington, and Toronto. Also significant is in all but two markets, percentage increases in sales were greatest in the upper-end when compared to the overall residential marketplace in 2008.

“Given the transition occurring in most residential real estate markets, upper-end sales remain exceptionally strong,” says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada.  “The market for luxury homes is usually the first to show pressure cracks, but the reverse is actually true this year, with pent-up demand (due to trade-up activity), less speculation, and job transfers all factors contributing to stability in this segment.  That being said, we feel uncertainty in financial markets both here and abroad will give purchasers cause for concern in the immediate future.”

Although the top-end of the market represents less than five per cent of total sales, activity is generally a gauge of overall market conditions.  Leading the country in terms of percentage increase in luxury home sales are Regina (up 306 per cent); Winnipeg (up 89 per cent); St. John’s ( up 78 per cent); Saskatoon (up 72 per cent); Kitchener-Waterloo (up 47 per cent); Ottawa (up 36 per cent); Halifax-Dartmouth (up 20 per cent); London (up 14 per cent); Greater Vancouver (up five per cent); and Victoria (up four per cent). Solid performance is likely a result of consumer confidence, particularly in provinces like Saskatchewan, Manitoba, Newfoundland, Nova Scotia, and parts of Ontario where solid economic fundamentals helped to bolster the number of homes sold in the upper-end. 

“In two-thirds of the markets we surveyed, demand for upscale homes surpassed peak levels reported last year,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada.  “However, with supply edging higher in most major centres and few markets reporting tight inventory levels, we are seeing a return to more balanced conditions.  This situation is expected to have an impact on high-end values in coming months, especially in areas that have experienced consistent double-digit growth.”

The RE/MAX Upper-End Report also notes serious appreciation in housing values in recent years has pushed upper-end price points to new levels.  This is especially so in Western Canada where $2 million is now merely a starting price in Greater Vancouver, while in the tony Westside, that figure is closer to $4 million. Calgary is steady at $1 million this year, but is pushing closer to the $1.5 million benchmark.  In Ottawa, where the upper-end price point is currently pegged at $750,000, sales are increasingly occurring over the $1 million mark.

Other highlights include:

See the full report »

September 28, 2008 in Buying Toronto Real Estate | Permalink | Comments (1) | TrackBack

Real Estate Softening, not Collapsing

High prices rather than tightening credit conditions are curbing Canadian home buyers' enthusiasm, says a new Desjardins Economic Studies report that argues Canada is not headed for a U.S.-style housing market collapse. "Price advances had been supported by fundamentals - strong employment and low interest rates - not softening credit conditions. Canada's real estate market is therefore not overvalued, a finding confirmed through a recent study published by the IMF," says the report by Desjardins senior economist Hélène Bégin.

The resale market in Canada is approaching equilibrium, Bégin writes, arguing that price declines are not widespread but contained to several western Canadian cities such as Vancouver, Victoria, Calgary and Edmonton, where prices had already rocketed to stratospheric levels.

"Since these same cities had carved the path to soaring home values and their weighting in the volume of sales had increased over the years, the downward shift in prices is enough to slash average home prices across the board in Canada," says Bégin.

However, Bégin acknowledges Canada's real estate market is reaching a turning point.

"If the economic environment is slow to improve and demand weakens further, price declines could spread to other cities. More markets would have to reach a surplus situation to get to that point, which seems unlikely in the short term but it could happen," Bégin writes.

Toronto is most at risk with its sales-to-new listings ratio in the second quarter of 2008 firmly in balanced territory at 50%. Other markets would have to deteriorate significantly to see prices shift further downward, and markets such as Montreal, Quebec and Ottawa, where slight shortages have been reported, seem to be "sheltered from any possible depreciation," Bégin writes.

Despite the recent declines in home prices, the price growth in the first half of the year will still mean an increase of 2.0% - 2.5% by the end of 2008, Bégin says. But she adds, a decline as high as 5% is almost inevitable in 2009 as demand will be slow to pick up and the price corrections will broaden. Modest price increases anticipated in Central Canada won't be enough to offset price declines elsewhere. Further, stricter borrowing rules for mortgages brought in by the federal government will limit the pool of potential home buyers, Bégin says.

