Business
Excerpted from the Totonto Star
Condo sales, prices up — but rents starting to ease
Up to 20,000 new units are set to hit the GTA this year, making it a buyers’ and a renters’ market
By: Susan Pigg Business Reporter, Published on Tue Apr 15 2014
It could be the year of shrinking condo rents but surging condo “for sale” listings if the first quarter of 2014 is any indication.
Condo sales were up nine per cent in the first three months of this year over last, with 70 per cent of the 4,454 transactions taking place in the City of Toronto, according to figures released by the Toronto Real Estate Board Tuesday.
Prices in the first quarter were up 5.6 per cent, year over year, to an average of $351,213 across the GTA and $376,226 in the City of Toronto.
Realtors say they’ve seen more demand for condos the last few months as the supply of lowrise houses close to the downtown and transit lines has fallen so far below demand, bidding wars are driving prices for houses out of reach of many buyers.
Condo for-sale listings, on the other hand, appear to be headed in the other direction — up. And given that as many as 20,000 new condo units are expected to reach completion this year, more units are likely to hit the market by the end of this year, potentially driving down prices and even rents as owners look to rent or sell into an oversupplied market.
“. . . We could see stronger growth in listings in the second half of 2014 as some investors choose to list their units for sale. If this occurs, buyers would benefit from more choice in the marketplace and thus could have more negotiating power with regard to price,” said Jason Mercer, TREB’s senior manager of market analysis.
Already there are some signs that rents may be softening for investors choosing to offer up their units to the growing number of young people, and downsizing baby boomers, looking to live and work in or close to the downtown core.
Condo rental transactions were up 17.8 per cent in Q1 of 2014, year over year, but the total number of listings surged by 27.7 per cent as more investor-owned condos came to completion.
As a result, the rent for a one-bedroom unit in the GTA declined by 1.6 per cent, to $1,573 per month in the first quarter. Rents can run closer to $1,800 in the downtown core. One-bedroom units accounted for 60 per cent of all condo rentals.
Two-bedroom units, which are seeing some increase in demand among young people looking to share the hefty rents, saw rents increase 1.9 per cent in the quarter to $2,155. Two bedrooms accounted for 60 per cent of all condo rental transactions in the first three months of 2014, according to the TREB statistics.
Tuesday, April 15, 2014
Friday, April 4, 2014
Tuesday, April 1, 2014
5 Things To Know About Canada's Mortgage Market Right Now
ROB CARRICK
Five things to know about Canada's mortgage market right now
Here are five things you need to know about the mortgage market as the spring home-buying season gets going:
1. That 2.99 per cent Bank of Montreal five-year mortgage isn’t quite as good as it sounds.
BMO’s recent move to bring its rate below the psychologically significant 3-per-cent mark for fixed-rate five-year mortgages is being treated as a big deal because a similar move a year ago provoked then-finance minister Jim Flaherty to admonish the bank. Joe Oliver, Mr. Flaherty’s successor, is taking a more laissez-faire attitude.
Mr. Gaetano said late last week that he had a 2.84-per-cent rate on five-year fixed mortgages, but it only applied to clients who had down payments of less than 20 per cent and thus required mortgage default insurance.
The RateSpy.com website confirmed this rate from Mr. Gaetano’s firm, Monster Mortgage, while also showing competing brokers and credit unions with rates in the range of 2.83 per cent to 2.94 per cent. Some other rate comparison sites to try include RateSupermarket.ca, RateHub.ca and LowestRates.ca.
3. We will see wide open rate competition this spring.
“I think there will be a full-scale rate war with some mortgage brokers,” said Bruce Joseph, a broker with Anthem Mortgage Group in Barrie, Ont. “We’ve got a huge amount of competition in the market. The market is quite saturated with realtors and brokers.”
Mr. Joseph wonders whether we’ll see more of a practice called “mortgage rate buydowns,” where brokers sacrifice some of their compensation from selling a mortgage in order to get a lower rate for the client. He said some brokerage firms have been aggressive users of buydowns to build sales volume.
Borrowers, there’s nothing to stop you from asking for a rate buydown. You just have to recognize that less compensation for a broker may mean less advice and hand-holding.
