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Market Review – June 2017

July 7th, 2017 Posted by Market Review No Comment yet

The Toronto Real Estate market continued to moderate in June. The first point to note is that the average sale price was up 6.3% over June, 2016. Somehow, TREB’s HPI was up 25.3%, which may indicate that the unweighted average was brought down by a higher proportion of sales at the lower end of the market (e.g. condos: in June 2016 about 24% of sales were condos; last month is was closer to 30%). Over the last 12 months, the average price of a detached house was up about 10.2%, and the average price of a condo was up about 23%.

Of course, the louder news is that prices are down from earlier in the year. That’s no surprise, given the severity of the price spike in the first quarter – and, again, it’s a good thing. The market cannot sustain price increases in the 20-30% range. A bit of a pull-back was in order. As for the causes, who knows? Some speculate that it’s because of the 15% foreign buyers tax. Foreign buyers were such a small part of the market (maybe in the range of 5%…?) that it’s hard to say if enough of them have backed out of the market to have a measurable impact. Maybe it’s just buyers taking stock and getting the new lay of the land before proceeding. Or, maybe it’s just the usual spring surge in listings taking the pressure off price escalation. Either way, the market has been unsettled for a few months.

Still, it has been good for buyers – although fewer buyers took advantage of these more favourable conditions. The number of sales was down 37.3% from 2016, to just 7974 (and keep in mind that year-over-year the average sale price was up 6.3%). Those buyers had greater selection: the number of new listings was up 15.9% and the total number of available listings at the end of the month (19,680) was up 59.6%. For reference, the number of available listings in June 2007 was 21,789 – and that was down from 25,393 the year before! The current supply is up over last year, but we are still well below historical supply levels.

The market is not “correcting” in the sense that prices are going to go down below previous years. It’s leveling out. *BUT* these conditions won’t last. The Canadian economy is strong, and job creation is at its quickest pace since 2010. With interest rates set to rise, buyers will want to move quickly to make a purchase and secure as low an interest rate as possible. That’s going to fuel a surge in buying. What that will do to prices remains to be seen. Getting back to 5-10% annual increases would be great – healthy, great for investing, but also sustainable.

I think that sellers should hedge their bets and try to sell into this summer market. Things are going to pick up soon, and you don’t want to miss your buyer. Sure, prices may firm up through the second half of the year, but we’ve seen the top prices for 2017 already. Whatever we see for the rest of this year will be up from last year, but probably not by much. And buyers really should get out there and make their purchase ASAP. Whatever prices do, I doubt that the selection will get much better than it is now. The best time to buy is when nobody else is (or few others are) buying – that’s when you can make your best purchase. Lock in a great rate before they start rising.

The bottom line is: don’t miss your chance!

2016 Market Review – and a look ahead at 2017

January 17th, 2017 Posted by Market Review No Comment yet

2016 was a big year in Toronto real estate. For the second year in a row, TREB reported a record number of sales. Despite the volume of available listings shrinking, the number of sales hit 113,133 units, an 11.8% increase over 2015. The natural consequence of that is higher prices.

December was a prime example. Available listings were down 48.1%, to just 4,746 (from 9,137 in December, 2015), which TREB noted was the lowest inventory in 15 years. The number of sales reported to TREB in December was up 8.6% to 5,338 (from 4,917). Those tight market conditions drove up the average sale price 20% year-over-year, to $730,472 (from $608,714).

The average increase for the whole year was slightly lower, at 17.3%. However, the average sale price was basically the same, $729,922.

Note that the condo market, which not so long ago was reputed to be ‘over-built’ and primed to ‘crash’, has become the alternative of choice for an increasing number of buyers. Condo sales in the 416 were up 19.5% last month, with the average sale price up 16.6%. With an average sale price of $466,592 for a condo apartment, it’s easy to see why. (Condo townhouses are somewhat more expensive, at $569,864.) In fact, if anything, we may run into an ever-tightening condo market this year….

There’s no reason to expect anything different in 2017. Toronto is still a destination city, and the population keeps growing. CMHC is raising its premium on March 17th, so it will cost a bit more to buy if you can’t put 20% down (which means most first-time buyers), but that’s not likely to change overall market conditions. Mortgage rates may edge up a tiny bit, but they are super low these days and not expected to rise significantly in the next couple of years. That probably won’t be a factor in the Toronto market this year. The feds have tightened general mortgage qualification rules several times in recent years, and that does make it harder for first-time buyers, but I doubt that will affect the rate of sales and/or price increases. The bottom line is that the market is strong, and there’s no point waiting for a ‘correction’: get out there and buy.

And, yes, it’s easy to sell in this market, and harder than ever to buy. Still, more people are buying than in past years, so it’s not impossible! One has to get active, get out there and get shopping to find the right place. Don’t be put off by all the hoopla. Whatever you need, we’ll find it! 😉

Toronto Real Estate – What’s going to happen in 2014?