"Unless Canada posts significant job losses in the coming months, the slowdown in the real estate market will be gradual overall," Bégin writes. However, she cautions any substantial deterioration in the global financial environment could undermine financial institutions, leading to even tighter credit conditions. "Canada's real estate market would then be subjected to the dreaded contagion we have heard so much about. The current financial crisis could have some surprises in store."

September 26, 2008 in Canadian Market Forecast | Permalink | Comments (4) | TrackBack

Is our real estate crisis looming?

Crumbling housing prices have touched off a financial crisis in the U.S. Could the same thing happen here?

There's no question there are significant differences between the U.S. bloodbath and the situation facing Canada. It's just that the gap isn't as wide as some might believe. The good news is Canada never had a huge subprime market. In the U.S., more than 30 per cent of all mortgages issued between 2004 and 2006 fell into that category. Up here, subprime loans never accounted for more than five per cent of the market. That does not mean, however, that Canada's mortgage sector has been a bastion of responsible conservatism. Canada found other ways to make it easy for homebuyers to take out huge loans that they might not necessarily be able to afford.

Until very recently, Canada's real estate sector looked like it would weather the current economic storm and emerge more or less intact. The boom certainly rewarded homeowners, at least on paper. Double-digit annual growth in the value of the average home over the last six years meant that, at their peak in the spring, residential properties in Central Canada were worth 74 per cent more than at the start of the decade, while in the West home prices jumped by more than 130 per cent. There was plenty of talk about a slowdown. But thanks to our relatively strong economy, most economists predicted house prices would hold up.

Few were quite prepared for what happened next. In June, the average price of existing homes in Canada's major markets dipped 0.4 per cent from the year before — a tiny slip, but the first decline in nine years, and quite possibly the first major crack in the edifice of Canada's real estate market. Then, like a series of bad sequels to a horror movie, the market continued to fall in July, and then August. As of last week, when the Canadian Real Estate Association reported the average price of homes in major markets was $316,052, prices were already down 7.3 per cent from where they were in June. At the same time sales volume has tumbled, leaving many city streets cluttered with "For Sale" signs for the first time in years.

See the full story at Macleans.ca:

September 25, 2008 in Canadian Real Estate Market | Permalink | Comments (3) | TrackBack

Brookfield buys GMAC real estate unit

Toronto based Brookfield Asset Management is purchasing GMAC's its home services unit which includes real its estate brokerage. The transaction, which will stretch Brookfield’s Residential Property Services unit into the United States, will most likely be completed in the fourth quarter this year, Brookfield said. Terms were not disclosed.

GMAC is trimming mortgage operations after seven consecutive losing quarters at its Residential Capital business. This month, the company dismissed 5,000 Residential Capital employees, or 60 percent of the unit’s staff, and closed all 200 GMAC Mortgage retail offices because of weak real estate markets.

Moody’s Investors Service downgraded Residential Capital’s debt on Sept. 10, citing mounting losses, cash strains and “an impaired franchise.”

These are “pretty tumultuous times for the real estate industry,” said Graham Badun, managing partner and chief executive of Brookfield Residential Property Services, formed in the GMAC deal. “We do believe in the long-term positioning of residential real estate.”

GMAC, co-owned by General Motors and Cerberus Capital Management, renewed a credit facility with Citigroup last week, giving the lender access to $13.8 billion, down from $21.4 billion a year earlier. The company, which is based in Detroit, has amassed $5.4 billion in losses in the last year as the mortgage market crumbled and home foreclosures rose to a record.

Brookfield, based in Toronto, manages more than $95 billion in assets including the Royal LePage real estate brokerage brand and franchise.

