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Bank of Canada

Bank of Canada holds interest rate for now, but hikes still to come

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Bank of Canada holds interest rate for now, but hikes still to come

 

Bank of Canada

The Bank of Canada held its target for the overnight rate at 1.75 per cent on Jan. 9, where it has been since October 2018, and is lowering its growth forecast this year for Canada and around the world.

After raising the rate three times last year, some experts expected the Bank would do so again, either in late 2018 or early this year.

So, what does this latest non-action mean, and what can Canadian consumers expect in the coming months?

“The Bank gave several reasons for its decision to keep rates steady,” says Rubina Ahmed-Haq, personal finance guru and Homes Publishing columnist. “This includes lower oil prices, a weaker outlook for the global economy and Canada’s economy slowing more than expected.

Weaker investment

“It was a surprise that market pessimism did not come up,” she adds. “Despite stock market volatility making headlines for the last two months, there was no mention of the wild swings investors have been experiencing. The Bank did talk about weaker consumer spending and housing investment. This could be because of Canadian investors watching their portfolios and not feeling as confident in their spending.”

Sill, Ahmed-Haq says, the Bank remains very rosy on Canada’s economy, noting it has performing well overall. In its statement, the Bank says, “Growth has been running close to potential, employment growth has been strong and unemployment is at a 40-year low.” But still not enough to raise rates at this time.

Energy sector a concern

“The energy sector has been a concern for the Bank for some time now, but there seems to be a new focus on the housing sector, especially on the impact of mortgage guidelines changes and the five rate increases that have happened in the past 18 months,” James Laird, co-founder of Ratehub Inc. and President of CanWise Financial mortgage brokerage, told Homes Publishing.

Ahmed-Haq and Laird agree we should still expect higher rates in the coming months.

“The policy interest rate will need to rise over time into a neutral range to achieve the inflation target,” says Ahmed-Haq.

Rate hikes to come

Forecasters are now predicting two rate hikes this year, is down from earlier predictions of as many as three rates hikes in 2019.

“The Bank’s moderated outlook in the last two announcements has caused bond yields in Canada to drop lower than any point in 2018,” says Laird. “However, we are yet to see a corresponding decrease in mortgage rates. We would advise consumers to keep a close eye on mortgage rates in coming weeks.”

 

Highlights from the Bank’s announcement

  • Bank of Canada maintains target for overnight rate at 1.75 per cent
  • Canadian economy performing well overall
  • Employment growth strong
  • Unemployment rate at 40-year low
  • Canadian consumption spending and housing investment weaker than expected
  • Housing markets adjusting to municipal and provincial measures, new mortgage guidelines and higher interest rates
  • Household spending to be dampened by slow growth in oil-producing provinces
  • Real GDP growth forecast at 1.7 per cent for 2019
  • Growth of 2.1 per cent forecast for 2020

 

RELATED READING

Where are interest rates headed in 2019?

Homebuyers undeterred by changes in mortgage landscape

Interest rate hikes may not cost you as much as you think

 

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New homes today offer countless benefits

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New homes today offer countless benefits

Buyers of new homes today expect more – more space, more windows, more closets, more conveniences and more dazzle. The kind of “mores” you just don’t find in older homes, no matter how cozy they are.

While many homebuyers are attracted by the mores new homes have to offer, they also say they find the lesses very appealing. Less maintenance. Less repair work. And less costly heating and cooling bills. Builders are listening closely to what buyers are demanding. And they’re responding with new home designs that offer a whole new world of attractive style options and amenities at an affordable price.

Sure, older homes can be quaint. But when it comes to design, comfort, convenience and value, nothing compares to a brand new home. When asked what factors motivated them most to buy new, home shoppers across the country cited the following reasons:

LIVEABLE FLOORPLANS

New homes these days feature maximum light and spaciousness. Whether modest or grand, new home layouts combine informal areas for family activities, workable kitchens for comfort and ease, gracious formal rooms for elegant entertaining and cozy areas for privacy.