January 13th, 2014 Posted by First-time buyers, Interest Rates, Market Commentary, Mortgage No Comment yet

Twenty-fourteen is shaping up to be another great year for the Toronto real estate market. As I have said many times before, Toronto is unlike other markets. It drives me nuts when people talk about the ‘Canadian real estate market’, as if trends in smaller cities and towns have anything to do with Toronto. Our economy is diverse and our population continues to grow, so there’s no mystery as to why residential real estate prices also keep growing. Of course it makes sense that the real estate market here is out-pacing many markets elsewhere in the country. How could it not?

Add to the picture this year the improving US and global economies. The jobs numbers that came out last week in Canada (net losses) and the US (weaker than expected growth) show that the ‘recovery’ is still, well, in recovery. However, there is a growing sense of inevitability that the US will finally show some upward momentum this year. Even Europe seems to have stumbled towards stability. As the American economy grows, so do Canadian exports, which will give a boost to our own mostly-stable, but slow-growing, economy. Once real growth kicks in we’ll be in for a few good years. (How many is anybody’s guess. This C.D. Howe report indicates that the pre-recession growth cycle was 16 years. We should be so lucky this time around!)

Another major factor this year is interest rates. I think that we are probably still on course for flat rates this year and into next. Even when rates do start to rise, they’ll most likely rise slowly, so as not to jolt the economy. We’ve got another few years of near-record low rates ahead of us. (My first mortgage, in 2001, was for 8.9% – more than double current rates – which was considered a great deal in those days. Perspective is important!)

The supply shortage that has been a feature of the Toronto market since late 2008/early 2009 has yet to ease. As a full-time, professional Realtor I spend a lot of time talking to other agents. As we start 2014 there is a continuing urgency among my colleagues to find homes for our buyer clients. The view ‘on the ground’ is that tight supply will continue to drive prices up, particularly for single family homes and small income properties. I believe that it’s safe to expect a 5-7% year-over-year increase in 2014.

On that latter note, specifically, I continue to encourage my clients, especially first-time buyers, to consider an income property. In the short term, the income will help you afford not only the purchase (assuming you live there, which is an important factor), but a decent lifestyle. If kids are in the plan, or even if you just want more privacy down the road, you can keep the income property and use the equity to move on at some point. Not surprisingly, though, duplexes and triplexes are in high demand/low supply. It’s not a slam dunk, but it’s definitely worth thinking about.

Mortgage rate tip: one of the big bank mortgage pros that we work with told a group of Realtors last week that he expects a mortgage rate ‘sale’ some time in February or March. It has happened in each of the last few years, so he thinks it will happen again. Watch for it, and if you are in the market, try to nail down an interest rate deal before the busy spring market. 

September 2013 Market Review

October 3rd, 2013 Posted by Market Review No Comment yet

Today TREB released the sales statistics for SeptemberAs I noted recently, sales activity has been up significantly this year, and September continued that trend: sales volume was up 30% over September, 2012. At the same time, the number of both new and active (total) listings were down. That led inevitably to higher prices, which climbed 6.5% year-over-year. 

Interestingly, while the number of active listings in September (20,194) was higher than August (18,788), the number of sales was lower (7,411 sales in September after 7,569 in August). So, the seasonal increase in listings has begun, but not to the satisfaction of buyers. As I’ve said for years now, buyers make the best decisions for their circumstances (budget, location, etc.), and won’t over-pay for a property that doesn’t offer them the value they are looking for. Buyers are still ‘picky’ – and rightly so. The message to sellers? Properly prepare your property for sale (declutter, clean, complete minor repairs, paint, etc.), and price to market! Don’t just assume that because it’s a ‘hot’ market you’ll get your price.

As has been widely discussed, an important factor driving the real estate market is super low interest rates. We’ve known for some time that rates would stay low through 2014, and perhaps beyond. According to this article, one major Canadian bank expects low rates all the way to 2016. That’s good for home owners, investors, renovators, etc.

Overall, the key point is that there is still lots of pent up demand this year- just as there has been since the recession ended – and low interest rates to help keep prices affordable. October will be another strong month for sales and price appreciation. In fact, we could see the ‘fall market’ steam on through November – especially if the weather holds up. All in all, whether you want to buy or sell (or both), this fall is going to be a great time to do that. Call me now and let’s get started!

November-December 2012 Market Review

January 8th, 2013 Posted by Market Commentary, Market Review No Comment yet

With the month of December being chock-a-block with seasonal activities (including a couple of birthdays in my family), I neglected to post about November market activity, so I’m combining November and December. 🙂

November

November was not a super-busy month. Sales activity (volume) added up to 5,793 units sold, down 16% from the previous year. Prices were up about 1.6%, which I read as basically flat. Of note, TREB’s Home Price Index, which compares like house types (thus minimizing the effect of having more or fewer million-plus sales to influence the average) was up 4.6%. That 4.6% is meant to be the more reliable indicator.

