Tag Archives: Toronto Real Estate Board

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Behind the numbers: The GTA housing market in April 2020

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Behind the numbers: The GTA housing market in April 2020

TRREB released two market reports covering the month of April: the mid-April market update and the regular monthly Market Watch. Market conditions unfolded in a relatively uniform manner throughout April. Necessary physical distancing measures that continue to remain in place under the provincial state of emergency go hand-in-hand with the decline in resale housing market activity.

There were 2,975 sales reported through TRREB’s MLS system in April 2020, down 67 per cent on a year-over- year basis. Weekday sales remained within a relatively steady range during the month, averaging 130 sales per day.

Matching the decline in sales was the decline in new listings. In April, the number of new listings entered into the MLS system was down by 64.1 per cent year-over-year to 6,174.

Home prices, on the other hand, remained flat on a year-over-year basis. The average selling price in the Greater Toronto Area for April 2020 was $821,392 – up 0.1 per cent compared to April 2019. The number of sales remained high enough relative to listings to provide support for home prices, on average, at last year’s levels.

COVID-19 and its impact on the housing market

COVID-19 has impacted home sales and listings across the GTA. Realtors are adapting and have been able to facilitate transactions on behalf of buyers and sellers through the use of technology and innovative techniques, including virtual open houses.

Looking back at the first quarter of 2020 through the first two weeks of March, we saw a near-record pace for home sales and double-digit annual rates of price growth. However, when thinking about home prices during the COVID-19 pandemic, it is important to remember that the pace of price growth is dictated by the relationship between sales and listings.

So, while the onset of COVID-19 has understandably shifted market conditions and resulted in average selling prices coming off their March peak, there has continued to be enough active buyers relative to available listings to keep prices in line with last year’s levels.

It’s also important to note that breaking down recessions of the past, in addition to looking at their recovery phases, it does not necessarily provide the best guide on how the housing market will recover from the impact of the COVID-19 pandemic.

A key factor for the housing market recovery will be a broader reopening of the economy, which will result in an improving employment picture and a resurgence in consumer confidence. The province is currently undertaking carefully measured and monitored steps towards safely opening up some parts of the economy.

TRREB continues to encourage its member realtors to use alternative marketing strategies such as video and virtual tours wherever possible, under the current state of emergency, and to continue to follow directives and guidance being given by the government and public health agencies.

TRREB is further supporting its members by offering an improved virtual learning environment through its professional development department. Members are being educated on ways to use technology in innovative ways to conduct business virtually. They are also being provided with tools and services to meet clients’ needs.

Michael Collins is president of the Toronto Real Estate Board, a professional association that represents 54,500 professional realtor members in the Greater Toronto Area. You can contact him at trebpres@trebnet.com. For updates on the real estate market, visit trreb.ca.

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The Power Seat – building industry CEOs call for government change

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The Power Seat – building industry CEOs call for government change

The Power Seat is a new feature series in which we put one pointed question to a select, specific audience.

We asked CEO level executives among the homebuilding community:

“You have been invited to a meeting with representatives of municipal, provincial and federal governments, and it’s your turn to speak. What do you say to them?”

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This year is one of continual growth, which presents the opportunity to respond to the current and future challenges Ontarians face. All levels of government project an increase in Ontario’s population of 2.6 million #homebelievers by 2031. Change is where need meets opportunity.
We need more housing supply and choice across Ontario, and that means housing can be a cornerstone solution to climate change, the employment skills gap and the economy. Instead of viewing growth as a problem, let’s view it as the change opportunity for the type of future, communities and neighbourhoods that Ontarians want to call home.

Joe Vaccaro
CEO, Ontario Home Builders’ Association

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All three levels of government need to work collaboratively, rather than in silos, and with one agenda, rather than competing ones. With a housing affordability and supply problem impacting the GTA, we need solutions-oriented collaboration.
We need to make it simpler to bring new homes to market by streamlining the process, faster to build new homes by reducing approval times, and fairer by making sure fees and taxes are equitable

Dave Wilkes
President and CEO, BILD

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Help us do our job to create new housing. We have a shortage of housing because of the lack of supply. Don’t look at new housing as a golden goose that you can keep laying on more and more municipal charges. Right now, about 24 per cent of the cost of all new housing is going to some level of government in the form of taxes, levies, charges and fees.

Gary Switzer
Chief Executive Officer MOD Developments, Toronto

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The three levels of government, as well as builders and developers, may all have different constituencies, but our objectives are remarkably similar.