IMAGINATIVE DESIGN

Open and airy design appeals to a majority today’s new homebuyers. To accommodate this trend, even small compact homes are being built with soaring ceilings, dramatic entryways, deluxe master baths and innovative windows for a feeling of spaciousness.

LOTS OF LIGHT

A house filled with natural light bestows warmth, charm and uplifting feelings on those inside. To capture as much sunlight as possible, builders are making use of innovative strategically planned windows, skylights and a variety of sun spaces that make new homes look and feel more open, inviting and spacious.

DURABLE, LOW MAINTENANCE MATERIALS

New home builders are wise to affordable, Earth-friendly, low maintenance building materials that make it possible to conserve natural resources without sacrificing comfort. For example, engineered wood – a manmade composite lumber – uses half of the wood fibre of sawn lumber, but is considered stronger and cheaper than the conventional product. A wide variety of other innovative materials – many of which are recycled – are also finding valuable uses in new home construction.

COST SAVINGS

Here’s a fact that hooks many a new homebuyer — new homes consume half as much energy as homes built prior to 1980. Thanks to more efficient heating and cooling systems, better windows, controlled air filtration and improved insulation, new homes can save owners substantial sums every month. Besides the economical advantages, HVAC systems in new homes also provide more comfort and convenience year round.

SAFETY MEASURES

Occupants of new homes are almost six times less likely to die in fires than occupants of older homes. A growing number of new homebuyers are aware of this statistic and factor it into their purchasing decision. Builders are offering the latest smoke detection systems, circuit breakers and ground fault interrupters making new homes a safer choice for concerned families.

HEALTHY LIVING ENVIRONMENT

When it comes to health risks, new homes offer clear advantages. Asbestos – which can cause serious respiratory disease – has been removed from shingles, piping, cement board, roof tar, floor tiles, ceiling tiles and insulation. Lead is no longer used in paint or as solder for plumbing. Formaldehyde emissions from particleboard and hardwood plywood also have been eliminated. What’s more, in certain regions of the country, new radon prevention techniques are being built into new homes to prevent potential health problems.

STRONGER, QUIETER CONSTRUCTION

Extra bracing and framing anchors help new homes withstand high winds, storms and even earthquakes. In addition, new building materials make roofs and floors stronger and quieter than those older homes where board sheathing was used. New kinds of trusses for roofs and floors increase strength and also allow builders to offer a much wider range of design possibilities by eliminating most bearing walls.

ABUNDANT STORAGE SPACE

Closets, closets and more closets. It seems new homebuyers just can’t have enough of them. Homebuilders realize that storage space is something their purchasers crave. They’re responding with walk-in closets, built-in shelving and innovative storage areas to meet their buyer’s growing demands.

LESS UPKEEP, LESS HASSLE

With siding, windows and trim that never require painting, new homes are not only easy to maintain, they also keep their fresh attractive appearance year after year. Also worth noting, decks that embellish new homes these days are typically made of pressure treated lumber designed to resist rot and insects and retain their beauty from season to season.

MORE LUXURY AND CONVENIENCE

Enter a new home and you’ll immediately notice amenities designed to add ease to your lifestyle. You’ll find state-of-the-art kitchens with beautiful and functional built-in appliances, high-efficiency central heating and air conditioning, numerous electrical outlets and USB charging ports, plus luxurious bathrooms with large vanities, mirrors, enclosed showers and free-standing tubs. Look around. You’ll see that new home communities tend to look even better with age. As owners add personal decorative touches and landscaping, the homes in a new community acquire added charm … and added value.

A HOME THAT WILL AGE WELL AND APPRECIATE

Research shows that in many cases new homes appreciate more than older homes.

NEW HOMES ARE BETTER HOMES

If you’re hunting for a new home that satisfies all of the items on your wish list, new is definitely the way to go. So why deprive yourself any longer? Once you’ve made your move to your new dream home, you’ll wonder how you survived so long without it.

