Real Estate Trends Suggest Market Stabilizing

Greater Toronto Real Estate Agents Reported 4,120 Resale Housing Transactions in February

GTA home sales were down 32% in February compared with this time last year, but prices appear to be stabilizing, according to the Toronto Real Estate Board.

Toronto Real Estate Board Members reported 4,120 sales in February 2009 compared to 6,015 sales recorded in February 2008. The average home price was $361,305 last month compared to $382,048 during the same month last year.

“A considerable number of transactions continued to take place in February 2009. Motivated buyers and sellers, who were aware that market conditions changed over the past few months, were able to negotiate transactions acceptable to both parties,” said Toronto Real Estate Board President Maureen O’Neill.

On a month-over-month basis, sales and average price were above January levels of 2,670 and $343,632 respectively. The housing market is seasonal. Traditionally, in the first half of every year, sales and average price climb to their highest levels in late spring before trending lower from July onward.

Comment: We are now seeing the market come back to what we expected. The declines are slowing, or even reversing. Sure, February 2009 is down over the same period last year, but sales volume is up 54% over last month and prices have risen another 5%. Buyers are not going to see and major price drops, but there is still a good variety out there and more to choose from than last year. Lastly, days on market is heading down again, properties are selling faster and not sitting on the market for long anymore. So much for the crash, eh?

“While the economic downturn has had an impact, the GTA housing market is resting on a solid foundation. Current home prices and mortgage rates suggest that GTA homes have become more affordable on average,” according to Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis. “A greater number of home buyers could take advantage of this affordability once their positioning in the economy becomes more certain.”

Typically the spring real estate market tends to experience more activity and with the Canadian economy experiencing a period of low mortgage rates and strong immigration, this trend could continue. According to Statistics Canada, Canada welcomed 247,202 permanent residents in 2008, 70,000 more than in 1998, and well within the government’s planned range of 240,000 to 265,000 new permanent residents for 2009.

Comment: With prices starting to rise again, sales volume heading way up, days on market decreasing and very low mortgage rates – we are set to have a great spring market!

The Toronto Real Estate Board President pointed out that Greater Toronto Real Estate Agents are an integral part of the real estate transaction process. “TREB Members are uniquely positioned to help home buyers and sellers adapt to changing market conditions,” added Ms. O’Neill. “In addition, TREB continues to advocate public policies that do not threaten affordability but support home ownership in the GTA such as lower taxation and less regulation.”

Greater Toronto Realtors are passionate about their work. They adhere to a strict Code of Ethics and share a state-of-the-art Multiple Listing Service. Serving over 28,000 Members in the Greater Toronto Area, the Toronto Real Estate Board is Canada’s largest real estate board.

Don’t Panic – Lower Interest Rates & Housing Prices Is Good News!

I have constantly told my clients that the Canadian economy is not a mirror image of the economies of other countries around the world, particularly the United States.

While we shouldn’t turn a blind eye to what’s happening around our world, we shouldn’t allow ourselves to become gripped by fear while waiting to see if things are going to get worse.

Pierre Duguay, Bank of Canada’s deputy governor, is warning Canadians not to get spooked by “irrational fear” over the economy and says there’s a risk of overstating the global crisis.

Duguay says Canada should be prepared to hear a string of alarming economic news in the next few months. But that doesn’t mean we should panic.

And he says that justifies a “sense of urgency” in putting the federal government’s stimulus spending to work in the economy quickly.

Our government, reacting to economic woes, indicated they would introduce a stimulus package to help stir up activity across our provinces.

The Conservative government proposed spending $40 billion over two years to stimulate the economy, but no money will start to flow until April at the earliest. What? We need stimulus now!

Finance Minister Jim Flaherty has called for a free hand in spending $3 billion of the stimulus starting April 1, but opposition parties are asking for some oversight.

Duguay says it’s important to get the stimulus moving “so people can see recovery is coming and not have to worry about the future.”

The Bank of Canada has already stepped up to the challenge with their recent rate cut, and fortunately, the major banks quickly responded with their own reductions in interest rates.

As of the date of this story, my clients have access to the lowest rate in Canada! 3.5% for a five year, fixed/closed mortgage! An unbelievable opportunity to take advantage of a great rate before both housing prices and interest rates start to climb again… and they will!

Visit my website at http://www.BlairArmstrong.com or call 416-301-0222 for more information.

Real estate boom over, experts agree

The days of multiple offers when buying the house you were bidding on was like winning the lottery are over, says Phil Soper, president and CEO of Royal Lepage Real Estate Services.

Instead, standard offers with conditions attached are making a comeback.

“It’s all about having a home inspection, approval of financing, things that were disregarded during a sellers market,” said Soper, speaking at the Scotiabank real estate outlook conference in Toronto today.

Scotiabank is forecasting that Canadian housing starts will fall to 155,000 units this year, below long term replacement demand, and far below the 211,056 units registered in 2008.

“The housing boom is clearly over, and if anything, that’s an understatement,” said Scotiabank economist Adrienne Warren.