November is busier than December, but by about half-way through, attention starts to shift to the rapidly approaching holiday season, and the real estate market starts to tail off. That said, I took a new listing in the last week of November; it sold in 11 days!

December

Typically a quiet month, December saw 3,690 sales, down a fair bit from the 4,585 reported in  December, 2011. However, the average sale price was up 6.5%, which is good – up enough to show some capital appreciation (after inflation), but not so much as to stretch affordability.

The number of active listings declined significantly from 18,311 to 13,241 in December. That’s most likely due to the season. While November saw 9,838 new listings, December had only 4,295 as many Torontonians turned their attention to Christmas, New Year’s Eve, etc. With the market slowing for the season, and with kids off school, some soon-to-be sellers keep their house off the MLS until the New Year. Plus, some un-sold houses simply go off the market for the month. This tightening of supply always means that the good houses that are on the market get plenty of serious attention from active buyers, so those listings sell (like 9 Gowan Ave). Overall, it puts a bit of pressure on the buyers!

TREB reported that the average sale price in Toronto was $497,298 in 2012, up about 7% from 2011. I’d say that stands in stark contrast to the (many, many) dire predictions for the Toronto real estate market produced by various prognosticators last year. (By contrast, I said this a year ago: “The market is ‘hot’, and will stay that way for the foreseeable future.” Read the whole post here.) I don’t feel like we are being bombarded with negative news now. Maybe those ‘experts’ are getting tired of being wrong. 😉

2013

Watch for some houses that were taken off the market in December to be re-posted in the coming weeks. Other houses, perhaps belonging to folks who bought in late November or December, will be brand new listings. Still others will be just a part of the continuous cycle. Either way, we’ll see a gradual increase in the supply of available listings over the next few weeks and into the spring, when I expect things to really pick up.

If the public mood moves past the general negativity we’ve experienced in the last couple of years, we’ll be back to a strong real estate market in Toronto – which in my books means increased supply to help keep the pressure off prices. Interest rates aren’t going anywhere until the end of next year, maybe later. That will help with affordability in the short-to-medium term, and if the average Canadian heeds the warnings of the government and central bank and pays off some debt while debt is cheap, we’ll all be ready for the inevitable (and likely gradual) rate increases after that. In short, I’m expecting another good year for Toronto real estate.

By the way, check out my Facebook page, where I regularly post interesting bits of information, links, etc. The media, which loves the doom and gloom, has actually produced a few relatively balanced reports about the year ahead, some of which you’ll find there. Plus, if you are not already following me on Twitter, do it now!

Home Buyer Tips – Fall 2012

September 18th, 2012 Posted by First-time buyers, Market Commentary, Mortgage pre-approval No Comment yet

I have written before about home buyer tips, but felt the need to update for the current market. Conditions in the Toronto real estate market change from month to month, season to season, and year to year. We are just getting started with the fall market for 2012, and it’s important to be tuned in!

There has been some debate here at RE/MAX Hallmark about whether conditions merit doing a ‘hold-back’ on our listings – i.e. setting an offer date that’s a week after hitting the MLS. With the usual negative commentary in the media and ever-tightening mortgage rules, the question is whether or not there is enough demand to justify that approach. Based on what we have seen this week (numerous multiple offer sales), I think there is. Supply is still tight and there are plenty of buyers out there (many looking to re-locate within the city). Prices are up over last year, so there’s no reason for sellers to worry; with some luck, we’ll get the supply we need to bring some liquidity back to the market.

This early in the season I won’t say that it’s a seller’s market, per se, but it does appear to be a stable-to-strong market. Buyers have to be prepared to take action when they find a house they want. For you first-time buyers (and those of you who haven’t done this in a while), there’s lots that you need to know – not just about the market, but about the process. We’re not talking rocket science here, but almost every purchase or sale has something unique about it. Knowing the basics will help you to prepare yourself for your experience.

The following is by no means a comprehensive list; rather, it’s sort of a “Top 5” – or better yet, a “First 5” things you should know:

1) Be an educated Buyer. Learn as much as you can about the market before you buy. (I help all of my clients with this stage – and by reading this you are off to a great start!)

2) Be honest and open with your Realtor®. I work for you and can best help you if I have a good understanding of your needs. Once I know your needs, my job is to be your objective guide in the process, and to ensure your needs and interests are met and protected.

3) Get pre-approved for your mortgage as soon as possible. This helps you to determine your budget, and locks in today’s best rate for you. I’ll refer you to a few mortgage professionals, if you want. You speak to them all and pick the one you think is the best fit for you.

