Canada's real estate market trends

Home Prices Decline for the First Time in Seven Years According to Scotia Economics

After many false calls, there is now convincing evidence that Canada's housing market has come off the boil, according to the latest Real Estate Trends released today by Scotia Economics. Home resales, having fallen for four consecutive months, are running about 15 per cent below last summer's historic peak. Average annual home price appreciation has eased back into the mid single digits, as overall market conditions come into better balance. Adjusted for inflation, the average resale home price in Canada registered its first quarterly decline in seven years in the first quarter of 2008.

According to the report, cracks are appearing on the new home front as well. While housing starts in early 2008 are essentially tracking last year's elevated levels, demand for new residential building permits has fallen sharply. Price increases for new homes are moderating, while inventories of unsold new homes are trending higher.

"We expect overall sales volumes in 2008 to total about 15 per cent below last year's record levels, and home prices to increase on average by about five per cent," said Adrienne Warren, Senior Economist, Scotia Economics. "Price gains should slow further in 2009 with the return of a balanced market for the first time in a decade. Meanwhile, housing starts are projected to gradually moderate, returning toward underlying annual household formation levels of around 180,000 by the end of the decade, from the current 225,000 unit range."

The report also states that the cooling in overall activity is most notable in many of Canada's hottest urban housing markets in recent years, including Calgary and Edmonton. Both centres have officially moved into buyers' territory as soaring prices weaken demand and fuel new listings. More generally, however, economic conditions continue to favour the resource-rich markets in the West over manufacturing-dominated centres in Central Canada. Regina and Saskatoon are currently in the strongest sellers' position nationally, supported by good affordability, rising population inflows and tight supply.

Risk of a major correction still low

According to the report, Canada's recent record of home price appreciation, averaging an annualized 10 per cent from 2002 to 2007, was unsustainable, and a return to more historical norms is a welcome development. The faster and longer home prices climb, the greater the risk of an eventual price correction. Canada's last two major housing booms of the 1970s and 1980s were both followed by some degree of real price stagnation or decline, an essential ingredient to restoring affordability and generating renewed pent-up housing demand.

Ms. Warren cites a number of reasons why a major correction is not in the cards, "Home prices in Canada are not substantially overvalued. Our long-term housing price model puts average home prices in 2007 at about eight per cent above their long-term trend, compared with a premium of 12 per cent and 18 per cent, respectively, at the 1976 and 1989 housing cycle peaks. Recent International Monetary Fund (IMF) estimates placed Canada at the bottom rungs of international home price overvaluation."

Canada's real estate market is not overbuilt. While inventories of unsold homes are trending higher, the number of unabsorbed units, including condominiums, remains well below prior cyclical peaks in most major centres. Tighter lending guidelines and high construction costs have likely contributed to a more cautious approach among builders.

Households, for their part, are not overleveraged. Home equity as a share of real estate assets is near record highs, with price appreciation outpacing the rise in mortgage obligations. Mortgage carrying costs as a share of disposable incomes are historically low despite rising home prices.

Overall mortgage quality is still sound. Canadian lenders have maintained conservative loan qualifying criteria in recent years even while introducing a range of new products, including interest-only mortgages, no downpayment mortgages, and extended amortization of up to 40 years. Canada does not have ultra-low teaser rate mortgages that have contributed heavily to U.S. defaults as they reset. Adjustable-rate mortgages, sub-prime lending, borrowing against home equity, and insured investor mortgages all account for a much smaller share of the Canadian mortgage market than in the United States.

"At the end of the day, we predict a soft landing for the Canadian housing market, with somewhat lower sales and construction, and a period of relatively flat inflation-adjusted home prices," added Ms. Warren. "While underlying domestic housing fundamentals remain healthy, a major risk to the outlook would be a deeper and more protracted downturn in the U.S. economy, with more serious repercussions for domestic output, employment and income growth."