Affordable housing works for all of us. Good planning works for all of us. Good design works for all of us. Building Green buildings works for all of us. Governments working together with developers works for all of us and can help facilitate all of this.

At The Rose Corporation, we accomplished exactly this, working with York Region, the Town of Newmarket and the federal government (CMHC). Together, we are now building a sustainable, complete and better overall community for having worked in close consultation with each other.

Daniel Berholz
President, The Rose Corporation

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The largest issue surrounds climate change, GHG emissions and resilience in new housing. Over the next decade, these may be some of the biggest changes our industry will face. Our building code is about to be changed to begin steering the industry towards net-zero homes.

Government needs to support the R&D side of the construction industry so that new and better products can be developed. Net-zero homes are achievable. There are a number of builders that have already constructed a discovery home and are looking at the ability to market this in a production capacity. Although from a technical perspective this is achievable, it will come at a significant cost. Net-zero homes will not be cheap.

The bigger question, then, is, will such initiatives be affordable? This is what governments will have to balance. When they regulate such a high minimum standard, our industry will be forced to meet the requirements. This is where R&D pays back. We need materials and products that are approved and available at the best price points possible to adopt into our building program.

Government should keep a close eye on the timing for mandating high standards of construction, and be mindful that affordability must be a top priority in the implementation.

Johnathan Schickedanz
General Manager, FarSight Homes, President, Durham Region Home Builders’ Association

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Housing affordability is one of the most important issues facing Canadians today. TREB remains diligent, along with other real estate boards and associations across Canada, in urging all levels of government to remove barriers and reduce the cost of homeownership.

With all levels of government in Canada, plus reputable international bodies acknowledging that we have a housing supply problem, and specifically the affordability pressures facing the GTA, it’s imperative for the growth of our city and region that we have flexible housing market policies that will help sustain balanced market conditions over the long term.

The time is now and policymakers need to translate their acknowledgment of supply issues into concrete solutions in 2020 to bring a greater array of ownership and rental housing online. As always, TREB will be there to help policymakers have the right impact on the market and Canadians.

John DiMichele
CEO, Toronto Real Estate Board

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The bottom line is this: Unless we can shorten the time it takes to bring developments through the approval process and to market faster, demand is going to continue to outstrip supply.

There have been some very positive enhancements the provincial government has put through to try and reduce these timeframes, by reducing red tape and other changes, and we’re grateful for that.

But in many cases the Province and the municipalities do not see eye to eye on how policies should be applied, and this constant fighting continuously thwarts the positive efforts and mires the process.

We have to work together – the politicians, building industry and public – to accept growth, have growth pay for growth, and not for unrelated municipal spending as well. We need to plan to have adequate supply of all types of housing, but especially what is missing in our urban areas today – the two- and three-bedroom midrise condos – the “missing middle.”

 cl_feb2020_the_power_seat_bob_finniganBob Finnigan
Principal and COO of Acquisition & Housing, Herity, Toronto

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It’s vital that all three levels of government work together to address the housing affordability issue by increasing the supply of housing to meet demands of growth in the GTA for decades to come.

Sustained infrastructure growth requires multi-level government support partnering with private enterprise to foster innovation in procurement and delivery and that the planning approval process is streamlined to avoid increased costs which impact housing affordability.

The cities in the Greater Golden Horseshoe need to actually adopt and implement provincial policies on development densities near transport nodes. Ultimately, the homeowners carry the burden of the increased costs from a lack of land supply, approval delays and development charge increases.

Niall Collins
President, Great Gulf Residential, Toronto

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Canadian economists and politicians have spent the better part of the last decade sighing with relief and sharing kudos for having skirted the U.S. housing crisis. Meanwhile, north of the border, Canadians are on a rollercoaster ride, as a result of government intervention and other factors. We’ve experienced record-high housing prices, record-low interest rates, economic downturns, and domestic speculators and foreign investors pushing people out of their homes because they can’t afford to live there anymore. We’ve seen housing inventory drop, and new development hindered by red tape and mounting development fees.

We need to keep up with housing demand to maintain sustainable housing values. It’s a complex issue with many moving parts.

To Mayor John Tory: Eliminate the municipal Land Transfer Tax, or at the very least, cap it. With Toronto’s ever-increasing property values, this tax is prohibitive in an already unaffordable market. The prospect of having to pay double LTT is deterring some move-up buyers from listing their homes, further straining the already low housing supply. How do you intend to stimulate housing market activity?