ALL IMAGES OF ALLEGRO IN AURORA BY GERANIUM

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Mortgage Rates web

Interest rate hikes may not cost you as much as you think

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Interest rate hikes may not cost you as much as you think

Mortgage Rates web

By Wayne Karl

When the Bank of Canada announced an interest rate hike  on Oct. 24 – and within hours all of Canada’s major banks followed suit in hiking their prime lending rates – consumers largely groaned.

All of CIBC, TD Canada Trust, Scotiabank, RBC Royal Bank and BMO Bank of Montreal almost immediately issued virtually the same statement, word for word: “(Insert bank name here) announced that it has increased its prime lending rate by 25 basis points from 3.70 per cent to 3.95 per cent, effective Oct. 25, 2018.”

Yes, the numbers, too, are identical.

BoC had already raised its influential overnight rate target three times since July 2017, to 1.5 per cent from 0.75 per cent, and now this most recent hike to 1.75 per cent, while hinting that further increases are likely.

For mortgage holders, though, the increases may not cost you as much as you fear.

Fixed rates

The majority of Canadian mortgage holders are on fixed-rate products, which is why a more moderate pace of rate increases likely won’t impact the market significantly, according to Canada Mortgage and Housing Corp. (CMHC).

Nearly half of existing mortgages in Canada will come up for renewal in 2018, according to a data release from CIBC Capital Markets. However, despite having to renew their mortgage in a rising interest rate environment, a borrower with a five-year mortgage rate may be able to get a better deal on their mortgage renewal today than when they entered the housing market five years ago.

According to calculations from mortgage rate comparison website  Ratehub.ca:

The best five-year fixed rate in September 2013 was 3.29 per cent. With that rate, a borrower with a $400,000 mortgage amortized over 25 years would have had a monthly mortgage payment of $1,953 over the last five years.

If that same borrower renewed their mortgage at today’s best five-year fixed rate of 3.19 per cent, their monthly mortgage payment would decrease by $17 per month to $1,936.

“Canadians who require a new mortgage in coming months should lock in a fixed rate as soon as possible,” says James Laird, co-founder of Ratehub Inc. and president of CanWise Financial. “This includes those who are purchasing a home, and homeowners whose mortgage is coming up for renewal.

“Remember that, on average, mortgage providers will offer their existing customers a discount of 0.25 per cent off their posted rate on a renewal. However, there may be more competitive rates out there. Be sure to shop around online or use a mortgage broker to negotiate the best rate for your renewal.”

Laird says borrowers should begin shopping around 120 days in advance of their renewal date in order to negotiate a competitive mortgage rate.

A rising interest rate environment could put downward pressure on home prices, he says, but upward pressure will come from predicted economic growth, lack of housing supply, immigration and first-time homebuyers.

Variable rates

“Borrowers should expect variable rates to perfectly correlate with Bank of Canada rate increases,” Laird says. “Variable rate mortgage holders should also be prepared for several increases to their interest rate in coming months and, with general interest rates in Canada on the rise, fixed rates will rise as well. However, those currently in fixed rates have nothing to worry about until their next mortgage renewal date.”

RELATED READING

7 factors that will affect GTA housing in 2019 – and 5 reasons to consider buying NOW

 

 

 

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Mortgage

Home prices and affordability still a concern – CMHC Mortgage Consumer Survey

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Home prices and affordability still a concern – CMHC Mortgage Consumer Survey

Mortgage

Rising home prices and affordability continue to weigh on prospective homebuyers, according to Canada Mortgage Housing Corp., in its 2018 Mortgage Consumer Survey.

Indeed, for first-time buyers, price and affordability are the most important factors they consider when buying a home – more than type of neighbourhood, proximity to work and overall condition of the home.

