Toronto Real Estate Info

Toronto neighbourhoods - price appreciation in 2010

2010-07-14T13:35:00Z

Toronto's housing market roared back to life in the first half of 2010, with single-detached homes and condominium apartments and townhouses posting unprecedented double-digit gains in average price in most districts, according to a report released by RE/MAX Ontario-Atlantic Canada. This is in stark contrast to the July 2009 RE/MAX report that found that values in approximately 80 per cent of neighbourhoods surveyed in Toronto had depreciated over the same period in 2008.

RE/MAX examined 63 Toronto Real Estate Board (TREB) districts in the single-detached category between January and June of 2010 and found that 85.7 per cent experienced double-digit gains. Mississauga's Lorne Park (W13) led in terms of percentage increase in average price with a 30.2 per cent upswing in the first six months of the year, bringing year-to-date values in the area to $880,373 (vs. $676,289 in 2009 and $830,041 in 2008). Markham (N01) ranked second with a 27.7 per cent jump to $779,168 (vs. $610,322 in 2009 and $683,050 in 2008) while Armour Heights, Bathurst Manor (C06) came in a close third at 27.5 per cent (rising to $732,535 from $574,599 in 2009 and $589,808 one year earlier). Mississauga's Creditview, Erindale area (W16) secured fourth spot with an average price of $561,973-up 26.5 per cent over 2009's $444,221 and 2008's $476,877. Rounding out the top five was York Mills, Hogg's Hollow, Bridle Path (C12) with a 26.2 per cent increase over last year and an average price of $1,868,591 (vs. $1,480,296 in 2009 and $1,580,851 in 2008).

While first-time buyers dominated housing markets during the first half of 2009, move-up buyers ruled during January to June of 2010. Rising interest rates and the introduction of the Harmonized Sales Tax (HST) in the province helped drive activity, with more than 50,000 sales reported year-to-date-a figure on par with record 2007 levels.

As in years past-the exception being 2009-the second half of the year will be more tempered, with price appreciation moderating somewhat in most neighbourhoods. The one exception to the rule will be the hot pocket areas that continue to experience limited inventory.

With affordability a growing issue for many in the Toronto market, the city's vast supply of existing condominium apartments and townhomes offer a financially attractive alternative. Like single-detached homes, however, condominium prices were on the upswing in the first six months of the year in the 59 TREB districts examined-with 61 per cent reporting double-digit increases.

The Danforth, East York (E03) was the top performing condominium market in terms of price appreciation-with values up 28.2 per cent to $222,421. While the increase is significant compared to the same period in 2009, it's a more moderate 15 per cent ahead of the $195,019 reported in 2008. Yorkville (C02) secured second spot, with a 22.6 per cent increase in values, bringing average price to $653,745-a serious uptick over the 2009 level of $553,302 but only a nominal 5.6 increase over 2008's $619,151. Markham (N01) took third place with an increase of 22.1 per cent to $332,590 over the 2009 figure ($272,316). Bayview Village (C15)-Toronto's newest condominium corridor-saw a 19.6 per cent increase, with values rising to $331,063. North York (C14) continued to experience upward momentum during the first half of the year, with average price on the Yonge St. line up 19.5 per cent to $363,685, compared to the $304,342 reported during the same period in 2009.

GTA's Best ROI Neighbourhoods Report 2010.....2

Overall, single-detached homes in TREB's North district (north of Steeles Ave.) saw the greatest percentage increase, with year-to-date average price rising 17.5 per cent to $617,723 (compared to $525,635 one year ago). Not surprisingly, condominium apartments and townhomes in the central core experienced the most significant upswing, with average price in TREB's Central district rising 16.8 per cent to $385,996, up from $330,517 one year ago.

Both housing types experienced serious percentage increases year-over-year - yet its important to keep those price hikes in perspective. Last year, 80 per cent of those districts experienced a decline in value. The bounce-back-fuelled by unprecedented market conditions including a severe shortage in listing inventory-simply returned average prices to their normal course.

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Questions or comments? Contact me @ 416-831-1980 www.TodayBestHomes.com home

Toronto House Prices increase in second quarter

2010-07-07T12:08:00Z

Despite a modest decline in sales forecast for the second half of 2010, Toronto's house prices are expected to remain steady

BuzzBuzzHome
July 7, 2010

The second quarter of 2010 has seen steady price increases, according to the Royal LePage House Price Survey and Market Survey Forecast.

The report states that standard two-storey homes and detached bungalows increased from both the previous quarter as well as year-over-year comparisons to 2009.

While standard condominiums saw averages prices decline from previous quarter, they had increased 7.7 per cent over the second quarter of 2009.

"It's important to understand the real estate trend over the past year to keep these increases in context," said Gino Romanese, senior vice president, Royal LePage Real Estate Services Ltd. "In 2009, typical seasonal growth in the second quarter was delayed until the third quarter. Fueled by the threat of rising interest rates and to a lesser extent some pressure to buy prior to the introduction of HST, growth continued right through the second half of 2009 into the first half of 2010."

According to Royal LePage:

"In the second quarter of 2010, standard two-storey homes increased 10.5 per cent year-over-year to $589,857 from $533,748 in 2009. Detached bungalows increased 11.4 per cent to $481,933 compared to $432,433 during the same period last year. Standard condominiums were up 7.7 per cent, with the average price in the second quarter rising to $326,913 from $303,650 in 2009."

"By the end of 2010, we expect to see about 7 per cent growth in average house prices in comparison to 2009. However, this growth has already been accounted for in the first half of 2010. Average prices are expected to decline moderately for the remainder of the year," added Romanese.

Moderation may be nice to see for some buyers, as they are used to be bid out of the market. Listing inventory in the GTA as of June 30th has increased from last year's record low of 18,700 to 23,900, giving potential buyers more choice.

Questions or comments? Contact me @ 416-831-1980 www.TodayBestHomes.com

Household worth rebounds after recession

2010-07-06T14:37:00Z

Rising stocks and home prices have helped restore almost all of the value Canadians lost in household net worth during the economic downturn. Household net worth rose 1.3%, or by $74-billion, to $6-trillion, as the growth in the value of assets, particularly equities and residential real estate, exceeded the increase in liabilities, Statistics Canada reported Monday.