To Premier Doug Ford: Domestic and foreign immigration to Ontario is critical to a healthy economy, but as you work to continue attracting the biggest and best businesses to the province, where will you house the employees and their families? Housing supply is critically low, with developers stuck behind red tape and buried under development fees, preventing them from building the homes Ontarians so desperately need.

To Prime Minister Justin Trudeau: Canada needs a National Housing Strategy that addresses inventory and affordability in our cities. Many Canadians, especially Millennials, new immigrants and those employed in the so-called “gig economy” feel homeownership is becoming less tangible by the day. While politicians of all stripes acknowledge the mounting urgency of affordable housing, few are offering any timely or compelling solutions. Focus on creating supply and affordability in a sustainable way, instead of continuing to support corrective measures that have constrained Canadians from participating in the economically beneficial practice of homeownership.

Christopher Alexander
Executive Vice-President and Regional Director, ReMax of Ontario- Atlantic Canada

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Buyer confidence remains high

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Buyer confidence remains high

In December 2019, residential sales reported through TREB’s MLS System by Greater Toronto Area realtors were up by 17.4 per cent year-over- year to 4,399. Total sales for calendar year 2019 amounted to 87,825 – up by 12.6 per cent compared to the decade low 78,015 sales reported in 2018. On an annual basis, 2019 sales were in line with the median annual sales result for the past decade.

We certainly saw a recovery in sales activity in 2019, particularly in the second half of the year. As anticipated, many homebuyers who were initially on the sidelines moved back into the market place starting in the spring. Buyer confidence was buoyed by a strong regional economy and declining contract mortgage rates over the course of the year.

While sales were up in 2019, the number of new listings entered into TREB’s MLS system was down by 2.4 per cent year-over-year. For the past decade, annual new listings have been largely in a holding pattern between 150,000 and 160,000, despite the upward trend in home prices over the same period.

I asked Jason Mercer, TREB’s chief market analyst, for his thoughts on the latest numbers.

“Over the last 10 years, TREB has been drawing attention to the housing supply issue in the GTA. Increasingly, policy makers, research groups of varying scope and other interested parties have acknowledged that the lack of a diverse supply of ownership and rental housing continues to hamper housing affordability in the GTA. Taking 2019 as an example, we experienced a strong sales increase up against a decline in supply. Tighter market conditions translated into accelerating price growth. Expect further acceleration in 2020 if there is no relief on the supply front.”

The MLS Home Price Index Composite Benchmark was up by 7.3 per cent on a year-over-year basis in December 2019. From June 2019 onward, the annual growth rate in the MLS HPI Composite Benchmark accelerated. The average selling price in December 2019 was $837,788 – up almost 12 per cent year-over- year. For calendar year 2019, the average selling price was $819,319 – up by four per cent compared to $787,856 in 2018.

I asked TREB’s CEO John DiMichele what the new year has in store for the GTA real estate market.

“TREB is committed to conducting and sponsoring evidence based, empirical research on housing market and broader regional economic issues. We share this research in order to contribute to the policy debate. On February 6, 2020, TREB will be releasing its Market Year in Review and Outlook report, which will contain consumer polling results, market overviews and forecasts, and new third-party research on housing and the economy in the GTA.”

Michael Collins is president of the Toronto Real Estate Board, a professional association that represents 54,500 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.

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Behind the numbers, Breaking down the market in March 2019

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Behind the numbers, Breaking down the market in March 2019

March 2019 sales figures followed a broader trend for the first quarter, with sales inline with the number of transactions reported through TREB’s MLS System during the first three months of 2018. Total March sales, at 7,187, were virtually unchanged from the number of sales reported in march 2018 (7,228). However, the March new listings statistic suggested that the market continues to be hampered by a lack of listings. New listings for March 2019 were down by 5.1 per cent compared to March 2018.

On the pricing front, the MLS Home Price Index Composite benchmark was up by 2.6 per cent year-over-year in March and the average selling price was up by 0.5 per cent to $788,335.

TAXES, OSFI AND SUPPLY

Whether it be proposed increases to the Toronto Municipal Land Transfer Tax, the strict OSFI-mandated mortgage stress test guidelines, or the low levels of housing stock available for purchase, there’s no doubt that relief is needed for the GTA housing market.

