Is 'under construction' buying in real estate the IN thing now?

New home condo sales mainly condo apartments and townhouses dominated the GTA sales last month. The buying frenzy we just experienced has since subsided and builders marketing strategies may just be working. Read the following article as 'Excerpted from The Toronto Star'.

New home sales soar in June, as condos dominate market

Condos accounted for 91 per cent of the new homes sold in the Toronto area last month.

BILD statistics show there were only about 11,000 new homes on the market in June, compared to about 18,000 in the same month last year.  (Vince Talotta / Toronto Star File Photo)  

By Tess Kalinowski

Real Estate Reporter

Tues., July 25, 2017

New construction home sales, especially condos, are rising even as the re-sale property market continues to slump in the Toronto region.

The gains in the newly-built home market are almost entirely due to apartments and stacked townhouses, which accounted for 91 per cent of the 6,046 homes sold in June, according to the latest numbers from the Building Industry and Land Development Association (BILD) on Tuesday.

New condo sales were up 89 per cent year over year, compared to a 72 per cent year-over-year drop in the sale of single family homes.

The strong condo performance was due in part to the large number of new projects that hit the market in May and June, said Patricia Arsenault, of Altus Group, which tracks new home statistics.

But their more affordable entry-point prices appealed to many consumers, who might have otherwise preferred a ground-level home and to investors who have noted the escalating price of condos, she said.

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"With condo prices continuing to escalate, this segment of the market is becoming out of reach for many consumers," warned BILD CEO Bryan Tuckey in a press release.

The price of new apartments rose $22,000 to $627,000 in June, compared to May — a 34 per cent year-over-year increase.

The price per square foot, considered one of the most accurate gauges to compare condos, rose to $742, compared to $587 a year ago.

Were Warnings About Canadian Hosehold Debt Overblown?

Excerpted from Toronto Sun:
We've read about several warnings about Canadian household debt being at a critical stage. This article suggests that homeowners who took money from the equity of their house to buy appreciating assets such as rental condo apartments or townhomes may have done the right thing. More so it was the correct move with low interest rates.

Canadian household debt warnings overblown: Report

POSTMEDIA NETWORK

First posted: Tuesday, July 18, 2017 07:27 AM EDT | Updated: Tuesday, July 18, 2017 07:41 AM EDT

A real estate sold sign hangs in front of a west-end Toronto property, Friday, Nov. 4, 2016. (THE CANADIAN PRESS)

Recent warnings of Canadians running their household debt to record levels are blown out of proportion, according to a new study.
While household debt continues to climb, most Canadians are using it to invest in appreciating assets, according to the Fraser Institute.
“Despite alarmist headlines, concerns about Canadian household debt levels can be overblown,” said Livio Di Matteo, author of the Fraser Institute report and professor of economics at Lakehead University.
“When looking at debt levels it’s important to consider the degree to which Canadians are also using it to increase their net worth.”
While Canadian household debt is at a record high $2 trillion, up from $357 billion in 1990, household assets have increased from $2.2 trillion to $12.3 trillion over the same period, the study found.
The bulk of Canadian household debt was on mortgages (65.5%), followed by consumer credit (29%) and other loans (5%).
The study also said taking on more debt was a “rational response” to falling interest rates.
While interest rates in 1990 was nothing like the whopping 18% in the 1980s, it was still considerably high - at nearly 13% - compared to 0.75% at the end of last year.
The low rates reduced the burden on debt payments for Canadians, while making it less attractive to set aside savings in the bank.
While the study paints a positive picture for Canadians carrying debt, the same cannot be said about government debt.
“Governments across Canada have been racking up debt, particularly since 2007, but the net worth of governments in Canada has actually decreased,”Di Matteo said.
“It’s somewhat hypocritical for governments to warn Canadians about rising household debt levels given the state of their own finances,” Di Matteo said.

Should I Delay on Buying As House Prices Are Dropping?

This article says it all. I was asked if it is okay to hold off on buying as prices are coming down. It is noteworthy that prices are still rising in the traditional 'year over year' way. What has come down are the number of transactions and the month to month prices. June average prices was lower by 8% than May's but was still higher by 6.3% than a year ago. So analyze your needs.