While decreasing steadily for four consecutive surveys, more than one-third (37 per cent) of homebuyers continue to feel concern or uncertainty when buying a home. “Concerns related to affordability top the list with more than 50 per cent of concerned buyers worrying about paying too much for their home while nearly one-third worry about rising interest rates and mortgage qualification,” the survey says.

Other survey highlights include:

  • Eighty-five per cent of first-time buyers spent the most they could afford on their home purchase.  However, a majority (76 per cent) are confident that they will be able to meet their future mortgage payment obligations.
  • Sixty per cent of first-time buyers and 69 per cent of repeat buyers indicated that, if they were to run into some financial trouble, they would have sufficient assets (such as investments and other property) to supplement their needs.
  • About 50 per cent of homebuyers agreed they would feel comfortable using more technology to arrange their next mortgage transaction. However, the majority agree it is important to meet face-to-face with their mortgage professional when negotiating and finalizing their mortgage.
  • Slightly more than half (52 per cent) of homebuyers were aware of the latest mortgage qualification rules. About one in five first-time buyers indicated the rules impacted their purchase decision with most opting to decrease non-essential expenses, purchase a less expensive home or use savings to increase their down payment.
  • Consumers continue to show confidence in their homebuying and mortgage decisions, with 80 per cent believing that homeownership remains a good long-term financial investment and 66 per cent believing the value of their home will increase in the next 12 months.
  • More than one in five (22 per cent) first-time buyers were newcomers to Canada and almost 50 per cent were millennials (aged of 25 to 34), down from 60 per cent in 2017.

RELATED READING

5 steps to solving the housing affordability issue in Ontario

Build For Growth: Housing Affordability

Higher Rates and New Rules Cooling the Condo Market

 

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h_oct18_perpectives_fi

Perspectives: How Big Should Your Home Be?

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Perspectives: How Big Should Your Home Be?

As home prices remain high in the GTA, more homebuyers should appreciate that smaller homes are the way to go.

According to The Globe and Mail, the average home size in Canada in 1975 was 1,050 square feet. By 2010, that figure had nearly doubled to 1,950 square feet. Over roughly the same period, the average number of people living in a home declined from 3.5 to 2.5.

Today, Canada ranks third in the world in terms of average home size according to Point2Homes.com, behind Australia and the U.S.

Our living space per person averages to 618 square feet, which is 36 per cent larger than in the U.K. and 44 per cent more than Brazilians.

Clearly, we are a nation that cherishes our space. However, with average home prices holding steady at over $1 million in Toronto, more homebuyers may have to make due with more modestly sized dwellings.

This is a reality that we might just have to live with. After all, Toronto has finally arrived on the global scene as a truly world class city. So, just as in Hong Kong, London, New York and Paris, more families are probably going to have to consider smaller homes and condominiums.

It’s a trend that is actually already well under way. According to The Toronto Star, as of the last census in 2011, there were 10,500 more Toronto families with children living in condos, up to 129,000 in total from just over 118,000. This meant that growth in condo living families (8.9 per cent) was over double the growth of total number of families living in the region (3.9 per cent).

This may not have been the dream for some homebuyers, but many families will love the sense of community and access to amenities that is available in the condominium scene.

Smaller houses have their benefits, too. They offer reduced maintenance costs, and you’ll need fewer items to furnish them, which can also save you a bundle. Small homes lend a taste of family, they can be cozy and promote more unity.

So, with home prices showing no signs of lowering any time soon, you may want to expand your criteria to consider the concept of life on a smaller scale. It’s the big decision that might just make all the difference in your life, and your finances.

Lisa Chester is vice president, sales and marketing, at International Home Marketing Group. IHMG.ca

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h_sep18_real_insight_fi

Real Insight: Behind The Numbers

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Real Insight: Behind The Numbers

A deeper look into the GTA housing market

As president of the Toronto Real Estate Board (TREB) for 2018/2019, I’m excited to use this column to help break down the numbers behind the GTA real estate market.