Indeed, the OSFI stress test continues to impact home buyers’ ability to qualify for a mortgage and TREB continues to press for a review of OSFI provisions and mortgage lending guidelines, including more flexibility around stress test provisions and allowable amortization periods for insured mortgages.

Similarly, while TREB commends the City of Toronto on the recently announced Housing TO – 2020-2030 Action Plan, a process we’re advising the City on, we question some of the City’s proposed sources of revenue that will be used for its implementation. Namely, a recently proposed increase to the Municpal Land Transfer Tax (MLTT) on higher priced properties to fund the Housing Allowance Program. This tax is problematic because the MLTT is not a sustainable revenue source. This became clear during the recent City budget process. Plus, additional MLTT on higher priced homes could cause a trickle down effect, negatively impacting the supply of homes throughout the housing price continuum by preventing people from “moving up” the continuum.

Finally, while sales continue to trend downward when compared to the record highs seen in 2016 and 2017, supply is receding as well and by an even greater margin. This lack of available supply has created increased competition between buyers, thereby driving up prices and amplifying housing affordability issues in the city.

It’s clear that all three of these issues need to be addressed and TREB will continue to lobby all levels of government for housing and housing related policies that are fair to home buyers, sellers and renters alike.

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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How the new government initiative could help condo buyers

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How the new government initiative could help condo buyers

The federal government wants to help you buy your first home. In the 2019 budget, the government unveiled brand new plans that, it says, will help young buyers who have been shut out of the real estate market.

This includes the new First-Time Home Buyer Incentive and the expanding of the ‘Home Buyers’ Plan. Both can be used to buy a condo unit. Here is what you need to know.

Criteria to qualify

The new First-Time Homebuyer Incentive will allow eligible first-time homebuyers to apply to finance a portion of their home purchase through a shared equity mortgage with Canada Mortgage and Housing Corp. (CMHC). Eligibility means you have to have the minimum down payment for an insured mortgage. That is five per cent for a resale home and 10 per cent for a new home. Your household annual income cannot exceed $120,000. Lastly, the insured mortgage cannot be greater than four times the participants’ annual household income. Meaning the mortgage cannot exceed $480,000.

Pay back rules not clear

It’s not clear how much has to be paid back; is it an equal equity share or money borrowed plus interest? Those terms and conditions are expected to be released by CMHC. But the government clearly states that no ongoing payment will be required while you own your first home or still have a mortgage payment on it.

How it claims to help

The thinking is this will lower your overall monthly payments, effectively making your home more affordable to live in then if you had to carry a larger mortgage. Here is an example the federal budget detailed:

If a borrower purchases a new $400,000 home with a five percent down payment and a 10-per-cent CMHC shared equity mortgage ($40,000), the borrower’s total mortgage size would be reduced from $380,000 to $340,000, reducing the borrower’s monthly mortgage costs by as much as $228 per month.

Old program limit increased

Along with this new initiative, the government proposes to increase the Home Buyers’ Plan withdrawal limit from $25,000 to $35,000. First-time homebuyers who have money saved in their RRSP can withdraw that amount without penalty to use towards the down payment on their first home. That money has to be paid back into the RRSP over 15 years. If you borrow the maximum amount you would need to deposit $2,333 a year back into your RRSP. Bear in mind that is on top of all the regular mortgage payments you would be making.

Little to help affordability

Critics say this will do little to help young people in Canada’s most expensive markets such as Toronto and Vancouver, as average home prices are in the seven figures. But these schemes could be advantageous for anyone looking to buy their first condo unit. According to the latest figures from the Toronto Real Estate Board, the average price of a condominium apartment was $558,728 at the end of 2018.

Before the new initiatives were announced in the federal budget, Jason Mercer, TREB’s director of market analysis, said, “The condominium apartment segment continued to be a key entry point into the GTA homeownership market in 2018. Higher mortgage qualification standards meant that many first-time buyers were looking for more affordable housing options.”

If you’re a first-time homebuyer shopping for a condo in that price range, you could be in luck. But for most others, these plans will do little to help Canadians afford to live in the most expensive cities.

Rubina Ahmed-Haq is a journalist and personal finance expert. She is HPG’s Finance Editor. She regularly appears on CBC Radio and TV. She is a contributor on CTV Your Morning and Global Toronto. She has a BA from York University, received her post graduate journalism diploma from Humber College and has completed the CSC. Follow her on Twitter @alwayssavemoney.