“This marks the fourth consecutive quarterly improvement in household net worth and reflects a 96% recovery off the net worth lost during the recent economic downturn,”

David Onyett-Jeffries, economist at RBC Economics Research, wrote in an analysis. “The increase of household net worth continues to repair the cumulative $552-billion decline.” Household debt has also risen as low interest rates have encouraged Canadians to increase borrowings, but that has led to strengthening in demand and asset prices, particularly housing, said Mr. Onyett-Jeffries.

The ratio of household credit-market debt to income rose to 147% from 144.9% in the fourth quarter, while other consumer loan growth slowed, Statistics Canada said in its report. Meanwhile, the federal agency also reported that national net worth — national wealth minus net foreign liabilities — edged up 0.6%, or more than $38-billion, to $6.2-trillion in the first quarter. On a per capital basis, national net worth reached $181,500, up from $180,900 in the previous quarter, Statistics Canada reported. Total government debt rose, climbing 2.1% to $1.7-trillion as borrowings by all levels of government increased as bond issuance rose, especially by the federal government. Financial Post

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Toronto Real Estate and HST facts

2010-07-02T03:02:00Z

Today is the first day when the Harmonized Sales Tax (HST) comes into effect. The 13% HST replaces the 8% Provincial Sales Tax (PST) and 5% Goods and Services Tax (GST). This means many purchases that were exempt from GST before will now cost 5% more, and those exempt from PST will cost 8% more.

For home buyers, the situation can be complicated. Here’s the basic lowdown:

Resale Homes: No HST on Purchase Price, BUT HST on Services

Resale home prices are exempt from the HST, but related services such as legal, accounting, brokerage fees and home inspections will now attract HST when previously they only attracted GST. This means those service items will now cost 8% more.

New Homes: HST for homes above $400K

For buyers of new condos and houses purchased from a builder, or those substantially renovated, HST may apply. Homes costing up to $400,000 may get up to a $24,000 tax rebate.

This will take some of the sting out of the HST. Click here to download a PDF version of the rebate application form here.

As always, I encourage home buyers to first consult with their accountants and/or lawyers to understand the exact amount of HST due at closing. Questions or comments? Contact me

Happy Canada Day!

Repairs to Make Before Selling

2010-03-30T01:35:00Z

· Guttering: Make sure that any leaks are dealt with, debris and leaves are removed, and repairs are made to cracks.

· Roof repairs: Repair or replace missing or broken tiles so your home looks well cared for.

· Radiators: Leaking radiators leave unsightly rust stains and damp over time and may give the impression your home is not cared for.

· Faucets: Leaking faucets can be easily and simply remedied by replacing washers. Replacing washers is an economical way to help your home appear maintained, and help prevent major water concerns later.

· Windows: Missing putty in windows is quick, cheap, and simple to repair. Left untreated, it can lead to much more expensive problems and gives the impression you don't care about your home.

· Electrical: Bare wires and broken electrics are not only dangerous but can be a sign of an aging electrical system. Replace broken switches and power points.

· Broken glass: Cracked or broken glass can make a property look uncared for at best. At worst they give the impression that the house is located in a high crime or dilapidated area.

· Broken fences: No matter how pretty the garden, a broken fence can give a bad impression. Even if it is your neighbor's fence, offering to help put it back up can speed up the process and might help make a sale.

· Broken tiles: Broken tiles are dangerous and unhygienic. Even if you don't have any of the originals left for repairs, get some tiles that are exactly the same size and use tile paint to even out the different colors.

· Doors: Broken doors do not give a good impression. The potential buyer might even suspect they are due to a previous burglary. Get them repaired or replaced.

Sales still hot despite cooler weather

2009-11-23T05:22:00Z

As per your request here is Star's article by the President of the Toronto Real Estate Board

November 20, 2009 -- Winter may be fast approaching but there is certainly no cooling trend when it comes to the Greater Toronto Area resale housing market.

In the first two weeks of November, Greater Toronto REALTORS® reported 3,666 sales, an 84 per cent increase compared to the same period a year ago. The average price of GTA homes sold during this timeframe also grew, by 10 per cent, to $415,066. Condominium activity throughout the GTA was even more extraordinary. Sales of this housing type increased 90 per cent to 959 transactions, with an average price of $296,664, up 15 per cent year over year.

The City of Toronto experienced the highest increase in sales volumes while average price appreciation was consistent throughout both areas.

The number of sales in the City of Toronto increased by 88 per cent compared to the same period a year ago, reaching a total of 1,560 transactions. The average price meanwhile, climbed to $441,893, a 10 per cent increase from mid-November last year. Condominium sales in Toronto almost doubled to 674 transactions, an increase of 97 per cent from a year ago. They sold at an average price of $317,939, up 13 per cent year-over-year.

In the 905 Region sales activity was up 81 per cent over the first half of November 2008, totaling 2,106 transactions. The average price of a 905 Region home was $395,195, also up 10 per cent from a year ago. Condominium transactions in the 905 Region increased 75 per cent from mid-November last year, to 285 sales. They fetched an average price of $246,351, up 20 per cent year-over-year.

Year-to-date sales throughout the GTA have increased 11 per cent over last year, to a total of 78,233 transactions, putting 2009 on track to finish with some of the best years on record. The average GTA house price has also increased three per cent year-to-date, to $393,180.

While it’s reasonable for sales in the first half this month to be strong as compared to the same period a year ago, when the market experienced a marked decline, such strong price recovery is particularly significant.

I discussed this characteristic of the market with the Toronto Real Estate Board’s Senior Manager of Market Analysis Jason Mercer, who pointed to affordability as an important factor.

“Average home prices recovered quickly in the GTA compared to other centres in countries like the United States because the average priced home remained affordable relative to average household incomes. As consumer confidence in economic recovery improved in the spring, home ownership demand and home prices recovered quickly.”