We saw continued positive signs in the market in July 2018, with strong growth in both the number of home sales and the average selling price compared to July 2017.

At 6,961, July sales were up by more than 18 per cent compared to the same month last year. The average price for these sales was $782,129, up by almost 5 per cent compared to July 2017.

These are certainly encouraging figures for the health of the real estate market, which is a key economic engine, and point to initial signs that some people who had moved to the sidelines due to the psychological impact of the Fair Housing Plan, as well as changes to mortgage lending guidelines, have begun to re-enter the market.

PRIORITIZING HOUSING POLICY ISSUES

Starting with the provincial election last month and looking forward to the upcoming municipal elections this fall, the TREB has been busy working with elected officials and candidates to ensure that homeownership and housing affordability are a priority on the agendas of policymakers at all levels.

In order to truly make strides in terms of housing affordability, governments must prioritize increasing housing supply, especially the missing middle housing options (home types that bridge the gap between detached houses and condominium apartments), and reducing tax burdens, such as land transfer taxes.

On the latter point, we have clear evidence that residents agree. In a recent poll of 1,200 GTA residents conducted by Ipsos Public Affairs in May 2018, 77 per cent of respondents said they supported reducing the provincial land transfer tax, while 68 per cent supported repealing it. Similarly, 76 per cent supported reducing the Toronto municipal land transfer tax, while 69 per cent supported repealing it. Most residents are opposed to land transfer taxes because they are a barrier to homeownership and discourage individuals and families from right-sizing.

We look forward to working with all elected officials to help provide effective solutions to housing affordability issues such as these and will continue to speak out for homebuyers, sellers and renters.

Garry Bhaura is president of the Toronto Real Estate Board. 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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h_feb2018_consumer_prot_fi

Consumer Protection: More Deposit Protection

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Consumer Protection: More Deposit Protection

Changes to act means down payment coverage has increased

When you buy a resale home, you can see what you’re getting before you sign an agreement and invest your money.

However, when purchasing a newly built home, your home may only exist as a floorplan when you put your deposit down. It’s then on your builder to bring your investment to life.

But if your home never makes it beyond the floorplan and your builder does not — or cannot — return your deposit, it’s good to know that your deposit is protected.

As of January 1, changes to regulations under the Ontario New Home Warranties Plan Act mean that new homebuyers of non-condominium freehold homes have more of their deposit money protected than ever before.

How does this work?

If you paid $600,000 for your home or less, you are eligible to receive up to $60,000 to reimburse you for amounts paid to the builder. If your home was more than $600,000, you are eligible to receive up to 10 per cent of the purchase price, to a maximum of $100,000.

In addition, the passage of the Strengthening Protection for Ontario Consumers Act, 2017, means that this deposit protection now includes other payments, such as those made for upgrades and extras.

While this enhanced coverage only applies to non-condominium freehold homes, it’s important to note that condo buyers are also protected by the Condominium Act, which requires that the full deposit be placed in trust. If, for some reason these funds are released improperly from the trust, Tarion will cover up to $20,000.

A new home is a big investment – one of the biggest of our lives. And while you can’t put a price on peace of mind, I’m pleased that we’re able to provide deposit protection that is more in line with today’s home prices.

If you’re looking to buy a new home this year, I encourage you to visit Tarion. com to learn more about Tarion’s new deposit coverage.

Howard Bogach is president and CEO of the Tarion Warranty Corporation. His column appears 10 times a year in HOMES Magazine. For more information about how Tarion helps new homebuyers, visit Tarion.com or find them on Facebook at Facebook.com/TarionWarrantyCorp

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First-time homebuyers face new challenges in 2018

First-time homebuyers face new challenges in 2018

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First-time homebuyers face new challenges in 2018

There are still plenty of opportunities for first-time homebuyers to enter the real estate market.

by Matthew Ablakan

Last year, we experienced many significant changes with regards to qualifying for a mortgage. In addition, the Bank of Canada increased their overnight rate twice for the first time since 2008. What does this mean for first-time homebuyers? A more difficult process to qualify for a mortgage, less purchasing power and more compromise.

