As Long as Interest Rates Stay Low, Toronto continues to be a Hot Market with 3.5% Average Selling Price Increase

Two days ago, according to Toronto Real Estate Board (Treb), Greater Toronto Area (GTA) REALTORS® reported 10,182 sales through the TorontoMLS system in May 2013, representing a dip of 3.4 per cent compared to May 2012.Sales of single-detached homes in the GTA were up by almost one per cent compared to the same period last year, including a three per cent year-over-year increase in the City of Toronto.

“The sales picture in the GTA has improved markedly over the past two months.While the number of transactions in April and May remained below last year’s levels, the rate of decline has been much smaller.A growing number of households who put their decision to purchase on hold as a result of stricter lending guidelines are starting to become active again in the ownership market,” said Toronto Real Estate Board President Ann Hannah.

The average selling price for May 2013 sales was $542,174 – up by 5.4 per cent in comparison to $514,567 in May 2012.The annual rate of price growth was driven by the tight low-rise segment of the market and particularly by single-detached and semi-detached home transactions in the City of Toronto.Average condominium apartment prices were also up slightly in comparison to last year.

“The annual rate of price growth in May was not surprising given the competition that still exists between buyers, particularly for low-rise home types such as single-detached and semi-detached houses.We remain on track for a three-and-a-half per cent increase in the average selling price for 2013 as a whole,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

Bank of Canada maintains overnight rate target at 1 per cent

The Bank of Canada announced yesterday, April 17, 2013, that it is maintaining its target for the overnight rate at 1 per cent.
The Bank of Canada has held the benchmark interest rate at 1% for nearly three years running and despite record household debt, a crumbling eurozone and slowing growth in China, there’s still no sign that’s going to change any time soon.
Interestingly, the Governor of the Bank of Canada has been hinting for more than a year that the next rate move will be up even as the outlook for economic growth has grown increasingly gloomy — leading some observers to predict that in fact a downward shift is more likely.

Home Prices at 3.8% Up at the End of March

Year - Over - Year Summary

                                                    2013               2012             %Chg

Sales                                            7,765              9,385           -17.3%

New Listings                             14,728            16,191             -9.0%

Active Listings                          18,384            16,920              8.7%

Average Price                        $519,879       $500,875              3.8%

Average DOM                             24                  21                  13.8%

TREB's (Toronto Real Estate Board) Average price forecast for 2013 remains at $515,000.00, representing a 3.5 per cent annual rate of growth.

March Sales Numbers and Current Market Conditions

Greater Toronto Area REALTORS® reported 7,765 transactions through the TorontoMLS system in March 2013 – down 17 per cent compared to 9,385 transactions in March 2012. While the year-over-year dip in March sales followed the trend that has unfolded since mid-way through 2012, it is also important to note that the Good Friday holiday was in March this year versus April in 2012. Generally speaking, there are fewer sales reported on statutory holidays and weekends.

In the first quarter of 2013, sales amounted to 17,678 – down by 14 per cent compared to Q1 2012.
"Home ownership remains affordable for a household earning the average income in the Greater Toronto Area.There are many willing buyers in the marketplace today.While some households have put their decision to purchase on hold as a result of stricter lending guidelines or the additional Land Transfer Tax in the City of Toronto, other households simply haven’t been able to find the right house due to a shortage of listings in some market segments," said Toronto Real Estate Board President Ann Hannah.
The average selling price in March was $519,879 – up by 3.8 per cent compared to March 2012. The average price in Q1 2013 was $508,066 – up by 3.2 per cent compared to the first quarter of 2012.
"The average selling price and the MLS® Home Price Index Composite Benchmark was up on a year-over-year basis across most home types, especially in the low-rise market segments where supply remains an issue.TREB's average price forecast for 2013 remains at $515,000, representing a 3.5 per cent annual rate of growth," said Jason Mercer, TREB's Senior Manager of Market Analysis.

February Sales Down 15% but Average Price is Growing

Today, March 5, Toronto Real Estate Board released the February Resale Housing Figures.
Greater Toronto Area (GTA) REALTORS® reported 5,759 sales through the TorontoMLS system in February 2013 – a decline of 15 per cent in comparison to February 2012. It should be noted that 2012 was a leap year with one extra day in February. A 28 day year-over-year sales comparison resulted in a lesser decline of 10.5 per cent.
The average selling price for February 2013 was $510,580 – up two per cent in comparison to February 2012.