See the full Real Estate Trends report »

May 15, 2008 in Canadian Market Forecast | Permalink | Comments (1) | TrackBack (0)

MLS listings reach record high

Surge in Real Estate Listings Slows Home Price Increases

A surge in real estate listings in Canada's major markets slowed down the pace of price increases in April, according to a report released Wednesday by the Canadian Real Estate Association (CREA). The number of new listings of homes for sale on the Multiple Listing Service (MLS) reached its highest level ever in April, the CREA report said, with a seasonally adjusted 52,775 units coming on to the market - an increase of 1.8% from the previous month. Unadjusted new listings were up 17.7% from April 2007.

Meanwhile, the number of units sold in April was 34,781, down 6.1% from the same month last year. The average selling price was up 3.2% to $334,293 from $323,936 in April 2007. This is the smallest year-over-year price increase in over six years, CREA reported.

The increase in listings "means buyers face less competition in their search for a home," said CREA President Calvin Lindberg.

The sales drop and the modest price gain are well down from years of double-digit increases and are further confirmation that the boom days are over, said BMO deputy chief economist Doug Porter. No city in the country has reported a price decline from year-ago levels over the first four months of the year, Porter noted, "so the slowdown is still far from mimicking the U.S. experience. However, we would point out that new listings have climbed more than 8% this year, even as sales have slid."

CREA may term that as a more balanced market, Porter said. "That's a polite way of saying: If you're looking for double-digit price gains, dream on."

CREA said the new record in listings resulted largely from activity in Toronto and Saskatoon. The rise in new listings in these markets more than offset a decline in Edmonton and Calgary, where new listings retreated from record levels reached in March, the association said.

Seasonally adjusted sales activity edged up 0.8% month-over-month to 27,039 units in April, with stronger markets in Quebec City, Toronto, Winnipeg, Halifax-Dartmouth, Hamilton-Burlington, St. Catharines and Newfoundland & Labrador offsetting slower markets in Vancouver, London & St. Thomas, Calgary and Victoria.

"An increase in listings is resulting in a more balanced resale housing market in Vancouver, Calgary, Toronto and Montreal, the four most active of Canada's major markets," said CREA chief economist Gregory Klump. "New listings are forecast to rise further as sales activity continues retreating from the peak last year, resulting in an increasingly balanced resale housing market and smaller home price increases."

May 14, 2008 in Canadian Real Estate Market | Permalink | Comments (2) | TrackBack (0)

Be the belle of the block

Curb appeal is crucial in Toronto's changing market

Never mind the vernal equinox or visions of blooming tulips and budding leaves. May in Toronto has to be the harshest month when it comes to curb appeal, whether we're selling our homes or simply living in them. Gone are the snows of winter leaving our homes wearing a drab overcoat of a winter's worth of dust and grime. Not to mention those green doors.

In times past, it didn't matter if your house had a pink front door, it sold for more than the asking price. Now, buyers are being very picky. If it's not your home they buy, it will be one of the other 124 on the market that are just like yours — the same square footage — but $10,000. lower in price.

A year ago, it wouldn't have mattered that buyers saw your green front door as tired and dated — but it does now.

Last year, there was always a limited inventory available. This year, the total inventory is up, which means more selection for buyers. It is important that sellers understand that they're in a much different marketplace. Buyers can now take the time to find their dream home, instead of having to snatch up the first available place in their price range before someone else beats them to it.

So, sellers need to present their home in the best possible light ... and they need to price their home accordingly, in keeping with local market conditions.

Putting on a Fresh Face

Curb appeal isn't going to sell your property if the price, location or amenities aren't right for the buyer, but it can help you achieve both a faster selling time and a better price in any market. When the buyers drive up and see grass a foot high, they assume the whole house isn't well maintained.

By creating curb appeal, you create an emotional connection before the buyer even enters the home. Try to create a message about what you want the buyer to know about your house and your neighbourhood.