According to Mercer, the outlook for next year’s spring housing market is also favourable.

“Expect home ownership demand to remain strong in 2010. Market conditions will balance out next year as more homeowners react to the strong sales and price growth reported in the second half of 2009 and list their home. The average resale home price will grow at a sustainable rate next year.”

Please, do not hesitate to post your comments or questions.

You may also visit www.iSelect.ca

Toronto real estate market soaring

2009-11-12T22:24:00Z

Below is TREB President's Column as it appears in the Toronto Star.

It has been a red-hot autumn in the Greater Toronto Area resale housing market.

In the first two weeks of October, Greater Toronto REALTORS® reported 3,631 sales, a 34 per cent increase compared to the same period a year ago. The average price of GTA homes sold during this timeframe also grew, by 17 per cent, to $414,479. Condominium sales increased 23 per cent to 857 transactions, with an average price of $292,439, up 12 per cent year over year.

The average price increased most significantly in the City of Toronto while the 905 Region experienced the strongest sales volumes.

In the City of Toronto the average price climbed to $455,001, a 21 per cent increase from mid-October last year. The number of sales was up 31 per cent compared to the same period, reaching a total of 1,489 transactions. Condominium sales in Toronto increased 17 per cent from a year ago, to 589 transactions. They sold at an average price of $318,356, up 15 per cent from a year ago.

In the 905 Region sales activity soared to a 37 per cent increase over the first half of October 2008, totaling 2,142 transactions. The average price of a 905 Region home was $386,311, up 14 per cent from a year ago. Condominium transactions increased 40 per cent from a year ago in the 905 Region to 268 sales. They fetched an average price of $235,480, up eight per cent from mid-October last year.

Year-to-date sales throughout the GTA have increased six per cent over last year, to a total of 69,964 transactions, putting 2009 on track to finish with some of the best years on record. The average GTA house price has also increased two per cent year-to-date, to $389,697.

Given that a global recession resulted in a significant decline in sales activity at this time a year ago, it’s reasonable for this autumn’s sales to be strong by comparison. Substantial price gains though, are particularly noteworthy.

I discussed this characteristic of the market with the Toronto Real Estate Board’s Senior Manager of Market Analysis Jason Mercer, who pointed to the factors of supply and demand.

“Encouraged by record low interest rates and improved economic outlooks, households in the GTA have become increasingly confident in the home ownership market since the spring. With demand for resale homes rising and listings actually trending lower, it has not been surprising to see an accelerating rate of home price appreciation on average.”

According to Mercer, the outlook for the spring housing market is also favourable.

“Homeowners will react to the strong price increases experienced in the second half of 2009 and we will see the number of listings increase in 2010. I expect to see the average resale price continue to grow at a sustainable rate next year as well.”

If you’re thinking of buying or selling a home in the coming months I encourage you to talk to a REALTOR®.

You may also visit www.iSelect.ca

Does Every Generation Buy Homes The Same Way? Survey Says..

2009-11-06T06:19:00Z

Do you know of a friend or associate seeking Real Estate Advice? Click Here

Do younger Canadians think differently about buying a house than their parents or grandparents did? A recent TD Canada Trust Generational Homeownership Study set out to find out just that - and came up with some interesting results.

Young Canadians are ready to buy much earlier than their grandparents - or parents - were.

Interestingly, young Canadians aged 18-34 are more likely to feel they are financially ready to buy their first home compared to their parents and grandparents, however, it appeared that there was an increase in young homebuyers who are relying on family for financial assistance to make their home purchase a reality.

It's no surprise really, given that financial priorities have shifted over time.

Take paying off a mortgage, for example. Turns out that these days, people expect to live with a mortgage for a long, long time. When today's Canadians aged 55+ bought their first home, paying off their mortgage was a top priority. Fewer than half of young Canadian adults (49%) agree that paying off their mortgage is a top priority. But what IS significant for younger Canadians is location - almost 80% of Canadians between 18 and 34 years of age told us that where they buy is huge.

Other interesting cross-generational comparisons:

64% aged 18-34 purchased their first home in a city, 11% more than those 35-54 and 14% more than those aged 55+

Both younger Canadians 18-34 (65%) and Canadians 55+ (88%) revealed that their first real estate purchase was a house

When it came to getting a mortgage, 18-35 year-olds shop around more than their older counterparts did since 62% of older Canadians revealed they were loyal to their own bank and received financing where they were already a customer, compared to 36% of younger Canadians.

While there are plenty of differences between generations when it comes to talk about buying a house, one conclusion sticks out above the others: lessons about financing do get passed along by the older generations.To readers: What are some pieces of advice you have learned from your parents or grandparents that you have applied to you own decision making?

Regards

Silvia

LSTAR is first in North America to tackle identity fraud with voice biometrics

2009-11-06T06:06:00Z

I thought I would share this interesting article with you:

Quebec, April, 2009 - The London St. Thomas Association of REALTORS^® (LSTAR) is the first real estate board in North America to integrate a security system that uses voice recognition to protect its MLS^® data. Not only does voice recognition allow clients to counter identity fraud, but it also helps identify the fraudulent parties involved, acting as a deterrent from fraudulent practices.

In a preemptive strike against identity theft, real estate boards are looking for technology that is both affordable and easy to use. Our voice is as trustworthy and unique as a digital fingerprint. Not only is this technology used as a way to identify ourselves, our voice also offers the possibility of a superior degree of security. Voice authentication cannot be shared, borrowed, or reproduced, and all users need is their voice and a telephone.

This technology relies on the fact that vocal characteristics, like fingerprints, are unique to each person. When a member attempts to access the MLS^®, the Doorman™ verifies their identity by authenticating their voice combined with their MLS^® access code and password.

