Tag Archives: GTA housing market

First-time homebuyers catch a break with slowing home price growth

First-time homebuyers catch a break with slowing home price growth

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First-time homebuyers catch a break with slowing home price growth

We have some good news and we have some bad news, prospective homebuyers in Canada.

First, the bad news: According to the latest Royal LePage House Price Survey, home price growth in many of Canada’s real estate markets is slowing. This means, if you’re looking to buy a home, its value may not grow as much as it has recently. The good news, however, is that this same slowing price growth presents a window of opportunity for first-time homebuyers to get while you can.

The price of a home in Canada increased just 2.7 per cent year-over-year to $621,575 in the first quarter of 2019, Royal LePage says, well below the long-term norm of approximately five per cent. When broken out by housing type, the median price of a two-storey home rose 2.6 per cent year-over-year to $729,553, while the median price of a bungalow rose 1.1 per cent to $513,497. Condominiums remained the fastest growing housing type, rising 5.4 per cent year-over-year to $447,260.

Looking ahead to the second quarter, Royal LePage expects national home prices to stay relatively flat throughout the 2019 spring market, with the national aggregate price of a home increasing just one per cent over the next three months. Meanwhile, the housing markets in several larger Canadian cities have shown noticeable signs of slowing, with nearly half of the regions in Royal LePage’s Quarterly Forecast anticipating quarter-over-quarter price declines.

But these are national numbers, and as we’ve written before, there really is no such thing as a Canadian housing market.

But more on this later.

Silver lining

Early in 2018, Canada experienced the most significant housing correction since the 2008 financial crisis. Markets showed signs of recovery late in the year, yet the figures for early 2019 suggest that the market has once again slowed.

We are expecting this to be a sluggish year overall in Canada’s residential real estate market, with the hangover from the 2018 market correction and weaker economic growth acting as a drag on home price appreciation, balanced by lower for longer interest rates,” says Phil Soper, president and CEO, Royal LePage. “There is a silver lining here. This slowdown gives buyers, and first-time buyers in particular, an opportunity to buy real estate in our country’s largest cities.”

In the federal budget tabled by Finance Minister Bill Morneau in March, the Canadian government announced three new or enhanced housing programs. The First-Time Home Buyer Incentive is a three-year, $1.25-billion shared equity mortgage program whereby  Canada Mortgage and Housing Corp. (CMHC) will co-invest up to five per cent of the purchase price of an existing home. Further, for the first time in a decade, there was an increase in the registered retirement savings plan withdrawal limits in the Home Buyers Plan. The increase, from $25,000 to $35,000, was the largest since the program’s inception in 1992. Finally, an additional $10 billion in financing over nine years was earmarked for the construction of purpose-built rental housing.

Real estate is local

Illustrating our point that real estate is local and not national, the GTA housing market is still showing healthy growth.

“The city of Toronto is still one of Canada’s fastest appreciating real estate markets,” says Soper. “Detached home prices are rising in line with inflation, but condominium prices are increasing at near double-digit levels as vertical living has become the primary new-build option in this growing, world-class city.”

Median home prices in Toronto rose 5.8 per cent year-over-year in the first quarter of 2019. Two-storey home prices and bungalow home prices rose 4.8 per cent and 2.5 per cent year-over-year, respectively, while condo prices rose 9.3 per cent year-over-year. The overall GTA’s aggregate home price rose 3.4 per cent over the same period.

Real estate values in Ontario’s Greater Golden Horseshoe region continued to appreciate at a brisk clip, as local economies grew and workers from the GTA looked to trade commuting time for lower house prices. Niagara-St. Catharines, Hamilton and Kitchener-Waterloo-Cambridge aggregate prices were up by 6.9 per cent, 6.3 per cent and 8.9 per cent, respectively.


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Behind the numbers , A deeper look into the 2018 GTA housing market

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Behind the numbers , A deeper look into the 2018 GTA housing market

The story of the GTA real estate market in 2018 was one of moderation, with improvement of market conditions in the second half of the year.

Sales, listings and average selling price were all down compared to 2017: there were 77,426 transactions (down 16.1 per cent), 155,823 new listings (down 12.7 per cent), and an overall average selling price of $787,300 (down 4.3 per cent).