As of January 1, 2018 buyers that have a down payment of less than 20 per cent will have to qualify using the Bank of Canada’s Benchmark Rate, which is currently at 4.99 per cent, or 2 per cent more than the interest rate they are being offered by their lending institution (whichever is higher). And the Bank of Canada has already signaled that Canadians should prepare for a series of interest rate hikes in 2018.

Matthew Ablakan, founder of Millennial’s Choice
Matthew Ablakan, founder of Millennial’s Choice

So, it seems, that this year will be filled with optimism as well as uncertainty. But there are still plenty of opportunities for first-time homebuyers to enter the market. With financial support such as the Land Transfer Tax rebate, HST rebate, Home Buyers’ Tax Credit and the ability to use your RRSPs for your down payment, there is still a lot of hope.

I recommend using a licensed broker who has great relationships with builders as well as banks and alternative lending institutions. This will give first-time buyers more flexibility, as well as options when it comes to making a purchase.

Some lending institutions — not the big banks — have more flexible guidelines that allow them to make certain exceptions when it comes to qualifying for a mortgage. And some builders offer incentives especially for first-time homebuyers.

Purchasing pre-construction real estate, whether a condo or a new home, offers flexibility as well as different options for first-time homebuyers. You have the opportunity to enter into the marketplace without having to dish out money for a mortgage and other expenses right away. All you need to worry about is the deposit the builder requires, as well as a mortgage pre-approval. This gives you lots of time to prepare for your final closing.

With that being said, if you purchase a condo that is going to be ready in three to four years, you might be able to afford something a little more expensive than if you were to purchase it right now. In the intervening years, you may be more established in your career, have a spouse who can contribute and you may be starting a family. All of these factors play a role in purchasing a home. Purchasing a new home or condo gives you flexibility in the event these things change.

But it is important not to overextend yourself when making a purchase. There are more costs to owning a home then just your mortgage payment. You must be prepared for things like property taxes, utilities, maintenance and upkeep, as well as things like cable, Internet and phone bills.

Another helpful tip is to move away from your parent’s way thinking. What your parents were able to purchase just doesn’t exist anymore. That is a fact. That is the reality that first-time buyers are faced with today. There is nothing wrong with purchasing a one-bedroom condo to get your foot in the door. This will allow you to build wealth and help you get one step closer to that dream home.

When it comes to purchasing real estate, there are many different factors involved. I strongly recommend you do your own research as well as consult with different professionals. There are some professionals who offer things like buyer seminars. It is also important to know what you qualify for before you start your search. This will save you lots of time. Also, ask your broker if he/she can recommend a lawyer as well as a mortgage broker. This will save you the hassle of finding someone that is trustworthy and reliable. Always remember that a real estate salesperson or broker cannot provide you with legal advice. The onus is on you to show your contract to a lawyer, who can then provide you with that peace of mind.

Purchasing a home is supposed to be fun. It represents the start of a new chapter and adventure. Compromise does not mean settlement. When you are in your home, it should feel like home.

Matthew Ablakan is the founder of Millennial’s Choice, a team of experienced real estate and mortgage brokers dedicated to serving the millennial generation.



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Record October 2017 for new condo sales

Record October 2017 for new condo sales

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Record October 2017 for new condo sales

Average price for available new detached homes rises to $1,548,888

New construction home sales soared in the GTA in the month of October, primarily driven by sales of multi-family homes, condo apartments in highrise and midrise buildings and stacked townhomes, the Building Industry and Land Development Association (BILD) announced November 24.