After analyzing other security options, LSTAR opted for a natural, non-intrusive technology - voice biometrics. "We selected Touchbase Doorman to protect our MLS system because it offered the most convenience for our members," says Joe Hough, President of LSTAR. "While almost invisible to those disciplined users, Doorman targets the suspicious logins. We are excited to provide our members with a practical security solution using Doorman's proven voice recognition technology." And Alain Brunel, Touchbase Real Estate Vice-President, says the timing is perfect for LSTAR’s members to take a proactive stance on identity fraud. "According to Javelin Strategy and Research*, over $56 billion was lost to identity theft in the U.S. in 2006. Data security and identity theft are major concerns in the real estate industry, requiring MLS^® organizations and brokers to implement strong authentication standards for their systems ," says Brunel. “Especially with the economic situation, it is urgent to protect non-public data. The use of our voice offers very efficient, convenient protection, and we are very happy that LSTAR has opted to use our intelligent voice recognition system for their security. Voice biometrics are affordable and easy to use."

Please feel free to let me know if you have any questions or concerns or visit my website more information.

http://www.ChoiceHomes.ca

Regards,

Silvia

Where to Buy? Many untapped areas of Toronto that are both desirable and affordable

2009-10-27T20:03:00Z

Lately many of you are wondering and asking about Toronto areas and Where to Buy? Below is the article from Treb's President's Column in Toronto Star that we talked about:

October 23, 2009 -- With Greater Toronto Area resale housing activity continuing at a strong pace, some homebuyers may view a condominium purchase as their only launching point into the market. While condo living is an excellent choice, there are also many untapped desirable neighbourhoods where great prices on single detached homes can still be found.

One such example is the area around Wilmington Park in North York. Located south of Finch Avenue and West of Bathurst Street, ‘50s era bungalows and side-splits on wide lots are prevalent in this area, which has an abundance of greenspace. Here you can find a home that is still close to central Toronto and you’ll save several thousands of dollars by not paying the premium associated with the Yonge Street corridor. In recent months detached homes in this neighbourhood have sold for $549,635 on average, that’s compared to $865,467 in central Toronto.

Along the eastern border of North York, but also still centrally located you’ll find Parkwoods - an area dominated by 60s and 70s era detached homes that are currently selling for $503,040 on average. Parkwoods runs east of the Don Valley Parkway between Highway 401 and Lawrence Avenue, offering residents the natural beauty of the Don River Valley at a lesser price than you would pay in Don Mills. Although it has a suburban feel, its proximity to the Don Valley Parkway means that you’re only minutes away from city life as well.

Offering even easier access to downtown Toronto is East York, which runs long O’Connor Drive between Pape and Woodbine Avenues. Established in 1924, East York’s growth occurred primarily between 1946 and 1961 when its housing stock nearly doubled in size. Known as Canada's only Borough (until 1998), this area features well-loved brick bungalows, increasingly being left behind by seniors and snapped up by young professionals. In recent months, a detached home in East York could be found for approximately $493,870.

The southwest section of downtown Toronto is also a popular option. Beaconsfield Village, named after former British Prime Minister Benjamin Disraeli, who was given the title of Lord Beaconsfield by Queen Victoria, has undergone extensive gentrification in recent years. This area, along with neighbouring Little Portugal, is popular with Toronto's arts community, which has gradually migrated west along Queen Street. Immediately north of this area is Dufferin Grove, a community that has been completely revitalized by improvements to its focal point, the 14-acre Dufferin Grove Park. You’ll find even greater affordability just west of this area in Brockton Village where detached homes have recently sold for $496,911. Throughout these neighbourhoods you’ll find a variety of single and semi-detached homes, which offer a fair price in exchange for some elbow grease.

Further west, in Etobicoke, you can find another gem of a neighbourhood in New Toronto. Originally planned in the 1890s as a working town near the rail lines, this area has begun to attract young professionals thanks to its proximity to both downtown and most significantly, the waterfront. Petite detached homes and cottages, currently selling for $382,750 give this neighbourhood a cozy feel.

These are just a few examples of neighbourhoods that offer affordability all within reach of downtown Toronto and I can help you to look further into it. For more information please call me: Silvia @ 416-831-1980 or visit my website: http://www.TodayBestHomes.com

First-time homebuyers love the sweet deals

2009-10-26T21:53:00Z

Here is some commentary from the National Post that talks about the Generational Homeownership Survey. I thought I'd share with you.

"Armed with two incomes, historically low mortgage rates and often a down payment from the bank of mom and dad, the first-time homebuyer has returned to save the housing market.

They have provided the critical thrust that propelled the real-estate market out of a recessionary slump, and are expected to fuel sales in the future, industry experts say.

"We do a seminar for first-time homebuyers each spring and we thought it would wane this year because of the economy," says Peter Simpson, chief executive of the Greater Vancouver Home Buyers Association. "But instead of a drop-off of registrations, we actually set a record with more than 900 young people attending a seminar.

"Because they didn't have [a home] to sell, they weren't worried about that end, and they saw that interest rates were low and there were a lot of sweet deals out there because of the economy."

Mr. Simpson also said expectations were mixed for sales of condominiums at a planned tower in the suburb of Burnaby -- in the recession some banks pulled away from financing pre-sold units -- but on the first selling weekend this month people lined up overnight and the builder sold 135 of 180 suites in the first two days.

Banks are out in force offering tantalizing deals to prospective homebuyers, dangling the carrot of ultra-low interest rates. Recently, Bank of Montreal lowered its five-year variable-rate mortgage to its lowest posted level in more than 30 years.

Meanwhile, TD Canada Trust reported in its Generational Homeownership Study this week that Canadians aged 18 to 34 were more confident about buying a home than older Canadians were when they bought their first homes years ago.

When asked what prompted them to consider buying their first home, 51% of younger Canadians said they felt financially ready. Of those aged 55 and over, 37% said they felt financially ready when they were thinking of buying their first home.

The younger generation also seems to be getting more help than their older peers did; 36% of those aged 18 to 34 said they could not have afforded their first home without getting financial help from their family, compared with 16% of those over 55.

"The re-emergence of the first-time buyers brought life back to the market," said Ross Gurney, manager of business development at the B.C. Real Estate Group of TD Financial Group. "They are the start of the food chain: You have a first-time buyer buying in the $300,000-to-$350,000 range, and those who sold to him moved up to the $500,000-to-$600,000 range."

