Friday, May 25, 2012
Toronto's Push to Higher Home Prices Leads Other Cities in April
Excerpted from The Globe and Mail
Toronto’s push to higher home prices leads other cities in April
OTTAWA— The Canadian Press
Published Friday, May. 25, 2012 9:26AM EDT
Last updated Friday, May. 25, 2012 10:09AM EDT
A national home price index compiled by Canada’s main real-estate association was up 5.2 per cent in April compared with the same month last year.
Toronto had the biggest increase among the country’s major markets, with a 7.9-per-cent hike – far ahead of second-place Calgary at 4 per cent.
The MLS Home Price Index is compiled monthly by the Canadian Real Estate Association.
It’s based on prices for one- and two-storey single-family homes, townhouses and apartments in several key markets across Canada.
On a month-to-month basis, the overall index stood at 154.7 at the end of April, up 1.18 percentage points from February.
The index indicates that overall Canadian home prices tracked by CREA are up 55 per cent since January, 2005, when the index was at 100.
Thursday, May 10, 2012
Toronto Housing- Not In A Bubble..
Excerpted from Moneyville- The Toronto Star
Wed May 9 2012
Toronto housing bubble talk dismissed
Condo construction continues west of Rogers Centre in downtown Toronto.
TIM FINLAN/TORONTO STAR
The head of Canada’s biggest bank and one of the country’s leading developers said the housing market is not in a bubble, even as one economist said Toronto is caught in a “condo craze.”
Canadian housing starts rose to the highest since September 2007 last month, led by multiple-unit projects, Canada Mortgage & Housing Corp. said yesterday. The annual pace of home starts rose 14 percent to 244,900, Ottawa-based CMHC said.
Participants at Bloomberg’s Canada Economic Summit in Toronto said talk of a housing bubble is overblown.
“When we look at the overall marketplace, there might be pockets of vulnerability but we remain quite comfortable,” said Gordon Nixon, chief executive officer of Royal Bank of Canada “Frankly, I’d like to see the rhetoric come down a little bit.”
A residential real-estate boom in the world’s 10th-largest economy has prompted senior policy makers such as Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty to warn that Canadians may be taking on too much debt.
Carney told lawmakers April 24 that high levels of household debt remain the greatest domestic risk to Canada’s economy. In an appearance before a parliamentary committee, he reiterated that a rate increase “may become appropriate,” and warned Canadian families to exercise “caution” with their debt levels.
Carney has kept his key lending rate unchanged at 1 percent since September 2010 in the longest pause since the 1950s.
10 percent overvalued
Housing prices in Canada are probably about 10 percent overvalued, economist Paul Fenton said at the Bloomberg summit.
There doesn’t seem to be a sense that there’s been overbuilding, and housing doesn’t pose a systemic threat to the function of the nation’s financial system, said Fenton, senior vice-president and chief economist at Caisse de Depot et Placement du Quebec.
The 244,900 housing starts last month released yesterday beat economists’ expectations. The highest forecast in a Bloomberg economist survey with 21 responses was a 222,600 rate.
“Wow. This report reflects unbelievable strength in Canadian housing starts, and all of the gain was in multiples again which reflect the ongoing condo craze,” Scotia Capital economist Derek Holt said in a research note.
Sales of new condominiums in Toronto reached 6,070 units in the first three months of the year, a record for the first quarter, market research firm Urbanation Inc. reported May 7. As many as 40 new projects with more than 11,000 units could come on the market in the second quarter, a trend that may cause inventory of unsold units to approach a record set in 2008, Urbanation said.
Risk Averse
Condo builders “tend to be risk averse,” insisting that 70 percent of a project is presold and buyers put down at least a 20 percent deposit, according to Jim Ritchie, senior vice president of sales and marketing at Tridel, a Toronto-based real estate developer.
“It’s all about managing risk,” Ritchie said. There’s a market for condos because average house prices in Toronto’s 416 area code are about C$830,000 ($831,000), compared with C$400,000 for a new condo, he said.
Almost 60 percent of people buying condos in that area are either single or couples without children, said Ritchie, who said concerns about foreign buyers are overdone, given about 95 percent of purchasers are “locals who have social insurance numbers and local addresses.”
RBC’s exposure to the condo markets in Toronto and Vancouver isn’t “significant,” Nixon said. “Part of the reasons for that is firstly a lot of the condo buyers in those markets are cash buyers. At the margin there’s certainly a significant foreign component to them, and I think to some degree the banks are a bit slightly more cautious,” he said.
No Bubble
The increase in housing prices in Canada is unsustainable, said Finn Poschmann, vice president of research at the Toronto- based C.D. Howe Institute. It’s difficult for market participants to tell a bubble has formed before it has deflated, he said.
“The big question people ask is, is Canada’s housing market in a bubble. Our answer to that is no,” said Jim Murphy, chief executive officer of the Canadian Association of Accredited Mortgage Professionals. The association’s research suggests growth in mortgage credit is below average, he said.
