Commercial Real Estate News Blog

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

Existing Toronto area home sales up 7% over last year

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

GTA Realtors Report Mid-Month Resale Housing Figures

Greater Toronto Realtors reported 4,887 sales through the Multiple Listing Service® (MLS®) during the first two weeks of May. This represented a seven per cent increase compared to the 4,561 sales recorded during the same period in 2009. New listings increased by 48 per cent annually to 10,059.

“The average household looking to purchase a home continued to benefit from affordable opportunities in the first half of May,” said Toronto Real Estate Board President Tom Lebour.

"The number of done deals will remain high for the remainder of 2010, but will dip from record levels.”

The average price for May mid-month transactions was $448,641 – up 12 per cent compared to the average of $399,811 recorded during the first 14 days of May 2009. "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, TREB's Senior Manager of Market Analysis.

Propertyshop.ca

Lawyers are the latest group trying to grab a piece of the $8-billion in annual residential property commissions, as the real estate industry deals with the impact of changing regulations. A group of seven Ontario lawyers behind propertyshop.ca,which allows consumers to list their property on the site for a fee ranging from 1% to 1.5%, believe the landscape has changed dramatically because consumers listing with them can now also gain access to the Multiple Listing Service (MLS) for a nominal fee. Those fees contrast with an average 5% that consumers pay to real estate agents to handle a listing from beginning to end.

"There's been a lot of chatter among lawyers [about competing]," says Michael Forcier, one of the lawyers behind the site owned by Lawyers Web Property Shop Ltd. "It has been talked about for years, but the problem has been the MLS."

Changes now occurring in the industry are opening up access to the MLS rapidly. In February, the Commissioner of Competition filed an application with the Competition Tribunal saying the Canadian Real Estate Association's restrictions on the MLS -- responsible for about 90% of sales nationwide--were anti-competitive. CREA responded by making changes to its bylaws to allow more a la carte services, including letting consumers conduct a transaction with the agent providing only the listing.

Mr. Forcier's group is now working with an agent with the Ottawa Real Estate Board who, for $109, will take the listings his group gets and upload them to the national site mls.caor realtor.ca."You don't want to talk to a realtor who will charge you 5%, you don't want to deal with the FSBOs [for-sale-by-owner sites] who are not licensed, so you deal with a lawyer. We've been involved with deals since Confederation. We understand deals and we know how to negotiate deals," Mr. Forcier said.

Consumers using his site would get access to a lawyer from the beginning to the end of a transaction and would get legal advice on areas such as disclosure rules and zoning bylaws.

Ontario lawyers are allowed to trade real estate under the Real Estate and Business Brokers Act.

"We do private deals all the time. This just means we have to organize it a bit," said Mr. Forcier, who has managed only about 20 to 25 listings on his site, which is linked to 61 lawyers operating in Ontario. British Columbia lawyers are organizing a similar system in their province.

Lawrence Dale, the lawyer who at one point operated the discount broker Realtysellers Ltd., said legal fees have been dropping for years. "The legal profession has been hammered," he said. "Twenty years ago they used to get a 1% tariff, so on a $500,000 deal they'd get $5,000. Today they'd be lucky to get $500."

Mr. Dale said the legal fees on a property deal became a commoditized service much like what he says is happening to real estate. "No matter [what lawyer] you used, you knew you would get in and out of the market, so you said, 'Give me the cheap one.' Lawyers are looking for other opportunities," he said.

John Andrew, director of the executive seminars on corporate and investment real estate at Queen's University, said increased competition was to be expected in the wake of the competition commissioner's application and the changes by CREA itself.

"We are in an environment of tremendous uncertainty, but it's clear to all of the players that CREA is in the phase of relaxing its rules," Mr. Andrew said. "We are going to see even more of these websites springing up, all kinds of alternatives models.

"A lot of them will fall by the wayside. It almost doesn't matter what happens at the [tribunal] hearing. I think the writing is on the wall."

Source: financialpost.com

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.