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Breaking down the GTA housing market in 2019

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Breaking down the GTA housing market in 2019

This year has gotten off to a good start with sales, listings and price all up on a year-over-year basis. This is encouraging, especially when the inclement weather experienced in the GTA on the last week of the month is considered.

There were 4,009 home sales in January 2019, up 0.6 per cent and listings were up 10.5 per cent with 9,456 homes listed on TREB’s MLS system in January. While the average selling price was up by 1.7 per cent on a year-over-year basis, after preliminary seasonal adjustment the average selling price edged lower when compared to the previous month.

One trend to keep an eye on as we move through 2019 is stronger price growth for higher-density lowrise (such as condo townhomes, duplexes) and condominium apartment home types.

As the market experiences increasing affordability pressures, it is likely that many of those looking to buy a home will prefer to purchase these often lower-priced home types. Much of the affordability pressure we are seeing in the GTA has been driven by the OSFI mandated two percentage point mortgage stress test, a provision TREB is urging the government to revisit with an eye toward more flexibility.

A BROADER LOOK AT THE GTA HOUSING MARKET THROUGH TREB’S MARKET YEAR IN REVIEW & OUTLOOK REPORT 2019

On Feb. 6, TREB released its Market Year in Review & Outlook Report. While you can download a copy of the report from trebhome.com, I want to highlight some of the exciting contents and ground-breaking research contained in this year’s issue.

The report takes an in-depth look at the market in 2018 and provides a forecast for 2019. The analysis is punctuated by TREB-commissioned Ipsos surveys of existing homeowners and intending buyers, and helps to predict what 2019 will look like in terms of sales and price. It also shines the spotlight on issues ranging from preferred home types to the impact of the new mortgage qualification guidelines on buying intentions. The report also breaks down the rental market, the commercial market, and the new homes and residential land sectors.

This year’s report focused on envisioning housing options and supply for livable communities and features TREB-commissioned research on transit supportive development from the Pembina Institute and a study on missing middle housing from Ryerson University’s Centre for Urban Policy and Land Development.

The effects of transit-supportive development are highlighted by two real-life case studies – at Long Branch and Pickering GO Stations – and show that housing built within a 10-minute walk of a transit station, and in areas that feature a balanced mix of housing, jobs, shopping and services, can result in potential housing and transportation savings ranging from 10 to 56 per cent for individuals, families and retirees.

The Ryerson University Centre’s research offers some workable ideas on how to create more missing middle housing, which could fill the gaps in the types of homes needed and positively impact affordability. The study shows that there is plenty of opportunity to build this type of housing and that doing so could result in savings of between 20 to 49 per cent.

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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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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5 things we can learn from real estate in 2018

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5 things we can learn from real estate in 2018

2018 web

With much of 2018 in the rear-view mirror, It’s been quite the year for the housing market in the GTA and elsewhere in Ontario. From sales and price fluctuations to supply concerns to rising housing costs. As 2019 approaches, here are five things we can learn from real estate in 2018.

 

1 Get used to the affordability issue

Get used to affordability challenges, especially in the GTA. This oft-cited issue is not going away any time soon, despite lobbying from the likes of the Building Industry and Land Development Association (BILD) and the Toronto Real Estate Board (TREB).

Key economic fundamentals such as population and employment growth will continue to drive housing market demand. Over the next decade, almost 700,000 first-time buyers will target the GTA or Hamilton markets, according to a report from the Ontario Real Estate Association. Meanwhile, the supply of new homes is not yet being addressed, which contributes to rising prices.

With recent interest rate hikes and other changes, sales and prices in the GTA saw some moderation in 2018. But this will be short-lived, and a return to price growth is expected.

 

2 Increased government involvement – finally

Government lobbying by BILD and TREB seems to be paying off, in the sense that the Province is increasingly aware of the issues facing the industry – and buyers.

Buyers, you may not realize it, but you should thank BILD, TREB and other associations for that.

In late November, Ontario announced it was committing to a housing action plan “to help create more housing faster, give people more choice and bring down housing costs.”

Like anything involving government, though, this process will likely be slow moving – meaning, some of the challenges, namely increasing housing supply – will take time to be resolved.

But at least the issues are on the agenda.

One real example of this improved awareness is Ontario’s recent plan to change the 40-year-old apprenticeship system in the province – a move the home building industry says is a “game changer.”

