Real Estate Experts See Silver Lining
Posted by admin on May 14, 2009 in News | 0 comments
There’s lots of bad news and more job losses in store, but a recent real estate panel organized by Bank of Montreal in Toronto had positive things to say about the housing market in Toronto and elsewhere.
Broker Brad Lamb, one of four experts, identifies December – the month his office phones stopped ringing – as the Toronto market bottom.
As evidence, he points to the diminishing decline in Toronto Real Estate Board resale volume numbers: In November 2008, they were down 45 per cent from a year earlier; in December, down 55 per cent; January, 45 per cent; February, 31 per cent; and March, only 7 per cent.
Then, he highlights the decline in the average number of days a property is on the market before being sold: 39 days in March versus 45 days in February.
“That’s taking into consideration the $200,000 studio apartment, and it takes into consideration a $10 million Bridle Path home. That’s an astonishing, confident number.”
Lamb also says multiple offers have returned.
“Believe it or not, in the month of March, 20 per cent of all the MLS (Multiple Listing) sales had more than one offer at the same time.”
Given those figures, “I can’t believe we’re in it, but there is evidence we are returning to a sellers’ market.” Mind you, he tempered his bullish comments, noting he was a “100 per cent glass-full kind of guy,” who’s never negative.
Even in Toronto’s condo sector, where projects with more than 32,000 units will be completed this year and next, Lamb does not expect a supply glut or price declines, as unsold inventory and investor-purchased units go up for sale. In fact, he predicts a shortage in 2011 and resulting price increases, because of the lack of new projects.
“There hasn’t been a successful condo launch since August ’08, and there won’t be until spring 2010,” the condominium specialist said with confidence. “So you’re taking about 25,000 sold units out of the construction starts.”
Bank of Montreal senior economist Sal Guatieri laid on the bad economic news of 357,000 job losses nationwide since October and 200,000 yet to come, along with another six months of declining economic activity. He expects unemployment to rise to 9.5 per cent next year from 8 per cent, but that’s below the 12 to 13 per cent of earlier downturns.
Canadian home sales and starts have plunged 40 per cent, and house prices, an average 14 per cent. On the upside, affordability is now in line with long-term norms, given lower prices and interest rates that have cut mortgage payments on average homes by one-third.
Guatieri expects interest rates to continue low into next year, spurring increased home sales in 2010. Some long-term mortgage rate cuts may still lie ahead, and it will be well into next year before borrowing costs trend upward.
“We’re expecting the housing market to correct further this year, but not crash as per the U.S. and several other countries,” was Guatieri’s assessment.
Phil Soper, president of Brookfield Real Estate Services, offered his Canadian outlook: “I don’t foresee a sharp recovery in home prices over the next six months. Prices should stabilize on a year-over-year basis by the second half of this year.”
He expects only moderate price rises on a national basis at “a very slow snail-like pace for the next couple of years.”
Of course, there will be exceptions. He points to a 15 per cent increase in house prices in St. John’s in this year’s first quarter, because of supply issues.
Both Soper and Century 21 Canada Limited Partnership president Donald Lawby commented on strength in first-time buyer activity. “There seems to be significant activity in entry-level real estate across this country,” Lawby observed. “They’re reacting to the current interest rates.”
Soper describes the first-time buying uptick as “astonishing.” Carrying costs now make home ownership enticing compared to renting, and public policy – increases in the amount first-time buyers can withdraw from registered retirement savings, closing cost credits and land transfer tax rebates – also helps sustain this part of the market, which is crucial to the health of the entire housing sector, he says.
Overseeing the businesses of Royal LePage and Johnson & Daniel, Soper describes the current downtrend as a normal, cyclical correction that was broadsided by the global financial crisis. He maintains the Canadian housing market turned negative in 2007, and we’re now six quarters (18 months) into the decline.
“The longest period of housing market correction in the last 30 years has been seven quarters,” he points out. “So we’re coming up on the longest correction in this industry. It’s not nearly as severe as previous ones, although we have this really dangerous backdrop.”
As for Lawby, he reminded the audience of the high unemployment and interest rates of earlier recessions. Mortgage rates hit 12 3/4 in the 1989 market crash and an unbelievable 25 per cent in the early 1980s. Now five-year fixed rates are below 5 per cent.
“I would say, looking at it, considering the size of the (worldwide) economic meltdown, that the impact on the housing market has been quite minimal,” he said.
Electrical Explosion sent 500 Residents Packing
Posted by admin on May 14, 2009 in News | 0 comments
Residents of Kingston Rd. condos and townhouses who were forced out by an electrical explosion nearly two months ago may be able to go home by the middle of next month.
About 500 residents of a nine-storey condominium and adjoining townhouses have been bunking with family or friends or living in hotels after a Toronto Hydro transformer exploded in a parking garage on March 19, causing extensive damage.
Just last Thursday, residents met with local Liberal Margarett Best to vent their frustration after learning it might be another 12 weeks before they can move back in, due to delays in completing essential repairs.
They are anxious to return to their homes, which were built less than two years ago.
They have filed a $30 million class-action lawsuit against Toronto Hydro and Deltara Construction, which built the complex.
But an update issued at 4 p.m. Friday and available to residents at the front desk of the condo at 3650 Kingston Rd., near Markham Rd., said the timeline for completion of the work has since been revised.
“It is currently estimated that it will be approximately 4 to 5 weeks until the completion of the necessary repairs, recommissioning of building systems, verification of all life-safety systems and final verifications have been completed by the city,” said the update, issued by the board of directors of the condo corporation.
Hailu Mulatu moved his wife and two small daughters in with friends after the blast.
“Sure, it’s good news,” he said, “but I have to be honest. If they have to replace all the stuff they’ve told us about, I don’t know how they can do it. I don’t know if this timeline takes into account the repairs in total, or the quality of work that’s required.”
Greater Toronto REALTORS® report 8,107 Resales in April
Posted by admin on May 14, 2009 in News | 0 comments
TORONTO, May 6, 2009 – In April 2009, Greater Toronto REALTORS® reported 8,107 sales – down seven per cent from April 2008. While April sales remained lower than last year, the resale housing market gained momentum on a month-over-month basis. The seasonally adjusted annual rate of sales in April, at 80,900, was up 26 per cent from March and up two-thirds compared to January’s ten-year low.1
“Conditions in the resale housing market have improved markedly this spring,” according to TREB President Maureen O’Neill. “Home purchases have increased as households have taken advantage of low interest rates and slightly lower home prices.”
The average price for April transactions was $385,641 – down three per cent from last year.
“The rate of average price decline continued to diminish last month. This is due in large part to a
tightening in the resale market,” stated Jason Mercer, TREB’s Senior Manager of Market
Analysis. “The level of sales relative to new listings increased in April.”
1Seasonally adjusting TREB MLS® data removes recurring seasonal trends observed each year. For example, MLS® sales are highest in late spring each year and lowest in the winter months. Removing the recurring seasonality, allows for the analysis of a meaningful trend reflecting actual changes in market conditions. By multiplying the monthly seasonally-adjusted figure by 12, creating an annual rate, we can compare how the current month relates to historical annual figures.
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