Soper said the Canadian market has in the past been driven by Generation X and first time buyers who have “largely checked out.”

“This is a generation that has been much more comfortable than their parents with mortgages,” said Soper at the conference. “But they have checked out in large numbers. They’re living at home, they’re renting, they don’t have to buy.”

Meanwhile, the federal government’s renovation tax credit for households may not give the much needed lift to the construction industry and the overall economy that Canadians may be hoping for, says Scotiabank.

“It certainly has the potential to provide a boost, but overall the opportunity for it to provide a significant boost to offset the construction gap are fairly limited,” said Warren.

Ottawa plans to give a 15 per cent renovation tax credit on expenditures between $1,000 and $10,000 completed prior to February 2010.

The renovation industry was worth $39 billion in 2008, or more than double the value of resale housing transactions.

However, the main factors behind the boom in recent years, including recording existing home sales, rising home equity, high new home prices, record ownership rates, an aged housing stock and strong job and income growth “are no longer supportive,” says Warren.

“If you’ve got rising house prices you’re a lot more confident about putting in that granite countertop.”

Still, some planned projects will likely be brought forward and some underground spending will be “pulled up” by the initiative, said Warren.

In a separate meeting today, commercial real estate industry executives heard that downtown Toronto and Calgary are the two Canadian cities that face the most “significant challenges” with millions of square feet of office space set to be developed right during one of the worst economic downturns in history.

“Toronto class A development will hit 4.6 million square feet of development at a time of weakening demand,” said John O’Bryan, vice chair of realty firm CB Richard Ellis in a market forecast at the Metro Toronto Convention Centre. “The effect on occupancy levels in the affected towers is significant and it does not appear that large tenancies will be able to quickly fill the void.”

Toronto currently has three new “Class A” office towers (considered the best buildings) each in the million square foot range with the first tower to be completed starting at the end of this year.

The new supply will cause vacancy rates to spike possibly into the double digits according to the realty firm. Vacancy rates over 10 per cent are considered to be a tenant’s market. More supply means there will be pressure on rental rates to decrease.

Source: TheStar.com, Tony Wong, Business Reporter

Flips are not flops, even in slower market

Their confidence is as intractable as a red wine stain: house flippers and the workers that trim the sector’s edges insist all remains well in Hogtown real estate.

While houses are selling for less than their listed price and are staying on the market longer, sellers like Sam Cohen insist the outlook is good, and house stager Anne Bourne says she is in high demand.

House flipper Sam Cohen, in a newly renovated residence in the Avenue Road and Highway 401 area, says he is able to wait for a buyer to accept the $1.2-million price tag. (Deborah Baic/The Globe and Mail)

“When everything happened in November, everything kind of ground to a halt,” Ms. Bourne said of her Staging Works business.

“In the last couple of months I’ve been getting more calls than ever. I think I’m going to be busier than ever this year.”

Last month, national home resales hit their lowest levels since the mid-1990s, slumping 41 per cent from a year earlier, according to the Canadian Real Estate Association.

Toronto’s house prices dropped 8.2 per cent over the same period: The average house price last month was $343,632, compared to $374,449 in January, 2008.

The slower market is in evidence across the city as For Sale signs linger on front yards, but the realty industry is maintaining its breezy grin. After all, obvious displays of disappointment are often considered as dangerous as a red flag in a bull ring.

But despite the assurances, cracks are appearing in the facade. Ms. Bourne said real estate agents are fighting for listings, with some offering to pay for house staging in a bid to win a listing.

And home owners who have never considered house staging are booking consultations at $200 a session to get advice on how to win over prospective buyers.

“From what I’ve heard from real estate agents, it’s a hard time right now. It’s been really hard to sell these houses,” Ms. Bourne said.

At the top end of the market, Bernod Singh recently slashed the asking price for his luxury home by $6-million, bringing it to a more affordable $10.8-million. But he is still trumpeting a positive tune.

“We’ve priced it for a quick sale,” Mr. Singh said of the 18,000-square-foot Bridle Path home that has been on the market since 2006. “I would love to get the full price, believe me … but I have to be realistic.”

Further down the pricing scale, house flipper Mr. Cohen says it will likely take weeks, instead of days, to sell his rebuilt house in the Avenue Road and Highway 401 area.

Still, he’s able and willing to wait for a buyer willing to accept the $1.2-million price tag.

“I built a house that probably will attract the kind of client that will be willing to pay the price I’m asking for,” said Mr. Cohen, who used to be a financial adviser but now renovates houses full-time.

Mr. Cohen first flipped a house about two years ago, and it sold just days after going on the market. This time, he expects it to take about a month.

“I expect there might be some individuals who might come in to look for a bargain,” he said.

“I hear people come in with ridiculous prices to offer. But again, a house in the right place will sell. Not as fast as previously, but it will sell eventually.”

SOURCE: Globe and Mail, TENILLE BONOGUORE, February 19, 2009