Toronto’s housing market roared back to life in the first half of 2010, with single-detached homes and condominium apartments and townhouses posting unprecedented double-digit gains in average price in most districts, according to a report released today by RE/MAX Ontario-Atlantic Canada. This is in stark contrast to the July 2009 RE/MAX report that found that values in approximately 80 per cent of neighbourhoods surveyed in Toronto had depreciated over the same period in 2008.
RE/MAX examined 63 Toronto Real Estate Board (TREB) districts in the single-detached category between January and June of 2010 and found that 85.7 per cent experienced double-digit gains. Mississauga’s Lorne Park (W13) led in terms of percentage increase in average price with a 30.2 per cent upswing in the first six months of the year, bringing year-to-date values in the area to $880,373 (vs. $676289 in 2009 and $830,041 in 2008). Markham (N01) ranked second with a 27.7 per cent jump to $779,168 (vs. $610,322 in 2009 and $683,050 in 2008) while Armour Heights, Bathurst Manor (C06) came in a close third at 27.5 per cent (rising to $732,535 from $574,599 in 2009 and $589,808 one year earlier). Mississauga’s Creditview, Erindale area (W16) secured fourth spot with an average price of $561,973—up 26.5 per cent over 2009’s $444,221 and 2008’s $476,877. Rounding out the top five was York Mills, Hogg’s Hollow, Bridle Path (C12) with a 26.2 per cent increase over last year and an average price of $1,868,591 (vs. $1,480,296 in 2009 and $1,580,851 in 2008).
“While first-time buyers dominated housing markets during the first half of 2009, move-up buyers ruled during January to June of 2010,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Rising interest rates and the introduction of the Harmonized Sales Tax (HST) in the province helped drive activity, with more than 50,000 sales reported year-to-date—a figure on par with record 2007 levels.”
As in years past—the exception being 2009—the second half of the year will be more tempered, with price appreciation moderating somewhat in most neighbourhoods. The one exception to the rule will be the hot pocket areas that continue to experience limited inventory.
With affordability a growing issue for many in the Toronto market, the city’s vast supply of existing condominium apartments and townhomes offer a financially attractive alternative. Like single-detached homes, however, condominium prices were on the upswing in the first six months of the year in the 59 TREB districts examined—with 61 per cent reporting double-digit increases.
The Danforth, East York (E03) was the top performing condominium market in terms of price appreciation—with values up 28.2 per cent to $222,421. While the increase is significant compared to the same period in 2009, it’s a more moderate 15 per cent ahead of the $195,019 reported in 2008. Yorkville (C02) secured second spot, with a 22.6 per cent increase in values, bringing average price to $653,745—a serious uptick over the 2009 level of $553,302 but only a nominal 5.6 increase over 2008’s $619,151. Markham (N01) took third place with an increase of 22.1 per cent to $332,590 over the 2009 figure ($272,316). Bayview Village (C15)—Toronto’s newest condominium corridor—saw a 19.6 per cent increase, with values rising to $331,063. North York (C14) continued to experience upward momentum during the first half of the year, with average price on the Yonge St. line up 19.5 per cent to $363,685, compared to the $304,342 reported during the same period in 2009.
Overall, single-detached homes in TREB’s North district (north of Steeles Ave.) saw the greatest percentage increase, with year-to-date average price rising 17.5 per cent to $617,723 (compared to $525,635 one year ago). Not surprisingly, condominium apartments and townhomes in the central core experienced the most significant upswing, with average price in TREB’s Central district rising 16.8 per cent to $385,996, up from $330,517 one year ago.
“Both housing types experienced serious percentage increases year-over-year – yet its important to keep those price hikes in perspective,” says Polzler. “Last year, 80 per cent of those districts experienced a decline in value. The bounce-back—fuelled by unprecedented market conditions including a severe shortage in listing inventory—simply returned average prices to their normal course.”