There were 5,377 new homes sold in October, according to Altus Group, BILD’s official source for new home market intelligence. About 91 per cent of them (4,884 units) were multi-family homes and only 9 per cent (493) were lowrise single-family homes such as detached and semi-detached houses and townhomes. Condo sales for October were 81 per cent above the 10-year average of 2,697, and the highest October yet recorded, while lowrise sales were 64 per cent below the 10-year average of 1,388.

As of the end of October, 39,476 new homes have been sold in the GTA in 2017, 82 per cent of them condo apartments in highrise and midrise buildings and stacked townhomes.

“October data shows that the new homebuyer is left with very little choice when it comes to purchasing a new home,” said BILD president and CEO Bryan Tuckey.

“Provincial intensification policy has our members building more high and midrise dwellings making housing choices a challenge. The cost of a single-family home is out of reach for many consumers pushing them to buy a condo over a house. As a result we are seeing record-breaking condo sales and higher prices this year for new lowrise homes.”

While supply of new housing increased again in October and reached 12,500 units, it is still well below what is considered a healthy level. Supply of new housing is typically measured by the number of new homes available for purchase in builders’ inventories at the end of the month. At the end of October, there were 9,308 multi-family homes and 3,192 single-family homes available in the GTA.

“Demand for newly-built condominium apartments is being fueled by three key buyer groups – small investors who have become the de facto providers of new rental housing supply in the GTA; end user buyers who might prefer a single-family home but are seeking out more affordable options; and the more traditional end users who value the lifestyle and amenities of well-located projects,” said Patricia Arsenault, Altus Group’s executive vice president of research consulting services.

Prices of available new homes in October increased slightly for both single-family lowrise homes and multi-family homes. The average for available new single-family homes was $1,217,428 up from $1,204,829 in September, and 29.8 per cent above last October’s average price of $937,689. The average price for available new detached homes was $1,548,888 and the average for available new townhomes was $995,571.

Meanwhile the average price of available new condo apartments in highrise and midrise buildings and stacked townhomes was $677,456 in October, up from September’s $661,188. The average price per square foot was $791 and the average unit size was 857 square feet.

October 2017

Highrise

Lowrise

Total

Region

2017

2016

2015

2017

2016

2015

2017

2016

2015

Durham

15

97

26

209

329

325

224

426

351

Halton

158

375

199

75

514

246

233

889

445

Peel

89

203

174

62

178

486

151

381

660

Toronto

3,994

1,509

2,307

2

22

66

3,996

1,531

2,373

York

628

687

573

145

625

695

773

1,312

1,268

GTA

4,884

2,871

3,279

493

1,668

1,818

5,377

4,537

5,097

Source: Altus Group



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GTA home sales drop in April

GTA home sales drop in April

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GTA home sales drop in April

(CNW)—According to statistics released today by The Canadian Real Estate Association (CREA), national home sales declined in April 2017.

Home sales over Canadian MLS Systems fell by 1.7 per cent in April 2017 from the all-time record set in March.

April sales were down from the previous month in close to two-thirds of all local markets, led by the Greater Toronto Area (GTA) and offset by gains in Greater Vancouver and the Fraser Valley.

Actual (not seasonally adjusted) activity was down 7.5 per cent year-over-year, with declines in close to 70 per cent of all local markets. Sales were down most in the Lower Mainland of British Columbia, where activity continues to run well below last year’s record-levels. The GTA also factored in the decline, with faded activity compared to record levels set in April last year.

“Sales in Vancouver are down from record levels in the first half of last year but the gap has started to close,” said CREA president Andrew Peck. “Meanwhile, sales are up in Calgary and Edmonton from last year’s lows and trending higher in Ottawa and Montreal. All real estate is local, and realtors remain your best source for information about sales and listings where you live or might like to.”

“Homebuyers and sellers both reacted to the recent Ontario government policy announcement aimed at cooling housing markets in and around Toronto,” said Gregory Klump, CREA’s chief economist. “The number of new listings in April spiked to record levels in the GTA, Oakville-Milton, Hamilton-Burlington and Kitchener-Waterloo, where there had been a severe supply shortage. And with only 10 days to go between the announcement and the end of the month, sales in each of these markets were down from the previous month. It suggests these housing markets have started to cool.