September 24, 2008 in Agency Matters | Permalink | Comments (1) | TrackBack

G7 Finance Ministers Meet

Committed to Maintaining Stability of Financial Markets

The G7 stand ready to take whatever action is needed to maintain the stability of the financial sector, the group announced on Monday morning after a series of meetings over the weekend and into Monday. The G7 said they remained committed to protecting the integrity of the international financial system, and welcomed the extraordinary actions taken by the U.S. government and Federal Reserve to stabilize the financial markets, including a plan to remove illiquid assets from the balance sheets of financial institutions.

The G7 also praised their central banks and their action to provide liquidity to the financial system and the limiting or outright banning of short-selling from financial market regulators. Furthermore, they pledged to continue working together to enhance the international regulatory system.

"We recognize the importance of making regulation more effective and bringing investors back into a liquid and stable marketplace. We remain committed to full and rapid implementation of the Financial Stability Forum (FSF) recommendations to enhance the resilience of the global financial system for the longer term," read the statement. "We look forward to the FSF report this fall on progress made in strengthening prudential supervision and regulation, improving firms' risk management practices, enhancing disclosure and transparency, and strengthening accounting frameworks."

The group also maintained that they were in a state of "heightened close cooperation" and reiterated their commitment to acting individually or together to protect the stability of the financial markets.

Following one of the most chaotic weeks in the history of Wall Street, U.S. Treasury Secretary Henry Paulson on Saturday proposed to Congress a $700 billion bailout plan directed at the heart of the crisis.

The plan, which gives the Secretary broad authority to purchase mortgage-related assets from any U.S. financial institution, will be discussed with congressional authorities over the weekend. The White House hopes the action will find agreement before markets open Monday morning.

The action of purchasing masses of bad debt from numerous institutions is hoped to restore confidence in the financial system by clearing up toxic assets obstructing bank-to-bank lending.

September 23, 2008 in World View [of real estate] | Permalink | Comments (0) | TrackBack

Toronto housing starts defy gravity

Most indicators suggest that Toronto’s economy is not having its best year. Manufacturing in the Greater Toronto Area (GTA) is being hammered by the high Canadian dollar and the slowdown in the U.S. economy. The 'Big Three' auto firms are facing weaker demand from south of the border and a shift in production to more fuel-efficient vehicles. The financial sector is being challenged by investment bank failures elsewhere and the tightening of credit.

The unemployment rate in the city has risen to 7.0%, which places it above the national average (6.1%) and moves Toronto to near the bottom in a ranking, lowest to highest, of all of Canada’s Census Metropolitan Areas. Existing home sales in Toronto were -22% in units in August 2008 year over year and the average price paid was essentially flat (+0.8%). Nevertheless, look where Toronto stands in housing starts so far this year versus the same period last year – in second place among all of Canada’s largest urban centres.

High-Priced Condos Hold the Key

Toronto housing starts are +32% to date this year versus the first two-thirds of last year. The strength continues to be in multi-unit starts (+70%), whereas single-family starts are on the decline (-15%). The Toronto multi-unit market is comprised to a significant degree of high-priced condos being bought by wealthy foreign investors and well-heeled empty-nesters relocating downtown from their homes with a yard in other ritzy neighbourhoods. The strength in Toronto has raised Ontario (+20%) to be the leader among all of the provinces in year-to-date total starts.

The other city with a million-plus population to show particular strength in multi-unit starts has been Calgary (+55%). Also in this large-population category, Montréal and Vancouver have tied for percentage gain in multiples at +11% each. In centres below one million population, Kelowna (+63%) and Hamilton (+52%) have demonstrated impressive increases that have raised actual volumes above 1,000 units. 
Cities with Notable Declines – in Starts and Prices

As for single-family declines, Calgary (-43%) and Edmonton (-69%) are among the weakest large-city markets. In addition, Edmonton’s multi-unit decline of 27% explains why that city is in last place among all centres for total starts. The Canadian Real Estate Association (CREA) reports that year-over-year average house prices in Canada were -5.1% in August, with the largest drops coming in Calgary (-8.0%), Vancouver (-5.2%), Windsor (-5.0%), Edmonton (-4.8%) and Victoria (-1.2%).