“The share of sales and dollar volume accounted for by luxury detached homes in the City of Toronto was lower this February compared to last. This contributed to a more modest pace of overall average price growth for the GTA as a whole,” said Toronto Real Estate Board (TREB) President Ann Hannah.

“Stricter mortgage lending guidelines that precluded government backed mortgages on homes sold for over one million dollars and the City of Toronto’s additional upfront land transfer tax arguably played a role in the slower pace of luxury detached home sales,” added Ms. Hannah.

The MLS® HPI Composite Benchmark price covering all major home types eliminates fluctuations in price growth due to changes in sales mix. The Composite Benchmark price was up by more than three per cent on a year-over-year basis in February.

“We will undoubtedly experience some volatility in price growth for some market segments in 2013. However, months of inventory in the low-rise market segment will remain low, resulting in average price growth above three per cent for the TREB market area this year. Our current average price forecast is $515,000 for all home types combined in 2013,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

2013 Experiences a Good Start Though Land Transfer Tax continues to be a Burden in Toronto

According to Toronto Real Estate Board, Greater Toronto Area REALTORS® reported 4,375 transactions through the TorontoMLS system in January 2013. This number represented a slight decline compared to 4,432 transactions reported in January 2012.

“The January sales figures represent a good start to 2013. While the number of transactions was down slightly compared to last year, the rate of decline was much less than what was experienced in the second half of 2012. This suggests that some buyers, who put their decision to purchase on hold last year due to stricter mortgage lending guidelines, are once again becoming active in the market,” said Toronto Real Estate Board (TREB) President Ann Hannah.

“It is interesting to note that sales were up for many home types in the GTA regions surrounding the City of Toronto. This is due, at least in part, to the additional upfront land transfer tax in the City of Toronto,” added Ms. Hannah.

The average selling price for January 2013 sales was $482,648 – up by 4.3 per cent compared to $462,655 in January 2012. The MLS® Home Price Index (HPI) Composite Benchmark price was up by 3.8 per cent over the same period.

“There will be enough competition between buyers in the marketplace to prompt continued growth in home prices in 2013. Expect annual average price growth in the three to five per cent range this year,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

Employment Numbers Looking Good, according to Report

Last friday, January 4, 2013, "Statistics Canada" announced that Employment in the country rose by 40,000 in December 2012, the fourth increase in five months. December's increase was all in full-time work. The unemployment rate declined 0.1 percentage points to 7.1%, the lowest in four years.
Provincially, employment increased in Ontario (33,000 according to CBC News), Manitoba, Saskatchewan, Newfoundland and Labrador and Prince Edward Island in December. At the same time, there was a decline in Nova Scotia.

The Trend's been the same since June 2012: Stricter Mortgage Guidelines and Land Transfer Tax put pressure on Sales

According to Toronto Real Estate Board (Treb), Greater Toronto Area REALTORS® reported 3,690 sales through the TorontoMLS system in December 2012 – down from 4,585 sales in December 2011. Total sales for 2012 amounted to 85,731 – down from 89,096 transactions in 2011.
“The number of transactions in 2012 was quite strong from a historic perspective. We saw strong year-over-year growth in sales in the first half of the year, but this growth was more than offset by sales declines in the second half. Stricter mortgage lending guidelines resulted in some households postponing their purchase of a home. In the City of Toronto, the dip in sales was compounded by the additional Land Transfer Tax, which buyers must pay upfront,” said Toronto Real Estate Board (TREB) President Ann Hannah.
The average selling price in December 2012 was up by 6.5% year-over-year to $478,739. The average selling price for 2012 as a whole was up by almost 7% to $497,298.
“Robust annual rates of price growth were reported through most months of 2012. Price growth was strongest for low-rise homes, including singles, semis and townhouses. Despite a dip in sales, market conditions remained tight for these home types with substantial competition between buyers,” said TREB’s Senior Manager of Market Analysis Jason Mercer.

November Resale Housing Figures

TORONTO, December 5, 2012 -- Greater Toronto Area REALTORS® reported 5,793 sales in November 2012 – down by 16 per cent compared to November 2011.