For example: paint the trim and the door if they're in need of it; replace the mailbox, lighting and hardware such as door handles; clean your walk and deck; switch on exterior house and garage lights; ensure keys work smoothly in locks; add fresh mulch to the garden beds; and re-edge the beds and sidewalks.

Going Beyond Cosmetics

Some very expensive homes have very basic things wrong, such as doorknobs that are loose or not working properly. It might sound cosmetic, but the cosmetics are important. If for example, you don't keep up with painting or staining your window trim, you'll be needing to replace those windows soon.

It's also important to ensure your steps are level, your sidewalk is in good shape and your trees or bushes are pruned. Those are little things that make people feel more comfortable when you're coming into a house. If everything is clean and organized, it appears that the owners have looked after the house.

As for the green doors, taking the usual television show advice to paint your door red to create punch could be a mistake. If you have green trim around a red door, it just doesn't work.

So figure out a great colour that compliments the hues already on your home including the trim -- maybe it's green.

See the Curb Appeals blog »

May 14, 2008 in Toronto Curb Appeal | Permalink | Comments (0) | TrackBack (0)

Improving Toronto’s public spaces

thinkToronto

Spacing magazine invites people — 35 years old or younger — with creative ideas on how to improve Toronto’s public space to take part in thinkToronto, an urban design ideas competition that will help celebrate the magazine’s 5th anniversary in December 2008. Architects, urban planners, landscape architects, designers, artists, students, and the urban curious are all encouraged to submit their plans to tweak, improve, or redesign streetscape elements and specific areas of Toronto.

thinkToronto seeks ideas from the next generation of city builders who want to challenge how we view Toronto’s public realm. The competition gives participants a platform to explore and experiment with Toronto’s urban landscape and generate a dialogue among Torontonians about creative and sustainable solutions in our shared common spaces.

See the thinkToronto website »

May 13, 2008 in Toronto Real Estate Trends | Permalink | Comments (0) | TrackBack (0)

Preparing for your Home Search

Your Needs and Wants

A good place to start your search for a new home is to prepare a detailed 'wish list' -- and then make a comparison of your wants or wishes and your needs or what you must have. For example:

Needs
Wants

Include the type of housing - detached home or condominium, bungalow or two-story, and size - which best suits your needs. Consider location, transportation or commuting time, and new or resale.If you are handy with tools or a paint brush, you might consider a home with a great floor plan even though it’s in need of some repairs or updating. Otherwise, a home in a newer community might be more suitable.Make it a family decision—include the children and your spouse. Or, if you're buying on your own, talk to friends about their home buying experience.

Make the list

Record a list of your needs and wants. Do you need an extra bathroom, a garage, a fenced backyard, or lower utility bills? Do you want a fireplace, a short drive to work, or maybe minimal yard work? Once your list is complete, review it and decide what is most important to your lifestyle. Decide which items are “musts” and which you are willing to give up.

Location

Deciding where you want to live may be the single most important factor in choosing a home. Location affects your day-to-day living and is one of the most significant influences on value. Your choice of location may be limited somewhat by the price you can afford. Even so, make sure you consider such things as:

Type of home and lot

A single-family detached home is attractive to many people because it typically provides more living space and land area than other types of living units. Typically the detached structure permits you greater freedom (less restrictions) on remodeling, expanding, painting, and altering the appearances of the structure. On the other hand, a condominium may be a more appropriate choice for you, with an emphasis on maintenance-free living.

Size and style

Consider size and style. You may already have in mind a contemporary home with a sun deck or a two-storey Victorian-style with a cozy study. Or maybe you won't know what you want or like until you see it. Whatever the case, your realtor should listen to your preferences and help find the right home for you.

May 13, 2008 in Buying Toronto Real Estate | Permalink | Comments (2) | TrackBack (0)

Monster Open House for Toronto

Doors Open Toronto

The City of Toronto is presenting its the 9th annual Doors Open Toronto on the weekend of May 24 and 25 when up to 150 buildings of architectural, historic, cultural and social significance open their doors to the public for a city-wide celebration.

