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Archive for the ‘Toronto Market Updates’ Category

Move over Toronto, Vancouver has you beat

Thursday, November 16th, 2017

When it comes to a city as great as Toronto it’s easy to have a little hubris. And with that, its inhabitants are sometimes accused of the short-sighted belief that the city is the centre of the universe.

And while on some level that may hold true, it doesn’t when it comes to house prices. In fact, a recent study by Century 21 Canada shows that seven out the country’s 10 most expensive neighbourhoods belong to our friends out west in and around Metro Vancouver.

Downtown Toronto made the number three spot on the list, while Oakville placed fifth and Richmond Hill, tenth. All the remaining seven spots belong to our friends in Vancouver.

The study measured price-per-square-foot (PPSF) for typical homes in cities and towns across Canada. Using information from Century 21’s independently owned and operated franchise offices, the study gathered information on house prices in the years 1997, 2006 and 2017.

Downtown Montreal ranked as the 12th most expensive neighbourhood, while Victoria was 18th, Saskatoon placed 31st, and Ottawa was 41st.

According to the study, Oakville leads the pack when it comes to escalating house prices, outstripping every other Canadian area. The price for a detached home in Oakville in 1997 was $105.77 PPSF. By this year, that number had ballooned to $627.33, a 493 per cent jump in 20 years. After Oakville, downtown Montreal is the community that claims the second fastest PPSF house growth with hikes in that city of 468 per cent over the same time period.

The data also showed that Nova Scotia and New Brunswick were the only provinces to experience falling prices in the past decade. Windsor followed by Moncton and Halifax came in at the least expensive cities in which to buy.

A house in Vancouver’s west side is priced at $1210 PPSF. Downtown Vancouver has a PPSF of $962.75. Downtown Toronto comes in with $818.86 PPSF. West Vancouver is at $816.61 PPSF. And Oakville comes in at $627.33.

If you think Canada’s numbers are high, take a look at other countries. The average PPSF in the Kowloon area of Hong Kong is over $3500. This number is 3.5 times pricier than Beijing, which is deemed the second-most expensive city with a PPSF of just over $1000. Shanghai comes in third with $955.39.

Lowest price on the list?  Maricaibo-Zuila in Venezuela at an average PPSF of $10.17.

 

Under One Million: New GTA Benchmark

Tuesday, September 12th, 2017

What goes up must inevitably come down and for the first time in months the average sale price in Toronto did just that with detached homes dipping in July to below $1 million.

That figure is notable for more than just psychological reasons. With price tags below a million dollars, the real estate market is open to more consumers and that’s good news for everyone.

According to the Toronto Real Estate Board (TREB), August figures show the average detached home in the GTA sold for $972,212. That’s down from $1,000,336 at the end of July.  The average price in August has fallen about $230,000 or 19 per cent since the market’s peak in March.

It’s widely believed the provincial government’s new housing rules introduced in April put the brakes on the city’s red-hot real estate market, controls some believe were necessary to calm out-of-control housing prices.

While the price drop is great news for buyers, TREB says the market in the GTA is expected to post a record year nevertheless. According to TREB, the average sale price of a detached home in July was $996,970, which is still a 13.3 per cent hike over house prices from one year ago.

Says TREB’s board president Mark McLean:  As we move towards a new record for home sales this year, it is important to point out that home ownership demand has been driven not only by low borrowing costs, but also by the fact that the greater Toronto area economy has been performing quite well, with the unemployment rate lower compared to last year.

The under one million figure is an average that combines house sales numbers from across the GTA. If you’re looking at detached homes strictly in Toronto you are likely still paying in the seven-figure range. Based on TREB figures from August, single-family homes there still average about $1.2 million, though that figure is down considerably from March when it hit a peak of $1.56 million.

The $1 million mark is significant because of changes introduced in 2014 which excluded government-backed mortgages on homes sold for more than seven figures. The ban targeted hot real estate markets in Toronto and Vancouver.

 

Mortgage Borrowing Clout Way, Way Up

Friday, September 8th, 2017

Think foreign investment is the cause behind high-priced homes in Toronto and Vancouver? Or how about the immigrant population growth in those centres? Could it be a lack of developable land or maybe it’s speculators?

With the exception of something catastrophic, it’s rarely a single cause that will prompt the kind of heavy volatility we’ve seen recently in those housing markets.

In fact, the Fraser Institute, an independent, non-partisan Canadian public policy think-tank asserts that higher home prices are the result of declining interest rates and rising incomes that allowed Canadians to qualify for much bigger mortgages over the past two decades.

Increased borrowing power, brought about by falling interest rates and rising incomes, is potentially the most overlooked and least understood factor influencing home prices across Canada,  Niels Veldhuis, president of the Fraser Institute, said in a media release last month.