“Transactions have been down on a year-over-year basis since June, after being up substantially in the last half of 2011 and the first half of 2012. Some buyers pulled forward their decision to purchase, which has impacted sales levels in the second half of 2012,” said Toronto Real Estate Board (TREB) President Ann Hannah.

“Stricter mortgage lending guidelines, including a reduced maximum amortization period and a purchase price ceiling of one-million dollars for government insured mortgages, have prompted some buyers to move to the sidelines. This situation has been exacerbated in the City of Toronto because the additional upfront Land Transfer Tax takes money away from buyers that otherwise could be used for a larger down payment,” continued Ms. Hannah.

The average selling price was up by 1.6 per cent annually to $485,328. The MLS® Home Price Index (MLS® HPI) Composite Benchmark was up by 4.6 per cent compared to last year.

“The moderate annual rate of price growth compared to previous months was largely due to a different mix in detached home sales this year compared to last, particularly in the City of Toronto. The share of detached homes that sold for over one-million dollars was down substantially, which influenced the overall average price,” said Jason Mercer, TREB’s Senior Manager of Market Analysis

Sales Keep Falling But Prices Keep Going Up

Greater Toronto Area REALTORS® reported 6,896 transactions through the TorontoMLS system in October 2012 – a decrease of 7.1 per cent compared to October 2011, Toronto Real Estate Board made public today.There were two more business days in October 2012 versus October 2011.

“Sales have decreased in the second half of this year compared to 2011, especially since the onset of stricter mortgage lending guidelines at the beginning of July.The prospect of higher monthly mortgage payments due to the reduced maximum amortization period has prompted some households to delay their home purchase,” said Toronto Real Estate Board (TREB) President Ann Hannah.

The average selling price for October transactions was $503,479 – up 6.2 per cent compared to October 2011.The MLS® Home Price Index composite benchmark price, which allows for an apples-to-apples comparison in terms of home attributes, was up by 5.1 per cent.

“We continue to see price increases well above the rate of inflation.Active listings have remained low from a historic perspective, so substantial competition between buyers still exists, especially for low-rise homes,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

“It should be noted, however, that the annual rate of price increase has been edging lower over the past few months as the market has gradually become better supplied,” continued Mercer.

For more info, please check out TREB's Website: http://www.torontorealestateboard.com/market_news/release_market_updates/news2012/nr_market_watch_1012.htm

September Sales Show Values Went Up 8.5% Despite Low Number of Transactions

Today, October 3, 2012, the Toronto Real Estate Board (TREB) made public that Greater Toronto Area (GTA) REALTORS® reported 5,879 transactions through the TorontoMLS system in September 2012. The average selling price for these transactions was $503,662, representing an increase of more than 8.5 per cent compared to last year.
The number of transactions was down by 21 per cent in comparison to September 2011. However, it is important to note that there were two fewer working days in September 2012 compared to September 2011. The majority of transactions are entered on working days. On a per working day basis, sales were down by 12.5 per cent year-over-year.
“While sales have been lower due to stricter mortgage lending guidelines, we continue to see substantial competition between buyers. The months of inventory trend remains low from a historic perspective, which explains the strong price increases we are experiencing,” said Toronto Real Estate Board President Ann Hannah.
September average selling prices were up compared to last year for all major home types. Price growth was strongest in the City of Toronto, including condominium apartments with eight per cent year-over-year growth. All benchmark home types included in the MLS® Home Price Index (MLS® HPI) experienced year-over-year price increases, with substantially stronger increases for low-rise home types.
“Barring a major change to the consensus economic outlook, home price growth is expected to continue through 2013. Based on inventory levels, price growth will be strongest for low-rise home types, including single-detached and semi-detached houses and town homes,” said TREB’s Senior Manager of Market Analysis, Jason Mercer.

August Resale Market Figures

Greater Toronto Area (GTA) REALTORS® reported, according to TREB, 6,418 sales through the TorontoMLS system in August 2012, representing a year-over-decline of almost 12.5% compared to 7,330 sales reported in August 2011. The number of new listings reported in August was down by 5.5% compared to the same period in 2011.

