Commercial Real Estate News Blog

Statistics released by The Canadian Real Estate Association (CREA) show that the number of newly listed homes and sales activity declined in June 2010.

Seasonally adjusted national home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards receded 8.2 per cent in June from the previous month. Led by lower activity in Toronto and Calgary, sales declined in almost 70 per cent of local markets.

Tightened mortgage regulations and anticipated interest rate increases cooled sales activity throughout the second quarter, resulting in a decline of 13.3 per cent from near-record levels in the first quarter. As expected, these two national factors contributed to a widespread decline in activity, with transactions down in all but a dozen or so smaller markets.

Actual (not seasonally adjusted) national sales activity was 19.7 per cent lower in June 2010 compared to last year, when activity almost reached a new record for the month. Actual sales activity in the second quarter stood 2.8 per cent below levels reported in the second quarter of 2009. For the year-to-date, transactions are up 13.6 per cent compared to the first-six months of last year. This gap is expected to shrink as the year progresses, since activity trended upward over the second half of last year and is forecast to continue easing over the second half of 2010.

The number of newly listed homes on Canadian MLS® Systems in June 2010 declined by 6.8 per cent from the previous month, following a monthly decline of 4.8 per cent in May. A declining trend in new listings will help maintain the balance between supply and demand, and temper home price volatility.

The national average price of homes sold via Canadian MLS® Systems rose 4.9 per cent on a year-over-year basis in June to $342,662.

The national average price can be skewed by changes in provincial sales activity. The national weighted average price compensates for this by taking into account provincial proportions of privately owned housing stock. It climbed 6.3 per cent on a year-over-year basis in June 2010. Similarly, the residential average price in Canada’s major markets was up 5.7 per cent year-over-year in June, while the weighted major market average price rose 8.7 per cent.

The number of months of inventory represents the number of months it would take to sell current inventories at the current rate of sales activity, and measures the balance between housing supply and demand. It stood at 5.7 months at the end of June 2010 on a national basis. This is up from 4.2 months one year ago, when it fell to its lowest level since the economic recovery began. The rise in the number of months of inventory was widespread, with increases from year-ago levels in all provinces, except Manitoba and Prince Edward Island.

The seasonally adjusted number of months of inventory stood at 6.9 months at the end of June on a national basis, the highest level since March 2009. It may rise further as sales activity trends lower over the second half of 2010, but an expected decline in the number of new listings should stabilize the balance between supply and demand.

“The housing market is becoming more challenging for sellers,” said CREA President Georges Pahud. “Buyers are in less of a hurry, so sellers should consult with their local REALTOR® on how to best price and present their home to attract purchase offers.”

“National home sales activity is easing due to fewer and more cautious first-time home buyers,” said Chief Economist Gregory Klump. “With interest rates on the rise, housing affordability and home sales activity are expected to continue to erode over the second half of 2010. While the pricing environment is becoming more challenging, a recovering economy and job market will provide support for housing activity and prices.”

PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month.

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.

MLS® is a co-operative marketing system 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 99,000 REALTORS® working through more than 100 real estate Boards and Associations.

Further information can be found at http://www.crea.ca/public/news_stats/pdfs/media_july15rpt_e.pdf

For more information, please contact:

Spencer Callaghan, Communications Officer
The Canadian Real Estate Association
P: 613-237-7111
E: scallaghan@crea.ca

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End townhouse at a waterfront locale

OTTAWA – June 16th, 2010 – Statistics released by The Canadian Real Estate Association (CREA) show that home sales activity and new listings in Canada declined in May.

Seasonally adjusted home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards declined nationally by 9.5 per cent in May from near-record level activity the previous month. While activity declined in more than 70 per cent of local markets, the lower national figure resulted largely from fewer sales in Toronto, Vancouver and Ottawa.

Actual (not seasonally adjusted) national sales activity was down 4.3 per cent in May from the same month last year. In a departure from the normal seasonal pattern, national activity levels in May were also down from April levels. This suggests that the combination of changes to mortgage regulations and rising mortgage rates pulled forward a number of sales into April that would have otherwise taken place at a later date.

“May was the first full month in which sales activity was affected by these changes,” said CREA President Georges Pahud. “An accompanying decline in new listings and housing starts means these changes are also affecting the supply side, which will keep the market balanced and Canadian home prices stable.”

The seasonally adjusted number of homes that were new listings on Canadian MLS® Systems in May 2010 declined by four per cent from the previous month. This marks the first monthly decline in new listings in eight months. New listings had been climbing sharply, rising from a four-year low last September to the second highest level ever last month.

The number of homes listed for sale on Boards’ MLS® Systems at the end of May was up 5.4 per cent from levels at the same time last year, when the supply of homes for sale on the market had started declining.

The national average price of homes sold via Canadian MLS® Systems rose 8.5 per cent in May from a year ago. This is a smaller increase compared to those recorded over the past nine months.

“Supply and demand has become more balanced in a number of major markets,” said CREA Chief Economist Gregory Klump. “Homebuyers now have more choice and are likely be in less of a rush to purchase than they were recently, so the amount of time it takes to sell a home is expected to rise in the coming months.”

With last year’s string of downwardly skewed average price values having now mostly passed, year-over-year national average price comparisons are coming back into line with changes in the national weighted average price.

The weighted average price compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. It climbed 8.4 per cent on a year-over-year basis in May 2010. Similarly, the residential average price in Canada’s major markets was up 9.8 per cent year-over-year in May, while the weighted major market average price rose 10.7 per cent.