The program allows visitors free access to properties that are either not usually open to the public, or would normally charge an entrance fee. Many locations have organized guided tours, displays and activities to enrich the visitor experience.

From heritage landmarks to modern structures, hidden gems, green roofs, places of worship, halls of learning, boardrooms, bedrooms, breweries, lighthouses, mansions, museums, theatres, national historic sites, centres of rail travel, cemeteries, factories, banking halls, architects' offices and more.

Doors Open Toronto is intended to help people get to know the city, whether they've lived in Toronto all their lives or visiting for the first time. You can see Toronto like you've never seen it before!

For more informatiom visit the Doors Open Toronto website »

May 11, 2008 in Toronto Landmarks | Permalink | Comments (0) | TrackBack (0)

Toronto Commercial Real Estate

Over 1,000,000 Square Feet Leased in April

Toronto Real Estate Board Members reported 1,108,430 square feet of space leased through the TorontoMLS system, up four per cent over April of 2007, Commercial Council Chair Garry Lander announced today. "This figure is also up 19 per cent over the March figure of 933,299, and in fact makes April’s the best monthly performance of 2008."

In April, the price for Industrial space (all size categories) declined six per cent to $5.43 sfn from last April's figure of $5.76 sfn. Commercial space (all size categories) averaged $14.91 sfn, down nine per cent from last April's $16.41 sfn.

Sales Market Highlights

In April, Toronto Real Estate Board Members recorded 58 sales of Industrial/Commercial Properties. Of these, 39 were industrial properties of all size categories, which transacted for an average of $87.04 per square foot. This compares to a figure of $101.59 per square foot from non-MLS® sources, which reported the sale of a number of unusually expensive Industrial properties in April.

See TREB Commercial real estate report:

May 8, 2008 in Toronto Real Estate Update | Permalink | Comments (4) | TrackBack (0)

Tim Hortons - Corporate Greed

This blog is usually about real estate but today I have to comment on the most egregious example of corporate greed that I have ever heard about.

The Canadian Press

LONDON, Ont.–Giving a free Timbit to a baby has cost a single mother of four her job. Nicole Lilliman, 27, was fired yesterday from her Tim Hortons job for giving one of the 16-cent blobs of fried dough to a tot. "I have been fired for giving a baby a Timbit," Lilliman said yesterday.

"It was just out of my heart – she was pointing and going `ah, ah...' I should have gone to my purse and got the change, but it was busy." Lilliman, who has worked at the store for three years, said she thought little of the incident since Timbits are often doled out to dogs and children. She said the baby was about 11 months old, and she gave her the treat to quiet her, since her mom – a Tims' regular – had been ``having a bad day." "I could see (the dismissal) if it was a sandwich or something," she said. "But it was a Timbit."

Three managers greeted her yesterday, saying she had been caught on video giving free food to a child. "They said, `Remember, Monday you gave out a free Timbit,' " she said. "I had to think, then I was like, `Oh yeah,' and I smiled because I thought I'd get a warning." Instead, she was fired for theft.

Giving food away is against the rules, said Tim Hortons district manager Nicole Mitchell.

The Timbits given to pets, Mitchell added, are usually "day-old and recycled."

I didn't know that you only gave stale Timbits to babies — I guess if they can't talk, they can't complain.

Postscript:

Tim Hortons responds to firing of staff member 

TORONTO, May 8 /CNW/ - In regards to the recent situation with the termination of a staff member in London, Ontario.

Unfortunately the action of the manager of this location was not appropriate nor grounds for dismissal. With an apology from management Ms. Lilliman has been rehired by the franchisee.

We sincerely apologize to our customers for this unfortunate incident.

For further information: Rachel M. Douglas, Director, Public Affairs, Tim Hortons, (905) 339-6277, douglas_rachel@timhortons.com

May 8, 2008 in World View [of real estate] | Permalink | Comments (8) | TrackBack (0)

 

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