“Residential transactions were down in August compared to last year. Stricter mortgage lending guidelines, which came into effect in July, arguably played a role. In the City of Toronto, the additional impact of relatively higher home prices coupled with the upfront cost associated with the City’s Land Transfer Tax led to a stronger annual decline in sales compared to the rest of the GTA,” said Toronto Real Estate Board (TREB) President Ann Hannah.
The average selling price for August 2012 transactions was $479,095 – up by almost 6.5% compared to August 2011. The annual rate of price growth was driven by the low-rise home segment in the City of Toronto, including single-detached homes with an average annual price increase of 15%. The MLS® Home Price Index (MLS® HPI)* composite index, which allows for an apples-to-apples comparison of benchmark home prices from one year to the next, was up by 6.3 per cent year-over-year.
“While sales were down year-over-year in the GTA, so too were new listings. As a result, market conditions remained quite tight with substantial competition between buyers in the low-rise market segment,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “The trends for sales and new listings are moving somewhat in synch, suggesting that the relationship between sales and listings will continue to promote price growth moving forward.”

Your Taxe Dollars are used to Pay Banks when Borrowers Default

Banks in Canada have, lately, been very strict about qualifying and approving potential home buyers for Mortgage.
On 29 of August, "The Globe and Mail" published an article saying that "Canada Mortgage and Housing Corp. saw profits at its mortgage insurance business fall sharply in the second quarter largely due to a jump in losses from claims.
The rise in claims losses suggests that an increasing number of borrowers whose mortgages were insured by CMHC have been unable to make their payments and have lost their homes. Mortgage insurance pays the bank back when a borrower defaults.
Amid growing concern about taxpayers’ exposure to mortgage defaults, Ottawa has been taking steps to curb CMHC’s growth and has placed the housing agency under the watch of the country’s banking and insurance regulator.
The amount of insurance that CMHC has in force crept up to $576-billion at the end of June, closing in on the $600-billion limit that Ottawa is now enforcing on the Crown corporation. To keep the amount in check, CMHC has dramatically cut the amount of portfolio insurance that it is offering to banks.
And it said that its future sales of mortgage insurance will continue to be offset as each year Canadians pay off about $60-billion of mortgages that it has already insured.
CMHC said that it has been spending more money on so-called “work-outs,” in which the mortgage insurer and banks work with struggling borrowers to find a solution – such as deferred payments – to keep them in their home".
To read more go to:
Jump in Claims pinches CMHC's Insurance Business

First Time Buyers and Retirees Will Continue to Prop Up Demand for Condos

According to an article published today in the "Financial Post", A new condo report suggests first-time buyers, retirees and population growth will continue to fuel demand and price growth for the compact living spaces over the next few years.
The study by Genworth Canada found that average condo resale prices are expected to rise next year in seven of the eight metropolitan centres studied.
Prices in Toronto are projected to jump 2.5% to $312,352.
For those seeking to own a home affordably in urban centres, condos remain a good option.
The highest increase however, is expected to be in Edmonton where prices could rise 3.2%.
Vancouver is the only city where condo prices are expected to drop, by 2% to $348,152.
The report stands in contrast to warnings from economists and officials that the condo market in some hot markets is reaching bubble territory that could soon burst.
The central bank noted certain segments of the housing market that have a persistent oversupply — such as condos in Toronto — face a higher risk of a price correction.
Genworth — which earns revenue from selling mortgage insurance — notes that rising prices for single-detached homes are driving first-time buyers to condos, but retirees also continue to prop up demand.
It suggests that the population is expected to grow in all eight cities studied over the next few years, while employment growth and low interest rates should also support the market.

Home Sales Down in June. Land Transfer Tax is a Heavy Burden in Toronto Area

According to Toronto Real Estate Board (Treb) at the begining of July Greater Toronto REALTORS® reported 9,422 home sales through the TorontoMLS system in June 2012. The number of transactions was down by 5.4% in comparison to June 2011. The year-over-year decline was largest in the City of Toronto, where sales were down by 13% compared to June 2011. Sales in the rest of the Toronto Real Estate Board (TREB) market area were comparable to a year ago.
“Buyers continue to face the substantial upfront cost associated with the City of Toronto’s unfair Land Transfer Tax,” said TREB President Ann Hannah. “Recent polling by TREB suggests that many households are considering home purchases outside of the City of Toronto to avoid paying the Land Transfer Tax. This goes a long way in explaining the disproportionate decline in sales in the City versus surrounding regions.”
The average selling price in June was $508,622 – up by 7.3% compared to June 2011. The mortgage payment associated with the average priced home in June, assuming five per cent down and a five-year fixed rate mortgage amortized over 25 years, would account for approximately 35% of the average household’s income in the GTA after adding property tax and utility payments.
“According to new mortgage lending guidelines set out by Finance Minister Jim Flaherty, the GTA housing market remains affordable. The share of the average household’s income going toward major home ownership payments for the average priced home remains below the 39 per cent ceiling recently announced by Mr. Flaherty,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