Canada’s housing agency said yesterday there is no compelling evidence of a price bubble based on factors such as household income and interest rates.
“Clear evidence of a bubble is lacking,” Canada Mortgage & Housing Corp. said in its annual report. “CMHC continues to monitor very closely housing prices and underlying factors such as demographic and economic fundamentals and financial conditions across all major urban centers, including condominium markets.”
Canadian housing starts rose to the highest since September 2007 last month, led by multiple-unit projects, Canada Mortgage & Housing Corp. said yesterday. The annual pace of home starts rose 14 percent to 244,900, Ottawa-based CMHC said.
Participants at Bloomberg’s Canada Economic Summit in Toronto said talk of a housing bubble is overblown.
“When we look at the overall marketplace, there might be pockets of vulnerability but we remain quite comfortable,” said Gordon Nixon, chief executive officer of Royal Bank of Canada “Frankly, I’d like to see the rhetoric come down a little bit.”
A residential real-estate boom in the world’s 10th-largest economy has prompted senior policy makers such as Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty to warn that Canadians may be taking on too much debt.
Carney told lawmakers April 24 that high levels of household debt remain the greatest domestic risk to Canada’s economy. In an appearance before a parliamentary committee, he reiterated that a rate increase “may become appropriate,” and warned Canadian families to exercise “caution” with their debt levels.
Carney has kept his key lending rate unchanged at 1 percent since September 2010 in the longest pause since the 1950s.
10 percent overvalued
Housing prices in Canada are probably about 10 percent overvalued, economist Paul Fenton said at the Bloomberg summit.
There doesn’t seem to be a sense that there’s been overbuilding, and housing doesn’t pose a systemic threat to the function of the nation’s financial system, said Fenton, senior vice-president and chief economist at Caisse de Depot et Placement du Quebec.
The 244,900 housing starts last month released yesterday beat economists’ expectations. The highest forecast in a Bloomberg economist survey with 21 responses was a 222,600 rate.
“Wow. This report reflects unbelievable strength in Canadian housing starts, and all of the gain was in multiples again which reflect the ongoing condo craze,” Scotia Capital economist Derek Holt said in a research note.
Sales of new condominiums in Toronto reached 6,070 units in the first three months of the year, a record for the first quarter, market research firm Urbanation Inc. reported May 7. As many as 40 new projects with more than 11,000 units could come on the market in the second quarter, a trend that may cause inventory of unsold units to approach a record set in 2008, Urbanation said.
Risk Averse
Condo builders “tend to be risk averse,” insisting that 70 percent of a project is presold and buyers put down at least a 20 percent deposit, according to Jim Ritchie, senior vice president of sales and marketing at Tridel, a Toronto-based real estate developer.
“It’s all about managing risk,” Ritchie said. There’s a market for condos because average house prices in Toronto’s 416 area code are about C$830,000 ($831,000), compared with C$400,000 for a new condo, he said.
Almost 60 percent of people buying condos in that area are either single or couples without children, said Ritchie, who said concerns about foreign buyers are overdone, given about 95 percent of purchasers are “locals who have social insurance numbers and local addresses.”
RBC’s exposure to the condo markets in Toronto and Vancouver isn’t “significant,” Nixon said. “Part of the reasons for that is firstly a lot of the condo buyers in those markets are cash buyers. At the margin there’s certainly a significant foreign component to them, and I think to some degree the banks are a bit slightly more cautious,” he said.
No Bubble
The increase in housing prices in Canada is unsustainable, said Finn Poschmann, vice president of research at the Toronto- based C.D. Howe Institute. It’s difficult for market participants to tell a bubble has formed before it has deflated, he said.
“The big question people ask is, is Canada’s housing market in a bubble. Our answer to that is no,” said Jim Murphy, chief executive officer of the Canadian Association of Accredited Mortgage Professionals. The association’s research suggests growth in mortgage credit is below average, he said.
Canada’s housing agency said yesterday there is no compelling evidence of a price bubble based on factors such as household income and interest rates.
“Clear evidence of a bubble is lacking,” Canada Mortgage & Housing Corp. said in its annual report. “CMHC continues to monitor very closely housing prices and underlying factors such as demographic and economic fundamentals and financial conditions across all major urban centers, including condominium markets.”
Friday, May 4, 2012
GTA Detached Home Sales Jump in April
Excerpted frm The Toronto Star
GTA detached home sales jump in April
Bosley broker and Toronto Real Estate Board President Richard Silver says single family detached homes are in high demand.
RICK MADONIK/TORONTO STAR
Detached homes are becoming so “precious” as the GTA continues to surge skyward, it’s going to become increasingly difficult for families to find, let afford, the Holy Grail of housing — a place that isn’t attached to the neighbour’s.
Demand is so strong for that shrinking share of the region’s housing stock, that sales of detached homes jumped 22 per cent across the GTA in April. The strong sales of those higher-priced homes helped push up the average price of homes (including condos, semis and detached) to $517,556 across the region — some 8.5 per cent higher than April of 2011, according to statistics from the Toronto Real Estate Board (TREB.)