In the first half of the year, it’s likely that many would-be buyers chose to delay purchasing a home due to higher borrowing costs and the new mortgage stress test, which could have contributed to the double digit decline in the number of transactions.

On the flip side, a decline in listings, contributed to increased competition between buyers looking to find a home that meets their needs. In turn, this fuelled a resumption of moderate year-over-year price growth in the second half of 2018.

It’s also true that certain segments of the market performed better than others from a pricing perspective. For instance, home prices were up slightly in the city of Toronto where a large proportion of sales were of condos. The condo market was the tightest market segment last year, with substantial competition between buyers who were searching for relatively affordable ownership housing options.

It is important to remember that TREB’s market area is made up of over 500 communities and market conditions obviously unfold differently across these communities. This is why it’s important to work with a professional TREB member realtor who is familiar with local market conditions in your areas of interest.

For information on the GTA real estate market in 2018 and in December, check out the infograph accompanying this article

GARRY BHAURA is president of the Toronto Real Estate Board, a professional association that represents 48,000 professional realtor members in the Greater Toronto Area. You can contact him At TREBpres@trebnet.com. For updates on the real estate market, visit TREBhome.com. If commercial property is what interests you, contact a TREB realtor by visiting TREBcommercial.com.

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The housing outlook for 2019

GTA among the most promising new home outlooks for 2019, Altus Group says

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GTA among the most promising new home outlooks for 2019, Altus Group says

The new home sector in Canada had a challenging year in 2018, but markets in the Greater Golden Horseshoe, including the GTA, have among the most promising outlooks for 2019, according to Altus Group.

Increased regulations, higher interest rates, new taxes and higher Development Charges are testing the industry,  Altus Group says in its New Home Outlook for 2019.

Altus Group is a leading provider of software, data solutions and independent advisory services to the global commercial real estate industry, and tracks new home development and sales activity across the country.

At the start of 2018, the supply of available new homes in both the Vancouver and Toronto markets was constrained, particularly in the condominium apartment sector. The lack of available product contributed to the rapid rise in pricing in 2017 and impacted sales volumes at the start of 2018.

In Alberta, the new home sector, along with the rest of the housing market, continued to be impacted by low energy prices and weaker economic activity. The opposite was the case in Montreal, where a sharp increase in demand for new homes led to peak sales levels.

The outlook at the end of 2017 was that the market would continue to see reasonably strong demand in 2018, but sales would be impacted by the new mortgage regulations and other new policies, taxes, and regulations – the degree to which was unknown.

Looking at 2018’s market performance year-to-date, Altus can see that demand was impacted in the major markets, most significantly in the single-family and higher-end townhouse segments. New condominium apartment sales have also moderated in Vancouver and Toronto where the incredibly strong demand seen in 2017 has softened in the current year. Some of the moderation is normalization from the frenzied market pace noted in recent years.

KEY FINDINGS

Greater Toronto Area

The GTA market came off a record new condominium apartment sales year in 2017. However, the impacts of mortgage rule changes and new development charges contributed to a decline in project launches and lower sales to start the year. Sales and project launch activity have increased in the back half of the year, but year-to-date sales remain down by almost 50 per cent compared to 2017.

While sales have been lower, pricing for new condominium apartment product in the downtown area has remained fairly stable with overall average prices trending towards $800,000.

New single-family sales continued to decline in 2018. Although availability of product to purchase has increased, it remains beyond the reach of most buyers.

Hamilton and Kitchener-Waterloo

Markets outside of the GTA have continued to benefit from their relative affordability compared to Toronto, particularly in Kitchener-Waterloo, where the new supply of condominium apartment product experienced strong demand in 2018. Both markets benefit from markedly better pricing compared to the GTA, where lower average prices for both new condominium apartment and single-family housing makes it a much more buyer-friendly market.

Promised improvements to transit, which will take several years to implement, will enhance commuting options throughout the Greater Golden Horseshoe, thus providing greater opportunities to live in markets outside of the GTA.

Montreal

Montreal saw a strong increase in new home sales over the past three years and continues to experience robust demand for new condominium apartment homes. Given the growth in sales, many of the challenges seen in the other large markets have started to impact Montreal – rising costs, elevated inventories of under construction product and increased investment activity. Despite the challenges, year-to-date sales activity remains strong and is trending slightly higher than last year.