Source: RE/MAX Ontario-Atlantic Canada
Sales of existing homes will hit six digits for the first time by the end of this year, creating a new record. But 2011 will look “quite different” as the market ratchets down, says a report by the Canada Mortgage and Housing Corporation released Wednesday. “The era of rock bottom mortgage rates is coming to an end and the red hot Greater Toronto Area housing market will begin to lose its steam,” said Shaun Hildebrand, senior market analyst for the CMHC.
The CMHC is forecasting that sales will pass the 100,000 mark for the first time to 101,000 by the end of 2010, while average prices will also increase to a record $444,000. The peak of the market was in 2007 when sales hit 95,000.
However, the federal housing agency is also warning that prices “could come down” sometime in late 2010 or 2011. But they are saying any declines will be minimal or short lived.
The CMHC expects the upward streak of price appreciation to continue into 2011 resulting in 16 consecutive years of increases. They are forecasting that prices will increase slightly by 1.7 per cent at the end of 2011.
The CMHC report is at odds with some other analysts including economist David Rosenberg who has said national prices are overvalued by as much as 30 per cent. The TD Bank recently revised their forecast to say that prices nationally will come down by 2.7 per cent instead of increasing next year. Their previous forecast was for a 1.6 per cent increase.
“There is a question of whether the bidding wars in Toronto have caused prices to overshoot,” said Hildebrand. “There is also the question of whether buyers will respond more negatively than expected to higher interest rates, but we think prices will likely hold.”
The CMHC says prices will likely flat line after 2011 as affordability becomes an issue.
“Five year mortgage rates will be a full percentage point higher by the end of the year. Combining higher rates with the new reality of average prices well above $400,000 will make the transition to homeownership more expensive,” said Hildebrand. “The erosion of affordability will cause delay for many first time buyers.”
For now, the market is showing few signs of a slow down, although more supply is evident.
In a separate report released by the Toronto Real Estate Board on Wednesday, existing home sales in the Toronto area market were up by 7 per cent in the first two weeks of May compared with the same time last year.
The board reported that 4,887 sales occurred through the Multiple Listing Service.
The average price for May mid month transactions was $448,641, up by 12 per cent compared with $399,811 last year.
One encouraging sign for buyers is that new listings are up by 48 per cent.
“The total number of homes currently listed in the GTA is now within a more normal range. As buyers benefit from more choice in the second half of 2010, average selling prices will grow at a slower pace,” said Jason Mercer, the board’s senior manager of market analysis.
The most fragile sector of the Toronto market continues to be high rise development, where the CMHC expects 17,000 condos will be completed in the Greater Toronto Area this year, with another 16,000 completed next year.
The CMHC expects 10,000 of these condominiums, purchased by investors will be placed back on the market over the next two years.
“The added supply will lead to softer price growth for high rise units relative to low rise homes,” said Hildebrand. “With fewer buyers competing for more homes, bidding wars will become less common and prices will face little upward pressure.”
Some mitigating factors in the Toronto economy include stronger income and job growth and higher net migration which will help to keep the market stable, said the CMHC.
Employment is expected to rise by 1.5 per cent in 2010 and wages by 2.5 per cent.
“These are pretty big numbers for the first year out of recession,” said Hildebrand.
Source: Tony Wong, Toronto Star
MARKETWIRE
Wed May 5 2010, 9:30am ET
Dateline: TORONTO, ONTARIO
TORONTO, ONTARIO–(Marketwire – May 5, 2010) – In April, TREB Commercial Members reported 1,155,944 square feet of leased space, up 148 per cent over the 466, 837 square feet of leased space recorded during April 2009, Commercial Council Chair Garry Lander announced today.
“The above average rates of economic growth experienced over the past two quarters has benefitted the GTA commercial real estate market. Both goods producing and services producing sectors have rebounded strongly, resulting in steady employment growth,” Mr. Lander said. “April’s leased space figure, the best monthly result for 2010, points to the fact that GTA businesses are confident that growth will continue and are acquiring the necessary space.”
Industrial space in all size categories leased for an average of $4.79 per square foot net (sfn) compared to $5.43/sfn recorded in April 2009. Commercial space leased for an average of $12.34/sfn compared to $14.22 for the same month last year. The average lease rate for office space was $12.78/ sfn compared $12.12/sfn last year.