The study ” Interest Rates and Mortgage Borrowing Power in Canada ” says that between 2000 and 2016, interest rates dropped from 7 to 2.7 per cent. During that time, the lower interest rates increased a potential home buyer’s mortgage-borrowing power by 53 per cent.

At the same time, average family incomes grew by 53 per cent. And when you factor in low interest rates with higher wages, the mortgage-borrowing power of the average Canadian climbed by a whopping 126 per cent.

In terms of city centres with the highest mortgage-borrowing power, Calgary came in first at 161 per cent, followed by Vancouver at 118 per cent, Montreal at 115 per cent and Toronto at 100.

This increase in borrowing power ”in simple terms” means that an average Canadian family, dedicating the same share of their income to monthly mortgage payments, can afford a mortgage that’s more than twice as big now as it would have been in 2000, Veldhuis said.

Canadians potential to borrow more money has resulted in homebuyers bidding up the price of homes since the supply of housing is not immediately responsive to changes in demand.

As would-be homebuyers and governments contend with rising prices across Canada, policy makers should look closely at the impact of interest rates, rising incomes and increased mortgage borrowing power on home prices, Veldhuis added.

 

 

 

Toronto’s Housing Looking Up Again

Monday, August 14th, 2017

The dip in Toronto’s housing market is expected to bounce back soon, says the federal housing agency.

The Canada Mortgage and Housing Corp. (CMHC) says the city’s current decline will be short-lived and real estate prices will pick up again as demand returns. According to the Toronto Real Estate Board, prices in the city fell from an average of $919,589 in April to $793,915 in June; however, the CMHC expects a rise in prices again due to a strong economy and a lack of housing supply.

Toronto’s red-hot real estate market was curbed in the spring when the Ontario government introduced measures designed to cool an overheated market. Included in the measures was a controversial 15 per cent tax on foreign buyers.

The CMHC said similar taxes imposed against foreign buyers in Vancouver worked to calm the market there by reducing the number of foreign buyers. However, the Vancouver market has since picked up again.

“The response we’re seeing in the Toronto market seems almost emotional and a knee-jerk reaction to some of the changes, which suggests that these impacts will be short-lived,” Dana Senagama, CMHC’s principal market analyst for Toronto, told the Canadian Press.

The province’s measures also include more rent controls and legislation that allows municipalities to tax vacant homes.

“If job creation continues in Toronto … and the economy continues to fuel the housing demand, we can expect some of the pressures on house prices in Toronto to resume,” said Bob Dugan, CMHC’s chief economist.

In the CMHC’s recently released housing market assessment, the agency ranked its overall risk rating for the national housing market at strong. The quarterly report is based on information collected from the first quarter of 2017.

Good New for Home Buyers

Wednesday, June 7th, 2017

Buyers eying the GTA will be happy to hear that the Toronto real estate market finally appears to be taming down somewhat.

The Toronto Real Estate Board reported that existing home sales fell in May by 20.3 per cent from the previous May, while prices edged down by about six per cent from April to May.

Though it’s too early to tell for sure, it’s believed the provincial government’s institution of new rules designed to control the housing market is the reason for the cool down.

“The actual, or normalized, effect of the Ontario Fair Housing Plan remains to be seen,” said TREB’s market analysis director Jason Mercer. “In the past, some housing policy changes have initially led to an overreaction on the part of homeowners and buyers, which later balanced out.”

In April, the province announced a 16-step plan to tame Toronto’s out-of-control real estate market. The plan targeted foreign investors with a 15 per cent non-resident speculation tax on property purchases and more rent controls which serve to restrict rent hikes.

While home buyers will be pleased with softer prices, they can also expect to benefit from a greater housing supply. Active listings rose nearly 43 per cent in May from the previous May. As for the breakdown, low-rise homes including detached and semi-detached houses and townhouses were up considerably in May from a year ago, while condominiums were down.

“The increase in active listings suggests that homeowners, after a protracted delay, are starting to react to the strong price growth we’ve experienced over the past year by listing their home for sale to take advantage of these equity gains,” Mercer said.

All of these factors contribute to a less frenzied buying model, which means less pressure plus more time and room to think for those looking to purchase.

Some say the Toronto market is echoing Vancouver, which also slapped foreign buyers with a 15 per cent tax last August. While the market subsequently softened it appears to have recovered with sales and prices again on the rise last month in Greater Vancouver.

Ontario’s Fair Housing Plan

Thursday, May 11th, 2017

The Ontario government introduced a housing plan late last month that aims to protect home buyers and renters from being priced out of the turbo-charged Toronto real estate market.

The 16-point plan targets actions that are expected to cool the city’s overheated market with a comprehensive set of measures designed to help more people find affordable homes, increase supply, protect buyers and renters and bring stability to the real estate market.