Current marketing and advertising from various sectors in the industry is targeting the entry-level properties that are seeing the most sales, he said, those priced under $400,000. "It is very rare that you see interest rates and housing prices down at the same time. They are marketing on affordability, now is the time to buy. Interest rates are low, prices are low and Canadian banks are still actively lending and putting mortgages up."

Prices of resale homes are on the rise again but newly built home prices were still down from the previous year's price levels as of July, according to Statistics Canada. The agency recently reported that the new housing price index (NHPI) was down 3.15% in July from the previous year. The market uptick began to register in new homes that month, however, registering a 0.3% rise, the first monthly increase since September 2008.

And first-time buyers have been taking advantage, according to figures from Canada Mortgage Housing Corp. CMHC said in a recent report that first-timers account for 57% of those who are buying or intend to buy this year, the highest level of first-time homebuyers in the past three years and close to double their figure of 33% in 2008.

"First-time buyers are definitely a target because the price realignment has created an opportunity there," said Stephen Dupuis, chief executive of the Toronto-based Building Industry & Land Development Association. "After all hell broke loose last fall the only way builders could attract a buyer was to get the price as low as possible. There are also a lot of move-up buyers in the low-rise single detached-home market."

Please feel free to let me know if you have any questions or concerns :)

Alternatively you can also visit http://www.ChoiceHomes.ca for Latest MLS Listings including Bank Sales & Foreclosures Properties.

REAL ESTATE TRENDS COULD IMPACT FUTURE PATH OF CANADIAN MONETARY POLICY

2009-10-07T16:17:00Z

Below is TD article I got today and wanted to share with you all.

Highlights:

Canadian housing sales have surged, with a rush of homebuyers lured by attractive mortgage rates, leading to a rebound in resale home prices.
• Recent Bank of Canada statements
indicate that it is closely watching the housing market, expecting its recent strength to be “temporary”.
• TD Economics believes that the most likely scenario is that real estate will moderate and inflation
will remain in check, with the Bank beginning to gradually raise rates in Q4 2010.
• If real estate activity does not cool, it might prompt the Bank of Canada to tighten earlier or more aggressively than anticipated.

With the recession drawing to a close, the focus has shifted to the shape of the recovery and the implications for the eventual rebalancing of monetary policy. TD Economics believes that the most likely scenario is a gradual economic expansion in 2010, which will do little to absorb the significant slack that has developed in the form of unemployed workers and unused plants and equipment. The implication is that inflation is not a major risk next year. In fact, core inflation is expected to dip below 1% in the first half of 2010 (see TD Observation “Canadian Inflation to Remain Under Wraps” July 23, 2009). While the recovery will gain momentum in 2011, price pressures are expected to remain in check. This backdrop suggests that the Bank of Canada can deliver on its conditional commitment
not to raise rates until June 2010, and it might be able to wait until late next year to begin gradually tightening policy.

However, there are always risks to a forecast. If the economy stumbles or the Canadian dollar soars, the future rate hikes would likely be delayed even further. Similarly, should the current stance of monetary policy prove too stimulative, the Bank may feel the need to go sooner and/or more aggressively. On this possibility, we will argue that the key risk is not an unanticipated acceleration in consumer prices, but rather excessive strength in real estate from the prevailing low interest rate environment. While the Bank emphasizes that its “sole monetary policy objective is to achieve its 2% inflation target”(1), recent statements also hint that the Bank will seek to “lean” against signs of emerging asset bubbles and are correspondingly attentive to developments in home prices. The Bank’s view at the moment is that the recent resurgence in real estate is temporary, but if it does not moderate in the coming year – or worse still if price growth accelerates – it could lead to an earlier and more substantial tightening in policy than currently anticipated.
It should be stressed that the Bank of Canada targets the rate of consumer price growth and does not target asset values. However, given the risks from an asset bubble to both financial system stability and sustainable economic growth, central banks are watching closely for evidence that the current low interest rates might be too stimulative. The Reserve Bank of Australia surprised markets today by hiking rates and cited significant growth in housing credit and dwelling prices as part of the justification(2) The Bank of Canada could very well follow suit if Canadian real estate continues to heat up.

Real estate comes roaring back
The performance of Canada’s real estate markets during the economic downturn has been remarkable. In the second half of 2008, there was a dramatic pullback in sales that led to a retreat in prices. However, the weakness proved surprisingly short lived. By the Spring of 2009, there were already signs that activity was coming back to life. This is particularly impressive, as it coincided with a deep economic contraction – accompanied by significant job losses, rising unemployment and weaker personal income growth. The ‘counter-cyclicality’ reflected the fact that improving financial conditions for real estate trumped weakening economic fundamentals. The Bank of Canada’s unprecedented easing of monetary policy in response to the financial crisis set the stage for record low mortgage rates, which when combined with falling home prices, fuelled a sharp improvement in home affordability. Once people realized that the economic downturn was going to be ‘just’ a severe recession, and not a repeat of the 1930s, individuals who felt that their job was secure jumped back into the real estate market to take advantage of mortgage rates that were perceived as ‘too good to last’. At the same time, the Canadian banking system weathered the financial turmoil quite well, with the result that mortgages were accessible to the pool of buyers entering the market. The surge in sales far outpaced listings, supporting a rebound in prices. The Canadian Real Estate Association (CREA) estimate of national homes sales was up 18.5% year-over-year in August and national average home prices had increased 11.3% year-over-year.