The actual (not seasonally adjusted) number of months of inventory stood at 5.3 months in May 2010. This is up from 4.8 months at the same time last year. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.

On a seasonally adjusted basis, months of inventory stood at 6.1 months in May, the highest level since last April.

“The number of months of inventory may rise further in response to easing sales activity and a further rise in the number of active listings,” said Klump. “However, the number of newly listed homes will ultimately retreat in response to a more competitive sales and pricing environment in a number of local markets. The outlooks for the Canadian economy, employment, and mortgage market trends remain upbeat, so supply and demand will remain balanced on a national basis. Canada will avoid a U.S.-style home price correction.”

PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month.

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.

MLS® is a co-operative marketing system 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 96,000 REALTORS® working through more than 100 real estate Boards and Associations.

Further information can be found at

http://www.crea.ca/public/news_stats/pdfs/Media_May10rpt_e.pdf

The Canadian Real Estate Association forecast Wednesday that home prices will fall by 2.2 per cent next year. The agency expects the average price of a home in Canada to be $325,400 by the end of 2010, a 1.6 per cent increase over 2009's level. Though still a gain, that's well below the 5.4 per cent increase the agency was previously expecting for 2010.

But by 2011, the agency expects a 2.2 per cent decline in the average price. That's because a slowdown in Ontario and British Columbia, the two largest housing markets in the country, will drag the national average down. All other provinces are forecast to post gains, CREA said.

"With interest rates soon expected to rise, Canada is widely believed to be entering a typical demand-driven downturn due to recent price increases and rising interest rates,” CREA chief economist Gregory Klump said.

Forecast of sales decline

Sales activity overall is forecast to slow. CREA now forecasts that 490,600 homes will be sold on its Multiple Listings Service this year. That's 5.5 per cent higher than the level in 2009, but much lower than the agency was originally forecasting for 2010.

In 2011, an 8.5 per cent drop to 448,700 is expected.

New mortgage rules unveiled by Finance Minister Jim Flaherty in April aimed at curbing speculation are expected to "marginally impact" activity, the agency said.

Although mortgage rates have gone up and are expected to rise further, the association says the higher cost of borrowing will have a minimal impact on the market this year.

"Interest rates are expected to rise slowly and at a measured pace during a new era of government spending restraint, so home financing will remain within reach for many homebuyers," CREA president Georges Pahud said.

Source: CBC News

Affordable east end home lures Annex renter

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

(OTTAWA – May 17, 2010) Home sales activity in Canada came up short of the record for the month of April and new listings continued to climb, according to statistics released by The Canadian Real Estate Association (CREA).

Residential sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards numbered 52,042 units in April 2010. This is less than one per cent short of the record for national sales activity during the month of April, which was set in 2007. Compared to April 2009, national activity was up 20 per cent.

Seasonally adjusted national home sales activity slipped 2.6 per cent from the previous month, and now stands 6.8 per cent below the peak reached in December 2009. More than half of the decline in activity over the first four months of 2010 resulted from fewer sales in British Columbia, while activity in Ontario and Quebec remains at or near record levels.

“The easing trend in national sales activity masks a rising trend in a number of major markets,” said CREA President Georges Pahud. “Real estate is local, so buyers and sellers should engage the services of a REALTOR® for knowledge about housing market trends in their market.”

Some 99,901 homes were newly listed for sale on Canadian MLS® Systems in April 2010, surpassing the previous record for the month of April set in 2008 by six-tenths of one per cent. A total of 236,397 residential properties were listed for sale on Boards’ MLS® Systems at the end of April 2010, down 1.9 per cent from levels one year earlier.

As for the national average price of homes sold via Canadian MLS® Systems, that figure rose 12.2 per cent over this time last year. This is a smaller increase compared to those recorded over the past eight months. Bucking the national trend, price gains continue to increase in a number of major markets in Alberta, Ontario and Quebec.

With last year’s string of downwardly skewed average price values having now mostly passed, and with activity in British Columbia’s lower mainland having settled down, year-over-year national average price comparisons are coming back into line with changes in the national weighted average price.

The weighted average price compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. It climbed 11.3 per cent on a year-over-year basis in April 2010. Similarly, the residential average price in Canada’s major markets climbed 12.9 per cent year-over-year in April, while the weighted major market average price rose 12.1 per cent.

The actual (not seasonally adjusted) number of months of inventory stood at 4.5 months in April 2010. This is down from levels one year ago (5.6 months) and April 2008 (4.7 months), but up compared to April levels from 2004 through 2007. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.

On a seasonally adjusted basis, months of inventory stood at 5.3 months in April, the highest level since last May.

“Next month will mark the passage of one year since the national average price rebounded from the recessionary trough to return to the pre-recession peak, so the rise in the national average price is expected to be more subdued next month, ” said CREA Chief Economist Gregory Klump. “The national average price could potentially be skewed higher over the next couple of months if buyers of higher priced homes in Ontario and British Columbia move their purchase decision forward to beat the introduction of the HST in July.”
PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month. The Canadian Real Estate Association has previously released these separately.

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.

MLS® is a co-operative marketing system 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 96,000 REALTORS® working through more than 100 real estate Boards and Associations.

Further information can be found at http://www.crea.ca/public/news_stats/pdfs/media_apr10rpt.pdf

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