Included in Ontario’s Fair Housing Plan is a 15 per cent foreign buyers’ tax, similar to the one introduced last year in Vancouver. The tax in Ontario will be levied against all foreign-bought properties within the Greater Golden Horseshoe, as they too have been affected by unprecedented price growth.

Home buyers should like the plan as it is expected to cool the housing market, which has experienced double-digit gains in the past few years. In April the average Toronto house price hit nearly $921,000, almost 25 per cent more than a year ago.

Renters may like it even more so as rent control will be expanded to buildings constructed after 1991, which were previously not covered by rules. Given the city’s tiny vacancy rate – 1.3 per cent, the lowest in 12 years — some landlords were commanding astronomically high rents, even doubling rents once a lease came due.

Ontario’s Fair Housing Plan includes additional measures, such as introducing a targeted $125-million, five-year program to encourage the construction of new purpose-built rental apartment buildings by rebating a portion of development charges.

The government will also work to better understand and tackle practices that may be contributing to tax avoidance and excessive speculation in the housing market, such as “paper flipping” — a practice that includes  entering into a contractual agreement to buy a residential unit and assigning it to another person prior to closing.

The province is also introducing legislation that will allow Toronto and potentially other municipalities to introduce vacancy taxes.

The Fair Housing Plan will also include a new Housing Supply Team of dedicated provincial employees to identify barriers to specific housing development projects and work with developers and municipalities to find solutions.

Toronto: Home to World’s Fastest Growth in House Prices

Thursday, May 11th, 2017

 

Toronto is number one for many reasons. The New York Times deems it a first rate travel destination. It’s also pretty good on the scales of diversity and gender equality. And – no surprise here – it earns high marks as one of the best cities in the world to live.

That could be why it also is number one when it comes to having the world’s fastest pace of house price growth.

According to research conducted by analytics firm CoreLogic, Canada’s largest city beat out Sydney, New York, even Tokyo in terms of how quickly its house prices escalated last year.

According to the research which was carried out for The Daily Telegraph in Australia, Toronto’s median house price climbed 19 per cent in 2016, surpassing next-in-line Sydney at 18.4 per cent and third-place Vancouver, where house prices rose by 14 per cent.

According to the Huffington Post, the survey measures median house prices, which is a different measurement than the average figures used by real estate boards in Canada. And average prices show even stronger growth in the GTA with a year over year hike of nearly 28 per cent in February to almost $876,000.

Naturally, these figures are not sustainable. House prices will begin to slow. The Financial Accountability Office of Ontario (FAO) is forecasting slightly lower house prices over the next three years and the strong possibility of a market correction.

The FAO envisions a correction that could see house prices decline by 10 per cent within three years or a worst-case scenario of a 20 per cent drop, says the Huffington Post.

In its report, the FAO expects “a leveling out in residential investment over the next several years, consistent with a modest decline in housing prices,” but “a sharper housing price correction remains a significant risk, both for the economy and the province’s tax revenues.”

Average Toronto house price hits $921,000

Thursday, May 11th, 2017

Here’s a strange anomaly for you: Even though more homes were for sale this April compared to one year ago, home prices were up by as much as 24.5 per cent that month compared to a year earlier.

If you’re still in the market for a house you may have noticed that significantly more homes – 33.6 per cent to be exact — were for sale last month compared to April of 2016. But the greater supply did little to stem the upward flow of the city’s house prices, according to figures released by the Toronto Real Estate Board (TREB).

Based on TREB data, the average cost of a home in Toronto climbed to nearly $921,000 last month, up almost $200,000 from last April’s average house price of $739,762.

April also saw sales nudge down by 3.2 per cent compared to a year ago, a sign, say some, that the Toronto real estate market is finally cooling off.

Any which way you look at it, more listings will inevitably signal a positive note for the Toronto real estate market, says a TREB economist.

“It was encouraging to see a very strong year-over-year increase in new listings,” said Jason Mercer, director of market analysis. “If new listings growth continues to outpace sales growth moving forward, we will start to see more balanced market conditions.”

Still, the board is not expecting any downturns in home prices. In fact, Mercer says the spring and summer months will see the growth of house prices well above the rate of inflation.

A greater housing supply could be a reaction to the market’s big year-over-year price jumps and the province’s newly implemented Fair Housing Plan, though it’s too early to tell.

Another indicator that the market is cooling showed in sales of detached homes, which slipped slightly from March to $1,205,262 from $1,214,422. Semi-detached homes also dipped a bit last month, while condo prices increased by 4.3 per cent.

The data included on this website is deemed to be reliable, but is not guaranteed to be accurate by the Toronto Real Estate Board. The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license.