     The key issue is whether the low interest rate environment is creating an economic imbalance that requires a rebalancing of monetary policy. There is some evidence that real estate price growth might not be as strong as it appears at face value. The CREA statistics are based on sales through the multiple listing service (MLS) and the average of prices can be distorted by the type and location of homes sold (See TD Report “A Different Look at Canadian Home Prices” November 20, 2008). These issues are tackled by the Teranet-NB House Price Index, which is calculated by using the sale prices of homes that have been sold at least once before (and using only periodically adjusted weights for the six urban centres in the composite index). The Teranet-NB measure of home prices increased for a third consecutive month in July, but prices were still down 5.1% year-over-year. However, given the strong home price gains experienced during Canada’s “housing boom” (see TD Report “Overpriced and Overbuilt” April 7,2009), this decline in values may not have been sufficient to clear past excesses in some real estate markets. Moreover, the Teranet-NB measure has its own drawbacks, the foremost being that it is lagged two months and, anecdotally, late summer sales were very strong. So, both the CREA and Teranet-NB price measure show that real estate has turned a corner, but the latter doesn’t suggest as strongly that there was a problem brewing – at least as of July.
     TD Economics believes that home sales will show some cooling in the coming months and MLS price growth is expected to return to a mid-single digit pace. First, a large number of recent sales were fuelled by pent-up demand created during the second half of 2008. At least half of that pent-up demand is likely absorbed. Second, the rebound in home prices and tighter mortgage pricing by some lenders is dampening affordability. Third, the economic fundamentals will remain weak, as unemployment will be slow to decline and personal income growth is likely to remain soft. Fourth, increasing confidence in the economic recovery and the rise in home prices is likely to induce a supply response, bringing an increase in listings that should moderate the growth in home sales and prices. This forecast will be explained at length in a TD Economics housing report to be released later this week.
     Overall, the most likely scenario is that home sales growth will moderate and home price growth will not become excessive. Recent comments from the Bank of Canada suggest that they also believe the recent strength in MLS readings is temporary.

Bank of Canada may worry if real estate doesn’t cool
     There is a material risk, however, that real estate may not cool. The persistence of extremely low mortgage rates might induce more buyers into the market and speculation could take on a greater influence. If so, the question is whether this could provoke a tightening in monetary policy, even in an environment where inflation as measured by the Consumer Price Index is at, or below, the Bank of Canada’s 2% target?
     In the past, the general view has been that changes in the benchmark policy rate are a poor vehicle for addressing sectoral imbalances, largely due to the fact that the impact of interest rates cannot be targeted and instead impact the overall economy. As Fed Chairman Greenspan expressed during his final term, asset bubbles are notoriously difficult to recognize and monetary policy was better at “cleaning” up the mess after an asset bubble had burst by providing monetary stimulus. However, in the wake of the recent financial turmoil and deep economic downturn arising from the bursting of the U.S. real estate bubble, the view of ‘cleaning’ has been questioned and many central bankers now believe that monetary policy needs to ‘lean’ against the development of asset price excesses by running a tighter monetary policy.
     Governor Mark Carney’s speech at this year’s annual Jackson Hole symposium seemed to show the belief that price stability is not enough and that financial vulnerabilities should be a consideration in monetary policy: “The combination of the central bank’s silence over the existence of a possible bubble, the certainty that it would not respond to emerging financial pressures unless they affect price dynamics over the monetary policy horizon, and the expectation that it would mop up if the bubble bursts all conspire to sow the seeds of the next crisis.” In other words, the Bank’s credible commitment to price stability has a potential “dark side” in encouraging households and firms to make “mistakes” in bidding up asset values beyond their fundamentals.
     While there are pros and cons to the ‘lean’ or ‘clean’ debate, the Bank of Canada appears to be weighing in on the ‘lean’ side of deflating bubbles before they grow too large. Of course, the overnight interest rate is still a blunt tool for this purpose, and is somewhat like using a meat cleaver when a scalpel is required. Ideally, interventions would target (either by regulatory discretion or design) particular markets where assets were becoming inflated. As Carney’s Jackson Hole speech observed, ‘counter-cyclical’ financial regulation is a preferable means of dampening the ‘pro-cyclical’ tendencies of the monetary transmission mechanism, taking the “weight off monetary policy to act for financial stability purposes”. And, it is not evident how forceful the Bank will be in adopting any leaning, since Carney’s speech contained the specific proviso that “it should not be seen as having any bearing on the current conduct of monetary policy or the prospective management of financial stability in Canada.” Moreover, “If the central bank were to lean for financial stability and miss its inflation target as a consequence, its accountability could be diminished.”

A risk to watch

The main conclusion is that the Bank of Canada will likely be watching developments in Canadian real estate quite closely. Governor Carney has expressed the view that the strength in existing home sales is “temporary”, reflecting “pent-up demand” and improved affordability.4 However, if surging existing home sales do not cool, the Bank may be inclined to respond. Governor Carney’s comments suggest that government regulatory actions are preferable to monetary policy action to address sectoral imbalances, but given that the overnight rate is at a mere 0.25%, there is a significant risk that the Bank might lift the overnight rate to help temper real estate activity. And, the response could come while inflation is still below target. While housing replacement and mortgage interest costs are included in the CPI, their impact is very lagged (see TD Observation “Mortgage Interest Costs and Canadian CPI” March 25, 2009) and their weight in the CPI is modest. Again, the base case economic forecast does not anticipate that hot real estate markets will force the Bank of Canada’s hand, but it is a risk worth closely monitoring.

attached is the full article in pdf format.

HST Tax - No Sense of Harmony

2009-09-28T16:02:00Z

I wanted to share with you this article by Tom Lebour is President of the Toronto Real Estate Board:

Starting July 1, 2010 Ontarians can expect to pay a harmonized sales tax (HST) rate of 13% on a long list goods and services that were previously exempt from the 8% Provincial Sales Tax (PST). While the impact of the tax will be felt by all Ontarians, the province’s 3 million homeowners and the thousands who buy and sell a home every year will be hit particularly hard by this latest tax grab. As real estate professionals, REALTORS® know how important the dream of homeownership is to Ontario families.

Unfortunately, thanks to the forthcoming HST, that dream is going to become much more expensive. After July 1, 2010, every residential real estate transaction in Ontario will face a significant tax increase. Specifically, home buyers and sellers can expect to pay 8% more on legal fees, appraisals, real estate commissions, home inspection fees, moving costs and the provincial government’s forthcoming system of mandatory home energy audits.