It’s a game changer because the new one-to-one ratio, a significant change from the existing 3-to-1 ratio, will enable home builders and renovators to more easily hire and train new apprentices. Besides creating more job opportunities for trades workers, the move also helps builders and renovators operate their businesses

 

3 Fixing on interest rates

The Bank of Canada raised its overnight rate three times in 2018 – January, July and October – to where it sits now, 1.75 per cent.

Canada’s major banks, as is usually the case, responded by immediately raising their own rates.

Naturally, all of this has Canadians feeling a little uneasy.

The Conference Board of Canada’s latest Index of Consumer Confidence confirms that rising interest rates and weaker wage growth have started to take their toll on confidence. With interest charges squeezing Canadian wallets and weakening wage growth offering little reprieve, consumers have become hesitant to make major purchases and are less positive about the state of their finances.

In its latest rate announcement on Dec. 5, the Bank of Canada noted that global economic expansion is slowing, and the effects of the “oil price shock” are being monitored.

“We expect that the Bank will not move the overnight rate until the effects of the declining energy sector are known,”according to interest rate comparison website ratehub.ca. “However, the Bank makes it clear that they still plan on raising the key interest rate in 2019, likely more than once.”

This moderated stance might put downward pressure on fixed rate mortgages, however, so Canadians may see better fixed rates in the coming weeks, ratehub.ca says.

 

4 Real estate is more local than ever

It’s a simple point that escapes some consumers: Real estate is local, and in 2018, it became more local than ever.

What do we mean?

Well, the Canadian Real Estate Association (CREA), Canada Mortgage and Housing Corp. (CMHC) and other major real estate bodies are mandated to oversee the national market.

So, when CREA issues a release that says Canadian home sales are down by X per cent, or when CMHC reports the national vacancy rate is down for the second consecutive year – and major media report such headlines – people tend to worry.

It’s essential to remember, however, that when you buy a home, you don’t buy the national market. You buy one house, on one street, in one neighbourhood, in one city and region.

If you live in Ontario, why do you care that Alberta’s ongoing oil industry struggles are pulling sales and prices down in markets in that province? Or that prices in Vancouver are even less affordable than in Toronto?

Forget the national headlines. Drill down into what’s happening in your market.

And why is real estate more local then ever? Because…

 

5 Lessons from Oshawa

General Motors Canada’s November announcement that it was closing its Oshawa assembly plant sent shockwaves not just through the province but all of Canada. To be sure, the loss of at least 2,500 jobs – not to mention untold positions in related suppliers – in a community of 170,000, is going to hurt. Hurt whom, and how badly, are the only questions.

This development should serve as a stark reminder to us all – of how important it is for cities to develop diversified, modern economies. Overdependence on any one ge, singular industries leads to overexposure in the case of downturns or, in GM’s case, outright shutdowns. It hurts the local economy, which impacts employment and wage growth, which impacts the housing market.

Oshawa, thankfully in recent years, has been diversifying its economy and expanding in technology, education and other industries. It will help, but the impact of the GM closure will likely play out over many months, if not years.

These developments could push housing in Oshawa into a buyers’ market, and prospective buyers could benefit from more options and softening prices.

In new homes, builders remain undeterred, encouraged by the longer-term growth and development throughout the Durham Region. Still, some may offer incentives such as discounts or inclusions to entice qualified buyers.

 

RELATED READING

GTA moving into balanced market for 2019

GTA new home market gains further momentum in October

What the GM plant closure means for Oshawa’s economy and housing market

New home buying opportunities abound in Oshawa and Durham Region

Where are interest rates headed in 2019?

 

 

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GTA moving into balanced market for 2019

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GTA moving into balanced market for 2019

Although the Greater Toronto Area housing market is somewhat in balanced territory, buyers and sellers are both up against the ropes.

This year has changed so much from the last five to 10 years. Both buyers and sellers have been affected in both positive and negative ways. For me, when working with a buyer and investor client, it was always a tailored approach. However, now more than ever, we have to be extremely diligent when analyzing residential types, location and price range.

In past years, it was much more common to think about flipping real estate or short-term investments. Now? Not so much. There is a total shift to a minimum five- to 10-year hold. Since the introduction of the stress test, some real estate markets took a hit. Buyers are also now faced with additional challenges such as qualification rules and rising interest rates.

Glass half full

Although there are pros and cons in today’s market, take a glass half full approach. Just think, in the past, is was very challenging for a seller to move up to a bigger property. There were bidding wars, price increases that exceeded pay raises, and to top it all off, extremely low inventory – which meant buyers might have to settle for something they might not fully love. The trade-off was a low interest rate environment. If you were a seller, it was nice to think you could sell your property for top dollar, but the million-dollar question was where will you buy next?