September 19, 2008 in Toronto Real Estate Trends | Permalink | Comments (3) | TrackBack

The new real estate landscape

The property market has been slowing for months across much of Canada and the recent turmoil in the financial sector could slow things even more. Banks are toughening lending practices, fewer discounts are being offered on  rates and several players have pulled out altogether.

Such is the new landscape of the housing market as listings surge, sales plunge, prices cool - and the final sparks fizzle out on one of Canada's strongest-ever residential real estate booms.

See the full story:

September 19, 2008 in Canadian Real Estate Market | Permalink | Comments (0) | TrackBack

Toronto Real Estate Board:

Greater Toronto Area Resale Housing Moderates in September

The Greater Toronto Area’s autumn resale housing market began with moderate activity, Toronto Real Estate Board President Maureen O’Neill announced yesterday. With 2,726 sales during the first half of this month, activity has declined 16 per cent from the 3,236 recorded during same time period a year ago. Compared to the 2,913 transactions recorded during the first half of September 2006, activity has declined six per cent.

In the City of Toronto, 998 sales were recorded, which represents a 23 per cent decline from the 1,297 transactions recorded in the first half of September 2007 and an 11 per cent decline from the 1,118 homes that changed hands in 2006. However, activity increased 16 per cent in the first half of September 2007 from the same period in 2006.

In the 905 Region, there were 1,728 sales, down 11 per cent from the first half of September 2007, when 1,939 transactions were recorded and within four per cent of the 1,795 sales recorded during the same timeframe in 2006. However, activity increased eight per cent during the first two weeks of September 2007 as compared to 2006.

“Although housing activity in the GTA remains moderate, we’re continuing to see a consistent pattern, and this stability is certainly positive news compared to markets in other sectors and in other world cities,” said Ms. O’Neill.

At $366,158 the average price of housing in the GTA has increased marginally from the $364,364 recorded a year ago and is up nine per cent from $335,208 recorded in September 2006.

In the City of Toronto, the average price is $386,524 up marginally from the $384,796 recorded in the first half of September 2007 and up 12 per cent from the $343,561 average from the same period in 2006.

In the 905 Region, the average price is $354,395; an increase of one per cent from $350,698 recorded a year ago and up seven per cent from $330,005 recorded in the first half of September 2006.

“The fact that prices have held firm despite moderate activity shows that consumers regard real estate as a sound investment,” said Ms. O’Neill.

The percentage of asking price that Sellers receive for their homes has also remained consistent. The list to sale price ratio is 98 per cent, as it was a year ago.

The 26,299 properties listed for sale on the TorontoMLS system have increased 26 per cent from a year ago when 20,841 homes were available. The time that homes remain on the market has increased as well, to an average of 37 days compared to 31 days a year ago.

In a few areas though, activity heated up during the first two weeks of the month.

Transactions in Bowmanville (E17) increased 66 per cent from a year ago, as a result of strong detached home sales.

In Streetsville (W20) activity increased seven per cent compared to mid-September 2007 due mainly to semi-detached sales.

Vaughan (N02) saw a 20 per cent increased in transactions from a year ago due to strong sales of all housing types.

September 18, 2008 | Permalink | Comments (2) | TrackBack

Yorkville condo to list near $30m

Global financial markets are in turmoil and the Canadian economy is slowing, but that hasn't put a damper on the promotional effort touting an as-yet-to-be-built condo unit at Toronto's Four Seasons Hotel and Private Residences as "Canada's most expensive penthouse!"

The posh condo in Toronto's Yorkville neighbourhood is expected to list in the $30-million range, but the price won't be revealed until after virtual tours for the media take place Thursday with developer Alan Menkes and designer Brian Gluckstein.

But the 9,000-square-foot penthouse, complete with four fireplaces, staff accommodations and galleria, will be listed for more than the previous record sale price of $25-million, public relations representative Beth Merrick said.

See the full story:

September 17, 2008 in Buying Toronto Real Estate | Permalink | Comments (1) | TrackBack

 

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