Edmonton

The Edmonton market has been facing challenges from elevated inventory levels, a large stock of completed and unsold new homes and the impact that weak energy prices is having on housing demand. Consumers’ mortgage qualification has become a more significant challenge for new home projects, resulting in a year-over-year decline in sales levels by almost 50 per cent for both townhouse and condominium apartment product. The slow pace of sales has also meant that several projects have shifted to purpose-built rental.

While the market has been slow, there are some bright spots with development in the Ice District experiencing reasonably strong demand, along with well-priced townhouse developments in the suburban markets.

Calgary

The Calgary market is performing stronger in 2018, with increased sales of both new condominium apartment and townhouse product on a year-over-year basis. This growth has been exclusively in the suburban markets where new condominium apartment and townhouse sales have exceeded 2017 numbers.

While sales in the suburbs are tracking higher, the inner city and downtown markets are seeing weaker demand and lower sales volumes with higher office vacancy and lower downtown employment impacting housing demand near the core. Conversely, the strongest new home sales in the suburbs have been occurring in regions near employment centres.

Vancouver

Leading into 2018, the Vancouver market was the tightest of the markets examined, in terms of available new homes with only 1.8 months of inventory. This year, new project launches, particularly along transit lines and in the Fraser Valley, have added much needed inventory and boosted the supply to 3.3 months of inventory – although this remains the lowest in the country.

The frenzied pace in the market has softened with the sales rate at launch moderating, while price growth has stopped and even pulled back in certain segments of the market. A key challenge that has become more apparent as of late has been the price sensitivity of consumers, with higher-priced projects, or those priced above the competition, experiencing below average sales rates.

2019 Outlook

The outlook for housing demand in 2019 remains positive across the country with elevated immigration levels, continued demand from first-time homebuyers and tight rental vacancies and elevated rents encouraging homeownership. The key pressures that Altus Group sees continuing to impact the new home market in 2019 are higher interest rates and housing affordability constraints, rising construction costs and development charges impacting developers, and weaker economic growth potential in certain regions constraining demand.

Across the major markets in Canada, Altus Group believes the markets in the Greater Golden Horseshoe, including the GTA, have the most upside potential for an increase in sales activity in 2019 given the depth of the decline in 2018 and building off of the sales recovery noted in the back half of 2018.

Calgary and Edmonton will continue to be impacted by the weaker economy, but are not forecast to experience a material decline in overall sales volumes given the current levels of activity in each market.

The two markets that may see a decline in sales activity in 2019 are Montreal and Vancouver – but for very different reasons. Montreal had a strong sales year in 2018 and 2019 volumes are expected to decline as the market returns to more normal conditions. The Vancouver market, which is currently exhibiting the most potential for downside risk, is expected to see a modest decline in sales volumes as consumers react to higher borrowing costs and developers react to escalating construction costs in the face of lower revenue opportunities. With that said, the sales volumes in 2019 are still anticipated to be at or close to the 10-year sales average for the market.

altusgroup.com


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Don’t Doubt The Market

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Don’t Doubt The Market

There is no shortage of demand at the launches of new projects

The GTA housing market is as robust as ever and things have been humming along quite nicely for many years now.

And yet there will always be those who believe we are doomed, that the good times cannot continue for the GTA’s hot housing market — that it’s no doubt headed for an inevitable crash.

Well, that’s just not the sentiment we’re seeing at In2ition Realty as we’ve launched a series of successful projects across the region in recent weeks.

There was certainly no shortage of demand at the launch this summer of the first tower at Universal City, a Chestnut Hill Developments master-planned community in Pickering. The project enjoys lake views and is located just minutes from the GO Transit station. It sold out in record time and a second tower of 324 units just launched last month. The interest for tower two was equally as strong.

In Port Credit, on the other side of the GTA, it was the same story with the recent launch of Tanu Condos, a 204-unit tower and townhouse project by Edenshaw Developments. We had a lineup on the first day of launch!

Truth be told, Toronto condo builders can’t launch developments quickly enough to satisfy the insatiable demand.