“Policy makers will no doubt continue to keep a close eye on the combined effect of federal and provincial measures aimed at cooling housing markets of particular concern, while avoiding further regulatory changes that risk producing collateral damage in communities where the housing market is well balanced or already favours buyers.”

The number of newly listed homes jumped 10 per cent in April 2017, led overwhelmingly by a 36 per cent increase in the GTA. Housing markets in the Greater Golden Horseshoe also saw similar percentage increases.

The jump in new listings and drop in sales eased the national sales-to-new listings ratio to 60.1 per cent in April compared to 67.3 per cent in March.

A sales-to-new listings ratio between 40 and 60 is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.

The ratio was above 60 per cent in just over half of all local housing markets in April, mostly in British Columbia and Southwestern Ontario. The GTA downshifted into the middle of the balanced range in April, while Greater Vancouver and the Fraser Valley have returned to sellers’ market territory.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents how long it would take to completely liquidate current inventories at the current rate of sales activity.

There were 4.2 months of inventory on a national basis at the end of April 2017, up slightly from 4.1 months in March when it fell to its lowest reading in almost a decade.

Although new listings surged in the Greater Golden Horseshoe, inventories remain tight at near or below one month across the region. Ontario’s recent changes to housing policy were announced late in the month, so their full effect on the balance between supply and demand has yet to be determined.

The Aggregate Composite MLS HPI rose by 19.8 per cent year-over-year in April 2017. Price gains accelerated for all benchmark housing categories tracked by the index.

Two-storey single-family homes posted the strongest year-over-year price gains (+21.8 per cent), followed closely by townhouse/row units (+19.9 per cent), apartment units (18.8 per cent) and one-storey single-family homes (17.2 per cent).

While benchmark home prices were up from year-ago levels in 11 of 13 housing markets tracked by the MLS HPI, price trends continued to vary widely by location.

After having dipped in the second half of last year, home prices in the Lower Mainland of British Columbia have been recovering, are up from levels one year ago, and are now at new heights or trending toward them (Greater Vancouver: +11.4 per cent y-o-y; Fraser Valley: +18 per cent y-o-y).

Meanwhile, benchmark home price gains remained in the 20 per cent range in Victoria and elsewhere on Vancouver Island. Price gains were in the 30 per cent range in Greater Toronto and Oakville-Milton, and ranged in the mid-20 per cent in Guelph.

By comparison, home prices eased in Calgary (-0.9 per cent y-o-y) and Saskatoon (-2.6 per cent y-o-y) and are now about 5.5 per cent below their peaks reached in 2015.

Home prices were up modestly from year-ago levels in Regina (+0.4 per cent overall, led by a 2 per cent increase in apartment prices), Ottawa (+4 per cent overall, led by a 4.9 per cent increase in two-storey single-family home prices), Greater Montreal (+3.7 per cent overall, led by a 5.5 per cent increase in prices for townhouse/row units) and Greater Moncton (+4.8 per cent overall, led by a 12.7 per cent increase in prices for townhouse/row units).

The MLS Home Price Index (MLS HPI) provides the best way of gauging price trends because average price trends are prone to being strongly distorted by changes in the mix of sales activity from one month to the next.

The actual (not seasonally adjusted) national average price for homes sold in April 2017 was $559,317, up 10.4 per cent from where it stood one year earlier.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which are two of Canada’s most active and expensive housing markets. Excluding these two markets from calculations trims more than $150,000 from the average price.

MLS Systems are co-operative marketing systems used only by Canada’s real estate boards to ensure maximum exposure of properties listed for sale.

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 120,000 realtors working through some 90 real estate boards and associations.

Further information can be found at http://crea.ca/statistics.


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