According to the Ontario Real Estate Association (OREA) Ontarians will pay, on average, an additional $1,449 in new taxes on their next residential real estate transaction. If it’s not bad enough that the new tax will increase the cost of buying a home, then consider the impact on the costs of owning and living in that home after it’s been purchased.

Specifically, a HST will add hundreds, potentially thousands of dollars in additional tax on utility bills, such as gas, electricity and home heating fuel, on home renovation labour, the cost of lawn upkeep or landscaping and the cost of snow removal.

Moreover, a HST will increase the cost of living with 8% more tax on gasoline, personal and professional services, meals under $4, dry cleaning, cab fares, magazine subscriptions, plane tickets, vitamins and cell phone charges. When added together, the impact of a HST on Ontario family’s disposable income will be considerable. In short, a HST will reduce the people of Ontario’s quality of life by taking more of their hard earned money. While the Government of Ontario plans to compensate homeowners by offering sales tax transition cheques and modest income tax reductions, these measures will in no way offset this new tax. A onetime payment of $1000 (for a family of four) and a modest $368 reduction in income taxes will do very little to offset the burden of an 8% tax increase on a litany of items in perpetuity. Certain basic needs, like groceries, prescription drugs, and children’s clothing, would be exempt from the new tax. U

nfortunately, the provincial government is not proposing to provide a similar exemption for home purchasing costs. Having a roof over one’s head is about as basic as needs get, and the government should recognize this by ensuring that the costs associated with purchasing a home are exempt from the new tax. Help oppose this latest tax grab" Fight the Tax, write to your MPP.

Visit http://www.ChoiceHomes.ca for more real estate info & latest listings including Bank Sales, Foreclosures and Distressed Properties.

Housing toughest sector on the block

2009-07-17T13:52:00Z

Recovery 'amazing'

Alia McMullen, Financial Post Published: Wednesday, July 15, 2009

Canada's housing market has become so much more grounded since the ugly property bust of the last recession that this time around it is one of the most resilient sectors of the economic downturn.

The lessons learned from the housing bust of the early 1990s helped prevent Canada from being tempted down the subprime path that devastated the United States and, combined with record low interest rates and government stimulus, has caused the impact of the latest slump to be less severe and relatively short-lived, figures released yesterday underscore.

"The turnaround in Canadian housing this year might be the single most surprising turnabout we've seen in any economic indicator I can think of," said Douglas Porter, deputy chief economist at BMO Capital Markets. "The fact we saw a little bit of a rebound isn't a total shock, but the extent of it is nothing short of amazing."

Sales of existing homes in June were up a seasonally adjusted 8.7% from the previous month, marking a fifth straight increase, Canadian Real Estate Association figures showed yesterday. Sales were 17.9% higher than a year earlier. Resales activity rocketed along at a record pace in the second quarter, surging by 31.5% from the first quarter of 2009.

Mr. Porter said the results were "galaxies away" from the yearly decline of about 40% registered at the start of the year.

Millan Mulraine, an economics strategist at TD Securities, said record low mortgage rates were a key difference between the housing bust of the 1990s, when interest rates were on the increase. The shock, the recovery from which took a decade, resulted in Canada introducing tighter lending standards, which helped prevent house prices becoming too overblown prior to the U. S. subprime crisis.

Mr. Mulraine said that while the house prices, sales and construction suffered along with the rest of the recession-struck economy this time around, the market's relatively stable condition and the relative health of Canada's banking sector created an opportunity for home-buyers to take advantage of record low interest rates, more affordable prices and government stimulus.

The rise in sales activity as well as a drop in new listings have caused the inventory of unsold homes to fall to 4.2 months of supply -- the lowest level since August 2007 and well below the peak of 12.8 months hit at the beginning of the year.

"Inventory levels are still high in many markets, but fewer new listings and rising sales activity suggests that the selection of homes available for sale may shrink as the year progresses," said Gregory Klump, the chief economist at CREA. "The supply of homes up for sale needs to be drawn down further before average price increases become more widespread among local markets."

The average price of homes sold in the month was up 1.7% from a year earlier, skewed higher by rising demand in markets such as Toronto and Vancouver.

Mr. Klump said monthly sales activity would likely not continue on an unbroken rise, but activity in the second half of the year would "meet or surpass" the results of the first half.

Other sectors of the housing market have also registered improvements. Figures from the Canada Mortgage and Housing Corporation showed last week the seasonally adjusted annual rate of housing starts rose 8% to 140,700 in June, while Statistics Canada building permit figures showed construction intentions rose 14.8% in May. RE/Max data showed sales in both Toronto and Vancouver set new record highs for June activity.

Michael Polzler, the executive vice president of RE/MAX Ontario-Atlantic Canada, said the recent surge in resale activity was due to a combination of pent-up demand as a result of the hit to activity at the beginning of the recession with record low mortgage rates and better affordability.

He said recent buyers had been lucky to snap up some of the best real estate deals in years, with conditions now beginning to favour sellers.

For more information call Silvia @ 416-831-1980

Real estate deep freeze now hot thaw

2009-07-14T20:24:00Z

July 14th, 2009

Toronto’s existing home market surprised economists with a better-than-expected resurgence in June

Tracy Hanes – Toronto Star

Remember last winter when the Toronto Real Estate market pulse could barely be detected?

The patient is not only recovering, but appears to be returning to robust health, according to five of top Toronto real estate brokers and marketing consultants.

There was plenty of optimism at a recent round table discussion the Star held with these experts, who shared their views during a candid and wide-ranging discussion on the current state of the Toronto real estate market.

The participants included moderator Barry Lyon, senior partner and president, N. Barry Lyon Consultants Ltd., and panellists Barbara Lawlor, president of Baker Real Estate Inc.; Debbie Cosic, partner in In2ition Realty; Michael Wilson, principal of International Home Marketing Group Ltd.; and Andy Brethour, president of PMA Brethour.

All agreed that December, January and February were “a deep freeze” for sales as Lawlor described it, but since then, sales have picked up. In fact, she pointed out, sales in May and early June have outdone May and June of 2008, according to Toronto Real Estate Board figures. And the average price for an MLS resale home was $407,716 according to TREB, up by 2% compared to last year.