Read about it here:
A Toronto Star article

June 2017 TREB Chart Showing Average Resale Home Prices

The above bar chart shows the average home resale prices up to last month June for 2017 as well as for the full year for 3 years to 2014.
 I dashed a red line at the top of each bar for 2017 and a blue line for 2016 so that a seasonal trend can be readily seen. Now note this:

• Red line- the sharp rise from January to past May is indicative of the unusual buying frenzy we just experienced where prices rose as high as 20% monthly where bidding was the norm frustrating a lot of buyers. Then the curve turns downward indicating a drop in prices.
• Blue line- follows the seasonal price trend for 2016. Note that the curve closely matches those of the previous years.

The downward red curve past May to date is more likely a market correction of the sharp rise starting from the beginning of the year to mid-May when government imposed more stringent regulations on buying and the realization by buyers that such a sharp rise is not really sustainable . The red dotted line is a more likely prediction of what the future months will be like price wise as borne by top of each bar in previous years but higher.

Should you delay buying as prices are going down? I won't count on it is my guess. Even with the recent monthly drop in prices, the dollar values of homes are still higher than last years.

Is There An Impending Interest Rate Increase?

There has been two articles posted in The Toronto Star recently about the Bank of Canada governor making statements that seemed to imply that rates will be going up. While we won't know until July 12 as to what he will actually do every homeowner or prospective home buyers should keep track of rates.
Here are the links to those articles-

https://www.thestar.com/business/economy/2017/07/04/bank-of-canada-governors-comments-fuel-talk-of-interest-rate-hike.html

https://www.thestar.com/business/2017/06/28/low-interest-rates-have-done-their-job-bank-of-canada-governor-says.html

Interest affects everyone with a mortgage as a homeowner or a prospective homeowner or whether one is selling and buying as an upgrade of their present abode. It will also affect a mortgagor if your mortgage term is about due depending on the new rate- in which case it may be best to speak with your realtor or mortgage broker about early renewal.

Do a copy and paste to the above links if necessary.

Sales down, Prices Still Up

Toronto home sales decline continues into June

The number of house sales is still dropping as new listings hit the market.

Last week was the eighth consecutive week that real estate sales declined in the GTA, according to Realosophy.  (Andrew Francis Wallace / Toronto Star File Photo)  

Excerpted from The Toronto Star

By Tess KalinowskiReal Estate Reporter

Mon., June 12, 2017

Toronto-area lawns are still sprouting “For Sale” signs even as the number of home purchases continued to decline into June, says online brokerage Realosophy.

It found that sales of houses (detached, semi-detached and towns) across the region were down 44 per cent last week compared to the previous week.

York Region is still showing some of the largest declines of about 60 per cent in some areas, said company president John Pasalis.

"The sales numbers keep getting worse,” he said. “It's like they've fallen off a cliff. It's this downward momentum week after week."

Although the Toronto Real Estate Board (TREB) issues monthly statistics, Pasalis said he started tracking weekly sales because the market is so volatile, although he acknowledged that it represents a small sample.

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His numbers show that June, so far, is continuing some of the downward trends TREB identified in May. It reported that prices had slipped about 7 per cent from April, although homes still cost about 15 per cent more than they did in May 2016.

In fact, last week was the eighth consecutive week that sales declined, according to Realosophy.

Meanwhile, the number of re-sale homes on the market rose 43 per cent last month compared with May 2016.

Has The House Buying Frenzy in Toronto Normalized?

Cooling Toronto housing market a return to normal, say realtors

Buyers now have more choice, more time and even a little more negotiating power.

The boost in supply of re-sale homes in May is down to strong prices in the first quarter and the provincial housing policy announced in April that have prompted some owners to cash out their equity, according to TREB.  (Bernard Weil / Toronto Star File Photo)  

Excerpted from The Toronto Star

By Tess KalinowskiReal Estate Reporter

Mon., June 5, 2017

That faint hissing sound — music to the ears of Toronto home buyers — could be the air escaping the region’s housing market.

It could also be the barely concealed frustration of sellers, who listed their homes this spring expecting to attract cut-throat bids from desperate, over-extended buyers. Instead they are seeing fewer showings and fewer offers.

Toronto area home prices dipped about 7 per cent in May compared to April but remained about 15 per cent higher year over year averaging $863,910.

Even as the market has soared, there were some month-to-month price declines, said Jason Mercer, director of market analysis for the Toronto Real Estate Board (TREB), which released its month-end May statistics on Monday.

December’s average home price was $46,212 lower than November’s $776,684 but it is “somewhat unusual” in the peak spring season, he said.

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The last year-over-year price decline was 2012, said Mercer.

May’s cool down came with a 43 per cent increase in active listings.

But there’s no indication that a bubble has burst, he said. That would require some dramatic change in the economic environment — a real rise in lending rates or a shift in regional employment.