“The single family detached home is the most precious — they are always going to be the bonus houses,” especially given the limited supply in Toronto and the fact condos continue to far outpace new home construction across the GTA, says realtor and board president Richard Silver.
A strong supply of new units coming on the condo market kept annual price growth to an average of 4 per cent, according to TREB statistics. But the continuing low inventory of houses for sale, and strong demand for higher-priced detached homes in particular, resulted in a 9 per cent price increase in April over a year earlier.
Detached homes sold for an average of $831,214 the 416 region in April, compared to $579,278 in the 905 regions.
Condo prices averaged $360,807 in the 416 region in April, up just 3 per cent from a year earlier, compared to a 7 per cent jump, to $289,819, in the 905 regions.
The statistics show the impact of provincial greenbelt policies that, while effective in drastically reducing costly sprawl, have seen the housing market shift dramatically over just the last decade, says George Carras, president of RealNet Canada Inc. which tracks all new housing construction across the GTA.
The explosion of condo development has actually seen the proportion of detached homes across the GTA slip to 59 per cent as of 2006 from 69.4 per cent of the total housing stock in 1991. And that number is expected to have dropped considerably when the 2011 census figures on housing are eventually made public because so much condo construction has happened in the last six years, far outstripping the creation of low-rise housing, says Jason Mercer, senior market analyst for TREB.
Just one new house is being built for every three condos now — it used to be one condo to every three houses just a decade ago — and that dwindling supply of homes, in the face of increasing immigration and demand, is contributing significantly to price escalations for low-rise homes, says Carras.
At the same time, at least one study has shown that just 20 per cent of Baby Boomers, the first wave of whom are nearing retirement age, have any intention of downsizing and putting their homes up for sale, he adds.
“Baby boomers are becoming a major force in this market. The majority of (detached) homes are owned by a demographic that really doesn’t want to move, which is causing a bit of a supply shortage.”
Veteran ReMax realtor Tom Cook said he’s seeing another issue contributing to the shortage of house listings: Homeowners who bought in the last decade but have seen their incomes lag well behind house price escalations.
While their homes may be worth far more on paper, at least, than a decade ago, they haven’t had the added income to pay down the mortgage, which means they can’t afford to list and move up.
Demand is so strong for that shrinking share of the region’s housing stock, that sales of detached homes jumped 22 per cent across the GTA in April. The strong sales of those higher-priced homes helped push up the average price of homes (including condos, semis and detached) to $517,556 across the region — some 8.5 per cent higher than April of 2011, according to statistics from the Toronto Real Estate Board (TREB.)
“The single family detached home is the most precious — they are always going to be the bonus houses,” especially given the limited supply in Toronto and the fact condos continue to far outpace new home construction across the GTA, says realtor and board president Richard Silver.
A strong supply of new units coming on the condo market kept annual price growth to an average of 4 per cent, according to TREB statistics. But the continuing low inventory of houses for sale, and strong demand for higher-priced detached homes in particular, resulted in a 9 per cent price increase in April over a year earlier.
Detached homes sold for an average of $831,214 the 416 region in April, compared to $579,278 in the 905 regions.
Condo prices averaged $360,807 in the 416 region in April, up just 3 per cent from a year earlier, compared to a 7 per cent jump, to $289,819, in the 905 regions.
The statistics show the impact of provincial greenbelt policies that, while effective in drastically reducing costly sprawl, have seen the housing market shift dramatically over just the last decade, says George Carras, president of RealNet Canada Inc. which tracks all new housing construction across the GTA.
The explosion of condo development has actually seen the proportion of detached homes across the GTA slip to 59 per cent as of 2006 from 69.4 per cent of the total housing stock in 1991. And that number is expected to have dropped considerably when the 2011 census figures on housing are eventually made public because so much condo construction has happened in the last six years, far outstripping the creation of low-rise housing, says Jason Mercer, senior market analyst for TREB.
Just one new house is being built for every three condos now — it used to be one condo to every three houses just a decade ago — and that dwindling supply of homes, in the face of increasing immigration and demand, is contributing significantly to price escalations for low-rise homes, says Carras.
At the same time, at least one study has shown that just 20 per cent of Baby Boomers, the first wave of whom are nearing retirement age, have any intention of downsizing and putting their homes up for sale, he adds.
“Baby boomers are becoming a major force in this market. The majority of (detached) homes are owned by a demographic that really doesn’t want to move, which is causing a bit of a supply shortage.”
Veteran ReMax realtor Tom Cook said he’s seeing another issue contributing to the shortage of house listings: Homeowners who bought in the last decade but have seen their incomes lag well behind house price escalations.
While their homes may be worth far more on paper, at least, than a decade ago, they haven’t had the added income to pay down the mortgage, which means they can’t afford to list and move up.
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