“Let’s put in it perspective,” said Lyon. “New homes sales down about 60% for the same period – why are resales so hot and why are new sales lingering somewhat?”

“The biggest difference is the vendors in resale are flexible,” said Cosic. “They listen to their clients, they listen to the marketplace . . . the new (home) clientele is sometimes not as flexible.”

Cosic said recently, there has actually been a short supply of listings, and many people listing are getting 95% of their asking price.

Comment: Actually, in many areas the average price is over 100% because there are so many bidding wars. Some neighbourhoods see multiple offers on almost every new property. I would be surprised to see selling prices under 98% of list.

“If it’s sharply priced, people are coming in and bidding up,” added Wilson.

Developers don’t have the ability to respond as quickly as resellers in dropping, said Wilson, because if they have sold a large number of units that under construction, “they have to make sure they don’t devalue investment past purchasers have made, so they are not about to tamper with price list.”

Brethour said in every recession, the consumer moves to certainty and that’s what the resale market offers: “It’s the seeing and believing, the touch and feel, being able to close in 60 days or 90 days.”

And while the resale market may have been quicker to respond, that doesn’t mean new home and condo builders aren’t willing to compromise.

“I have never seen developers so eager to make deals and negotiate as they are now,” said Lawlor.

“We hit a reset button and have had to reset our packaging, our product, our pricing. You can reset much faster in resale,” said Brethour.

First-time buyers are leading the market, they said, spurred on by record low interest rates and the greatest affordability of the last decade.

“I think right now is first-time buyer paradise. We have droves of first-time buyers coming into our sales offices, along the Sheppard corridor, anywhere there is a subway and what we find is if we send 20 people a week to get qualified, maybe 10 of them are going to come back qualified,” said Lawlor.

“There’s a great desire for home ownership, not necessarily the pocketbook to make the deal happen. The first-time buyers are driving the market at the moment.”

What’s not going over as well, she said, are luxury condos, and her firm has had to turn to overseas buyers.

She also said mid-range builders are the ones most eager to offer incentives currently.

Wilson described the downturn as a “millionaire’s recession” saying “they were the ones who lost all their money in the stock market and that’s why higher end is affected.”

Affordability is key to be successful in the current market, the panellists said. Some lowrise builders have introduced new smaller, streamlined homes that have been popular while condo projects will also likely get smaller, with fewer amenities.

Toronto condos will continue to be an integral part of the market, the brokers agreed.

“What I’m seeing happening is consumer acceptance of the lifestyle, whether it’s 416, 905, Toronto condos have arrived like you can’t believe,” said Lyon.

What the panellists have found is that a lot of owners are not Canadian-born and come from countries where highrise living is a normal way of life. The continuing large influx of new immigrants, many of whom are committed to home ownership, will help to fuel the Toronto condo market.

Incentives offered by developers, despite being rather modest in some cases, have also helped produce a flurry of sales.

The panelists also talked openly about “something we often tiptoe around,” Lyon said – that’s investor buyers. He said no one is exactly sure how many there are, but there is general agreement they make up 25% to 30% of the Toronto condo market.

“We had a launch two weeks ago in the pouring rain and we had people sleeping outside overnight,” said Cosic. “They were predominantly investors, who were South Asian, Korean, Eastern European. They are not that sophisticated, they are not people who deal in the stock market, they have had 10 years in a good economy and have some money saved away. They are good, long-term investors.”

Wilson agreed. “They are not high rollers, they are not playing with disposable income, this is real money they’ve saved and they are not going to walk away. This is an investor who is going to close.”

Despite the high number of new condo units, the five were confident that Toronto can continue to absorb the numbers of suites that will be ready for occupancy now through 2011.

Brethour pointed out that no rental housing stock of any consequence has been built since rent control came in during the 1970s – and with 100,000 new immigrants arriving in the GTA each year, rental condos are needed. The rental market can easily absorb these units and Lyon pointed out that while the vacancy rate among traditional units is 3%, it’s less than half a per cent for rental condos, which command higher rents.

The panellists had their doubts about the feasibility of three-bedroom family units in condos, promoted by city councillors like Adam Vaughan.

“We introduced 30 units in Mississauga with Daniels (Corp.) and didn’t get the feeling that there’s a tremendous appetite for it,” said Lawlor.

“Even though we get families coming in to sales offices in droves, it’s not because they are going to live there with little kids, they are usually there to support a family member.”

Cosic said nonetheless, more condo projects are including family-friendly amenities.

Wilson said a three-or-four bedroom apartment-style condo in the city costs $400,000 to $500,000 “and that opens up a lot of opportunities in the suburbs.”

Highrise living is not particularly conducive to family living, they said, but what they did feel would be a popular trend was stacked houses and condo townhouses, catering to families who want ground-oriented housing.

Not only market demand will drive this trend, said Brethour – because highrise developers will have more challenges getting financing, they will look to less costly projects that can provide almost the same densities.

Because of the scarcity of serviceable, lowrise land in the GTA, there will be more intensification in the 905 to keep product affordable.

The topic of municipal development charges brought groans.

“The same governments that are encouraging us to build more efficiently are taxing the bejesus out of multiple family housing,” said Lyon. “We’re paying for all that sprawl, parks, schools, aging pipes in the ground. Developers are being made to pay through the nose to support the lower density housing habit.”

Indirect taxes have a huge impact on buyers, all agreed. Wilson said that drives people either to resale or to areas outside of the GTA.

The panellists said Toronto’s market cannot be compared to others such as Calgary or Vancouver, as this city did not see the wild price jumps.

What also bodes well for consumers, they said, is the choice for the consumer, with 320 new sites in the city and GTA, ranging from urban to suburban, small and large.

“We’ve been bombarded by CNN and other publications about how the bad recession is and it’s not that bad,” said Wilson.

“It seems to be in a V-shaped recovery and we need to stabilize people’s thinking, need to get good news out there.”

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Contact Silvia for more information - 416-831-1980

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