Sales Market Highlights
TREB Commercial Members reported 58 sales of IC&I properties in April, including 23 industrial buildings of all size categories with an average selling price of $53.66 per square foot. Non-MLS sources provided an average selling price of $52.90 per square foot for the same time period.
Complete copy of the Commercial Realty Watch at www.TREBCommercial.com
Greater Toronto REALTORS(R) are passionate about their work. They adhere to a strict Code of Ethics and share a state-of-the-art Multiple Listing Service. Serving over 29,000 Members in the Greater Toronto Area, the Toronto Real Estate Board is Canada’s largest real estate board. Greater Toronto Area open house listings are now available on www.TorontoRealEstateBoard.com.
The real-estate industry is no longer only battling with the Competition Bureau. It is now fighting amongst itself, with one of the country’s largest firms starting a campaign against part-time agents. Michael Polzler, head of Re/Max Ontario-Atlantic Canada, launched a new offensive this week with an advertising blitz in the greater Toronto area that says: “Warning! Don’t use a part-time agent.”
The campaign follows a letter Mr. Polzler paid to have printed in The Real Estate Magazine, an industry publication. In the letter, he declares it’s time to “take back the industry” and calls for the creation of new requirements for agents such as increased education, a one-year apprenticeship program and a referral program that would allow inactive realtors to transfer clientele to full-time professionals for a fee.
“I don’t believe part-time agents can do the job,” he said in an interview. “Many consumers use part-time agents without ever knowing it. If an agent doesn’t do at least one deal per quarter, they are not active in the business, excluding the obvious people like managers.
“Someone who has a non-real-estate, full-time job should not be allowed to handle the largest financial transaction most people make in their lifetime. You have taxi drivers with real-estate licences and that’s not cool,” Mr. Polzler said.
Re/Max Ontario-Atlantic Canada’s campaign for more professionalism in the industry comes as the Canadian Real Estate Association (CREA) continues a legal battle with the Competition Bureau.
The government watchdog has launched a complaint with the Competition Tribunal over what it says are anti-competitive practices. The case revolves around the Multiple Listing Service system owned by CREA and responsible for about 90% of the transactions in Canada.
Last week, CREA passed new rules that will allow consumers to decide how much they use an agent on a deal and allow them to conduct parts of a transaction -- including listing on MLS -- without using an agent at all. But the case is still proceeding because the bureau maintains the new MLS rules can be changed by the local boards or CREA itself.
Phil Soper, chief executive of Brookfield Real Estate Services, which operates Royal LePage and La Capitale, wondered whether Re/Max’s proposals would further antagonize the bureau.
“It flies in the face in the face of concerns about competition. We are an industry that is full of diversity. There are many models in which our profession is practiced. To state that lower fee-charging realtors who adopt a different model have no place is similar to saying only high-priced lawyers should exist. You can’t say people shouldn’t have the opportunity to hire somebody who is less experienced.”
Some in the industry suggest Mr. Polzler’s proposed business model is an attempt to squeeze out smaller agents as well as being a marketing campaign for full-service brokers. The industry faces consolidation in anticipation of CREA’s new rules.
But Mr. Polzler says he’s been talking about non-producing agents for a year. He gives the example of Toronto, where 20% of realtors with the Toronto Real Estate Board didn’t complete a deal in 2009. Some brokerages have 70% of agents doing less than a deal a quarter, he added.
“Nobody is suggesting these people not be licenced,” said Mr. Polzler. Part-timers could stay in the industry, but on the referral basis, he suggested.
Don Lawby, chief executive of Century 21 Canada, conceded the numbers of agents in Canada does look odd on the surface. There are 98,000 agents or about one agent for every 336 people, including children and people who aren’t home buyers.
“There are some people who get a licence and just elect to keep it active without practicing,” Mr. Lawby said, adding the qualification for being a realtor should be having a licence and knowledge about the market.
“That could include part-time people,” said Mr. Lawby. “I’m sure there are part-time people who perform in a better fashion than some full-time people.”
Source: Financial Post