4) Buy the best home you can afford in the best neighborhood you can afford. You are almost always better off with the least expensive home in the area rather than the most expensive. That said, I strongly recommend that you be conservative with your budget.

5) There are no perfect homes. Be ready to make compromises and concessions. Know what’s most important to you and ‘give’ on those things that aren’t.

There you have it: five basic principles to get you started on your new home search. Be sure to visit my blog again for more tips, check out my Facebook page, follow me on Twitter – and please do call me if you want more help!

Toronto Land Transfer Tax Approved

October 31st, 2007 Posted by Interest Rates, Market Commentary, Toronto Land Transfer Tax, Toronto Real Estate No Comment yet

Details of Approved Toronto Land Transfer Tax

Toronto City Council has approved a municipal land transfer tax that will be levied on top of the provincial land transfer tax. The Toronto Real Estate Board worked very hard to oppose this tax and commends the efforts of REALTORS® on this issue. TREB took a strong position to oppose this tax as unfair in principle and refused to compromise. As a direct result of this strong position, City Council was forced to make a number of amendments to the City’s original proposal, including rebates for first-time buyers, a reduced rate, and grandfathering for existing transactions.

The City has not yet provided detailed information on administration or implementation issues. The following is based on currently available information.

What was approved by City Council? A second land transfer tax, on top of the provincial land transfer tax, at the following rates:

Residential:

0.5% of the amount of the purchase price up to and including $55,000
1% of the amount of the purchase price between $55,000 and $400,000
2% of the amount of the purchase price above $400,000
Commercial / Industrial / Etc.:

0.5% of the amount of the purchase price up to and including $55,000
1% of the amount of the purchase price between $55,000 and $400,000
1.5% of the amount between $400,000 and $40 million
1% of the amount above $40 million
When does this take effect? February 1, 2008.

Are existing transactions grandfathered? Yes. Any transactions where the purchaser and vendor have entered into an Agreement of Purchase and Sale for the property prior to December 31, 2007 will be rebated the full amount of the Toronto land transfer tax. The City has not yet provided clarification on how rebates will be administered. If your clients have concerns, they should check with their lawyer. Once the City of Toronto provides clarification, more information will be provided.

What about Agreements of Purchase and Sale signed after December 31, 2007 with closing dates before February 1, 2008? Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing before February 1, 2008 will not be required to pay the Toronto Land Transfer tax.

What about Agreements of Purchase and Sale signed after December 31, 2007 with closing dates on or after February 1, 2008? Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing on or after February 1, 2008 will be required to pay the full Toronto Land Transfer tax.

Where does this apply? The Toronto land transfer tax only applies to transactions within the City of Toronto. This does NOT apply to property transactions outside of the City of Toronto.

Are first time home buyers affected? First time home buyers of new AND re-sale homes will receive a rebate of the Toronto land transfer tax of up to $3,725 (this equals a 100% rebate on homes purchased for up to $400,000). The City has not yet provided clarification on how rebates will be administered. If your clients have concerns, they should check with their lawyer. Once the City of Toronto provides clarification, more information will be provided.

April 2007 Newsletter

April 15th, 2007 Posted by eNewsletter, Interest Rates, Market Commentary No Comment yet

April ’07 was the busiest month in the history of the Toronto Real Estate Board, with 9,452 sales recorded. As active as the market is, and with quite a bit of attention being paid to ‘bidding wars’ and sale prices tens of thousands of dollars over asking, it’s interesting to note that the year-over-year price increase was just 3%. Buyers, watch for unusually low list prices: they’re usually pegged to generate competition! If it looks too good to be true, it probably is!

Be Prepared to Make an OfferShopping for a house in a market this busy can be stressful. On many nights, lots of bidders are going home empty-handed. However, many buyers are wizening up to the low price strategy, and are waiting in the wings to see what happens on offer day. If nobody else steps in, they wait a day or two then make their move. This has resulted in some buyers making a good purchase, but has also been leading to competition 2 or 3 days after the scheduled offer night. If you are interested in making an offer, but don’t want to get buried in competition, be ready to go on offer day. If nobody else shows up (or just 1 or 2 others), you have a good chance of purchasing the house that night. If you wait too long to see what happens you may miss out!

Interest Rates May Rise

Canada’s economy continues to steam ahead. Job creation is great, GDP growth is steady, housing permits are up, and interest rates are still low. However, concerns about rising inflation may lead to a Prime hike, which will likely lead to Mortgage rate hikes. Most borrowers can still get an interest rate around 5% – through a Mortgage Broker – but that probably won’t last long. If you’re in the market for either a new mortgage or a mortgage renewal, make sure you shop around! I work with 3 Mortage Broker companies. Call me if you would like a referral to speak with one of them about your options.