It wasn’t all smooth sailing for the GTA housing market in 2018, mind you. The introduction of a new stress test on mortgage applicants certainly had an impact on home sales, sidelining some buyers.

And the GTA housing market faces considerable ongoing challenges, including trade labour shortages, development approval process and timing, project cost escalation, ability to secure financing, profit margins, land availability and cost … there are tons of hurdles for the building industry to contend with.

Although sales figures are down 40 per cent from last year, a portion is from lack of supply. In 2017 we saw 128 launches in highrise condos versus 56 in 2018.

The Toronto Real Estate Board (TREB) reported a 6 per cent uptick in regional home sales in October 2018, compared to the same month a year earlier. And the average sale price of a detached home in the GTA last month was up 3.5 per cent on a year-overyear basis, to $807,340. The average sale price for a condo in Toronto was $603,153, compared to $461,013 in the 905.

Renovation spending is also at an all-time high: $12.3 billion was spent on home alterations and improvements in Ontario in the first half of 2018, according to Altus Group.

Homebuying intentions are up, as well, despite affordability and qualifying challenges. An Altus Group survey of current homeowners and current renters showed that most GTA households are saying yes, they plan to buy a home in the next year or so.

The evidence doesn’t lie. Households and investors alike see the GTA housing market as a quality long-term investment. And why shouldn’t they? A thriving and diverse regional economy and a steady stream of 100,000-plus new arrivals in the GTA each year — more migration than any other city in Canada — will keep this market strong for years to come.

Debbie Cosic, CEO and founder of In2ition Realty, has worked in all facets of the real estate industry for over 25 years.

In2ition.ca

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Build For Growth: Housing Affordability

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Build For Growth: Housing Affordability

Band-Aid solutions will not address a generational challenge

It seems that every month or so, a new poll is released that shows that housing affordability is top of mind for GTA residents, and almost every week media covers the issue from a variety of angles. Commentators examine residents’ ability to purchase a home, the percentage of income spent on rent, the impact of new government rules, housing availability and the far-reaching societal consequences of the current situation.

So far, government interventions have focused on the demand side, including efforts to keep rent down through rent control, increasing the cost of housing for non-residents through the Non-Resident Speculation Tax, and more stringent mortgage qualification requirements. These steps have had the desired cooling effect but, as evidenced by experience in other markets, the effects may be transitory as the market adjusts. These are Band-Aid solutions that address the symptoms but do not deal with the fundamental issue. If we are to truly solve the challenges facing the GTA housing market, governments also need to address the supply side of the equation.

Unfortunately, it takes a long time to add new housing in our region. The rules and processes that worked in the past now struggle to keep up. That means that these days it takes approximately 10 years to complete a new highrise or lowrise project in the GTA. It is not just a question of the actual construction, but also the planning, zoning, approvals, infrastructure and servicing of land required to support development. This slow pace of bringing new homes to market has two practical implications. First, it exacerbates tight supply in a high-demand region, keeping prices up. Second, it means that unless current population projections of 9.7 million people in the GTA by 2041 are wrong, or there is a significant increase in migration away from the region, affordability challenges will be with us for some time.

As the municipal election campaigns unfold, we have heard pledges focused on increasing housing supply. These campaign promises have tended to focus on increasing the supply of affordable rental properties rather than on increasing housing supply overall. There are two problems with this approach. Almost two-thirds of Canadians live in homes they own rather than rent and these efforts do little for those aspiring to own. More importantly, and sadly for those trying to put an affordable roof over their heads today, given the lead time for adding new housing stock, these campaign pledges will not materialize as new homes any time soon.

If there is to be a meaningful solution to the generational housing challenge facing the GTA, governments must focus on removing the barriers to adding new housing supply, at the pace required, in the density desired under provincial growth plans, and preferably with access to transit.

That is why, as the municipal elections approach, we are encouraging GTA residents to have conversations with their local candidates about housing affordability and supply. You can send an email to your candidates at BuildForGrowth.ca

Dave Wilkes is president and CEO of BILD (Building Industry and Land Development Association), and can be found on: Twitter.com/BILDGTA) Facebook.com/BILDGTA YouTube.com/BILDGTA and BILD’s official online blog: BILDBlogs.ca

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