4. Variable-rate mortgages are looking good.
Rates on variable-rate mortgages are based on the major banks’ prime lending rate, which has been stuck at 3 per cent since September, 2010, minus a discount. Mr. Gaetano said discounts have widened out to 0.6 percentage points or more from roughly half that level about eight months ago, and that means a variable rate around 2.4 per cent.
His preference for variable-rate mortgages over the fixed-rate alternative right now is based both on the discounts being offered, and his interest rate outlook. “I don’t think rates are going anywhere soon, and getting a variable in the prime minus 0.60 range give you a considerable advantage in hammering down a mortgage.”
That said, many of Mr. Gaetano’s first-time home buyer clients are going with five-year fixed-rate mortgages, which is smart. In today’s expensive housing market, it makes good sense to buy yourself a five-year period to find your financial equilibrium as a homeowner without the risk that your payments will rise.
5. The banks will crush you if you want to break your mortgage.
The penalties that the big banks charge to break a mortgage before it comes up for renewal are abusive. They’re a far more deserving target for the federal finance minister than lenders aggressively undercutting each other on mortgage rates.
Get the lowdown on bank mortgage penalties in this column I wrote not too long ago. If there’s any chance you might have to break your mortgage – brokers say this is by no means unusual – then consider using a non-big bank lender with a lighter touch on penalties. These same lenders are often good on rates, too.
Follow me on Twitter: @rcarrick
1. That 2.99 per cent Bank of Montreal five-year mortgage isn’t quite as good as it sounds.
BMO’s recent move to bring its rate below the psychologically significant 3-per-cent mark for fixed-rate five-year mortgages is being treated as a big deal because a similar move a year ago provoked then-finance minister Jim Flaherty to admonish the bank. Joe Oliver, Mr. Flaherty’s successor, is taking a more laissez-faire attitude.
Mr. Gaetano said late last week that he had a 2.84-per-cent rate on five-year fixed mortgages, but it only applied to clients who had down payments of less than 20 per cent and thus required mortgage default insurance.
The RateSpy.com website confirmed this rate from Mr. Gaetano’s firm, Monster Mortgage, while also showing competing brokers and credit unions with rates in the range of 2.83 per cent to 2.94 per cent. Some other rate comparison sites to try include RateSupermarket.ca, RateHub.ca and LowestRates.ca.
3. We will see wide open rate competition this spring.
“I think there will be a full-scale rate war with some mortgage brokers,” said Bruce Joseph, a broker with Anthem Mortgage Group in Barrie, Ont. “We’ve got a huge amount of competition in the market. The market is quite saturated with realtors and brokers.”
Mr. Joseph wonders whether we’ll see more of a practice called “mortgage rate buydowns,” where brokers sacrifice some of their compensation from selling a mortgage in order to get a lower rate for the client. He said some brokerage firms have been aggressive users of buydowns to build sales volume.
Borrowers, there’s nothing to stop you from asking for a rate buydown. You just have to recognize that less compensation for a broker may mean less advice and hand-holding.
4. Variable-rate mortgages are looking good.
Rates on variable-rate mortgages are based on the major banks’ prime lending rate, which has been stuck at 3 per cent since September, 2010, minus a discount. Mr. Gaetano said discounts have widened out to 0.6 percentage points or more from roughly half that level about eight months ago, and that means a variable rate around 2.4 per cent.
His preference for variable-rate mortgages over the fixed-rate alternative right now is based both on the discounts being offered, and his interest rate outlook. “I don’t think rates are going anywhere soon, and getting a variable in the prime minus 0.60 range give you a considerable advantage in hammering down a mortgage.”
That said, many of Mr. Gaetano’s first-time home buyer clients are going with five-year fixed-rate mortgages, which is smart. In today’s expensive housing market, it makes good sense to buy yourself a five-year period to find your financial equilibrium as a homeowner without the risk that your payments will rise.
5. The banks will crush you if you want to break your mortgage.
The penalties that the big banks charge to break a mortgage before it comes up for renewal are abusive. They’re a far more deserving target for the federal finance minister than lenders aggressively undercutting each other on mortgage rates.
Get the lowdown on bank mortgage penalties in this column I wrote not too long ago. If there’s any chance you might have to break your mortgage – brokers say this is by no means unusual – then consider using a non-big bank lender with a lighter touch on penalties. These same lenders are often good on rates, too.
Follow me on Twitter: @rcarrick
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