Also read: GTA home prices continue to rise

Also read: GTA new home market gains further momentum in October

Also read: GTA condo sales and prices hit record levels

Today, if a seller wants to move up, they can usually find a good deal and sell their property for a fair market value. Maybe your property went down 10 to 15 per cent, however, you are also buying your next home for the same 10 to 15 per cent less. Another benefit to such market conditions is that there are more deals to be had.

Notably, there have been fewer first-time buyers out there recently. Even a larger down payment might not cut it anymore, due to higher interest rates. This is why the condo market is doing well, especially the smaller and less expensive properties, due to affordability. The new reality could well be more people renting for a longer period.

Rising rates

The qualifying rate today is slightly more than six per cent. “The recent rule change with regards to the stress test basically decreased people’s max mortgage amount by about 15 to 20 per cent,” says Michael Yosher, director of lending at Integrity Tree Solutions Inc. “The 2019 horizon looks like this trend will continue, as Bank of Canada and economists are predicting several interest rate hikes, which will further reduce the amount of mortgage a buyer will qualify for. This has really taken the wind out of first-time buyers. Family members helping out with gifted down payments and cosigning mortgage loans are the trend these days.”

According to the Toronto Real Estate Board, in October 2018 compared to last year October, average sales prices were up 3.5 per cent. Although this is good news for some sellers, most of this price growth is driven by the condominium market, which at one point lagged behind detached, semi-detached and townhouse product.

Arie Buzilo is a real estate broker with Century 21 Leading Edge Realty Inc. Brokerage, and an investor specializing in buying and selling properties in the GTA.

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GTA home prices continue to rise

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GTA home prices continue to rise

Toronto homes web

Greater Toronto Area average home prices continued their upward trajectory in November, rising 3.5 per cent year-over-year to $788,345, according to the Toronto Real Estate Board (TREB).

GTA realtors report 6,251 residential transactions through TREB’s MLS system in November 2018, down by 14.7 per cent compared to November 2017, when there was a temporary upward shift in demand caused by the looming OSFI-mandated stress test at the end of last year.

“New listings were actually down more than sales on a year-over-year basis in November,” President Garry Bhaura says. “This suggests that, in many neighbourhoods, competition between buyers may have increased. Relatively tight market conditions over the past few months have provided the foundation for renewed price growth.”

On a preliminary seasonally adjusted basis, sales were down by 3.4 per cent compared to October 2018.  The average selling price after preliminary seasonal adjustment was down by 0.8 per cent, compared to October 2018.

Average home prices, November

Toronto (416)
2018: $842,483
2017: $803,540

Rest of GTA (905)
2018: $750,721
2017: $732,848

GTA
2018: $788, 345
2017: $761,410

“Home types with lower average price points have been associated with stronger rates of price growth over the past few months,” says Jason Mercer, TREB’s director of market analysis. “Given the impact of the OSFI-mandated mortgage stress test and higher borrowing costs on affordability, it makes sense that the condo apartment and semi-detached market segments experienced relatively stronger rates of price growth in November, as market conditions in these segments remained tight or tightened respectively over the past year.”

Looking at the housing market from a policy perspective, TREB says it is encouraged with the provincial government’s recent announcement and on-going public consultation regarding a housing supply action plan.

“Housing supply remains a key issue in the GTA market,” says TREB CEO John Di Michele. “More specifically, an adequate supply and appropriate mix of housing types must be part of the conversation, as has been recognized by the provincial government in their consultation documents. Transit supportive and gentle density ‘missing middle’ housing should be a priority.”

 

GTA average prices and percentage gain by home type, November 2018

Detached: $1.01M, 1.3%
Semi-detached: $791,760, 8.3%
Townhome: $647,418, 3.1%
Condo: $556,723, 7.5%

TREB has commissioned research on these subjects and is holding a Market Outlook Economic Summit on Feb. 6, 2019.

“TREB is also encouraged that the provincial government remains committed to public transit expansion,” adds Di Michele. “TREB has long advocated for improvements to the Greater Golden Horseshoe transit and transportation network, and feels the time is right to have a conversation about the level of provincial and municipal responsibility that would be the most efficient arrangement to realize subway expansion sooner in Toronto, and the GTA, as this will impact the housing market.”

 

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

 

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