Federal Government Announced New Mortgage Rules

During the second half of the Month of June the Minister of Finance, Jim Flaherty, announced four measures for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent:

1. Reduce the maximum amortization period to 25 years from 30 years.
2. Lower the maximum amount Canadians can borrow when refinancing to 80 per cent from 85 per cent of the value of their homes.
3. Fix the maximum gross debt service ratio at 39 per cent and the maximum total debt service ratio at 44 per cent.
4. Limit the availability of government-backed insured mortgages to homes with a purchase price of less than $1 million.

These new rules will take effect on July 9, 2012.

Employment Rate Unchanged

Following two months of large gains, employment was unchanged in May, and the unemployment rate remained at 7.3%.
Compared with 12 months earlier, employment increased 1.2% or 203,000. Virtually all of this growth was in full-time work, up 192,000 (+1.4%).
www.statcan.gc.ca

Interest Rates Stay Low

According to "The Financial Post" (financialpost.com), Once again the Bank of Canada maintained interest rates at 1% last Tuesday, June 5, staying the course despite confirming global financial turbulence is creeping ever closer to our shores, while housing and household debt remain domestic risks.
The Bank of Canada has now held rates at a stimulus-level 1% since September 2010.

Federal Government putting Pressure to Cool down the Market

Cautious about getting too much in Debt
Today I was listening to a Real Estate Radio Show on 640AM and a buyer who found a Cottage property somewhere in Ontario said that he was having trouble finding mortgage although he had a 25% downpayment.
This doesn't come as a surprise to me. I've noticed that the Federal Government is currently putting lots of pressure on Financial Institutions (Lenders) so they thoroughly scrutinize everyone before approving any application for Mortgage.
Any potential home or condo buyer must be a real buyer: which means, there must be a very good credit history, solid savings for downpayment (25% or more of the purchase price), real job(s) paying real salary(ies) that should be clearly enough to pay for the Land Transfer Tax, Mortgage, Utility Bills (Hydro, water,...), Maintenance Fee in case of Condos, Property Taxes, etc.
According to some Mortgage Brokers from different Lenders I had the opportunity to meet and talk to recently, mortgage applications that would be easily approved a year or two ago, are now denied.
And even after approving the mortgage, the Lender, before the closing date, sends an Appraiser to make sure the Buyer(s) didn't over pay for the property.
Knowing that most of us don't have any savings in case things go South, the Government obviously doesn't want us to get into much (unsustainable) Debt because, God Forbid, the interest rates go up or we loose our job(s) we can't make the payments any more. The direct consequence, is what we see is happening with the American Real Estate Market: people leave the properties and if the lenders can recuperate their investment by Selling the property(ies), the government has to pay for their loses.
So these Government measures are purposely cooling and slowing down certain areas in Great Toronto Area and certain segments of the market such as the Condo Market.
I believe interest rates will not go up any time soon. At least not before 2013 since the economy is not growing as fast as we'd like it to. We just learned this week that General Motors Canada (GM) in Oshawa, Ontario Assembly Plant will next year (2013) let go  2000 jobs to the USA (Detroit and Tenesse).

Luxury Homes Sales Across Canada

According to Toronto "Metro" Daily Newspaper the Re/max real-estate sales organization says demand for high-priced housing was strong in most Canadian markets in the first months of this year, with records set in 10 of 16 markets it tracks.
Vancouver was one of the six markets where the luxury market has cooled off after an especially hot period last year, but demand in Toronto remained high.
The organization says the price of luxury housing depends on the market, from a low of $500,000 in mid-sized cities such as St. John's and Halifax to a high of $2 million in the Vancouver area.
In the case of Regina, which had the biggest increase in luxury sales this year, there was 56% more sales of at least $500,000. In Canada's most expensive market, Vancouver, there was a 31% decline from last year's peak with 393 luxury homes sold in the first quarter.
By contrast, Toronto's market has been hotter than last year, with 412 homes sold for at least $1.5 million each - a 49% increase from early 2011.