Convenience of downtown living leads 2015 real estate trends: report

TORONTO – Homeowners who choose the convenience of city life over the more generous living space in suburbia are driving Canada’s real estate market, according to a new report jointly produced by consultancy PricewaterhouseCoopers and the non-profit Urban Land Institute.

The annual outlook on emerging real estate trends says the move downtown, which has emerged in the past few years, will continue as more Canadians decide to stay in or move back to urban cores.

Much of this is due to changing demographics as young families and millennials forgo the white picket fence and house in the suburbs to take advantage of downtown living, where properties are smaller but offer more conveniences, said the 112-page report released Tuesday.

According to Statistics Canada, the most recent numbers available show that the population of urban centres grew 7.1 per cent between 2006 and 2011.

Frank Magliocco, Canadian real estate leader at PricewaterhouseCoopers, said there are a number of factors behind the urban growth, including that Canadians are more aware of the environmental costs associated with urban sprawl as well as the cost in time and money of lengthy commutes.

As well, provincial land use regulations that protect green spaces — for example Toronto’s Greenbelt involving about 800,000 hectares of protected land from Peterborough, Ont., to Niagara Falls, Ont. — have made it more difficult to find land to develop and has pushed an explosion of condominium growth in major cities.

But one of the concerns is what will happen to these urban properties once the younger generation grows out of them.

“This continuing urbanization trend has fuelled the condo boom in Toronto and other cities, but some question what will happen as the lifestyles of today’s young urban singles and couples change. Will they move out of the city core in search of larger homes, schools and services, or will they — like their counterparts in other parts of the world — simply adapt to smaller living spaces?” the report asks.

Magliocco said Canadian cities will either go the way of New York, where families are willing to sacrifice space to live in the city, or the way of London, where families are used to living outside the city and commuting downtown for work.

The rapidly growing condo markets in cities such as Toronto and Vancouver have also raised concerns about an oversupply of units and whether the boom is overly weighted towards wealthy, foreign investors who lease the units to others.

Meanwhile, an expected rise next year in interest rates from historically low levels may also influence demand in the housing market.

However, among the 1,400 people interviewed and surveyed for the report, which included private property investors and developers, commercial developers and real estate service firms, the consensus was that the Canadian market is strong enough to weather a bump in mortgage rates.

“The improvement in the U.S. economy indicates that higher rates could be coming, but the economic stability in Canada and the United States will continue to attract foreign capital,” said the report. “In addition, retiring baby boomers are likely to flood the market with private capital as they look to turn stock options and retirement packages into stable, income-generating assets.”

Overall, the report sees developers responding to the needs of downtown dwellers by building more mixed-used properties, which include residential and retail space.

“Looking ahead, we can expect to see more and more retail and services along the streets of Canada’s city cores and along major transit arteries, especially where new developments predominate. Major brands are likely to move into these new spaces, too — though with new formats and smaller footprints,” said the report.

The report also noted that Calgary, Edmonton and Vancouver, will see the most residential growth in 2015, a trend that has been helped by more jobs becoming available in the West than in Central Canada, while Calgary and the Greater Toronto Area will hold the most potential for retail growth.

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CMHC study: Families benefit significantly from living in their own homes

CMHC study: Families benefit significantly from living in their own homes

A study conducted by the Canada Mortgage and Housing Corporation (CMHC) highlighted the importance of affordable housing for Canadian families. It concluded that moving into one’s own home leads to major improvements in housing conditions, child well-being and school performance, health, and personal and family life.

Family in front of future house

The study is based on the results of a 2012 Canada-wide survey of families who purchased a home through the Habitat for Humanity Canada since 2000. It showed that children benefit significantly from living in their own home. Overall well-being and school performance improved with the majority reporting increased confidence and behaviour, higher grades and better attendance.

Living in one’s own home has a positive impact on health with 78% of the Habitat home buyers reporting that their own health and the health of their families is ‘better now’ than in their previous, mostly, rental housing.

While many participants said their housing costs increased since becoming home owners, the majority also said they were better off financially and had more financial control.

Finally, home owners are engaged community members. The study found that new Habitat families’ participation in volunteer activities increased from 52% to nearly 61% since purchasing a home.

Ontario REALTORS® understand the importance of affordable housing. Since 1967 OREA members have been active supporters of a variety of shelter-based charities including Habitat for Humanity through the REALTOR® Care Foundation. Since its inception, the Foundation has granted more than $2-million on behalf of the Ontario REALTORS® to shelter-based organizations across the province.

REALTORS® are also vocal supporters of governmental policies that ensure Ontario homes stay affordable. While the Toronto Real Estate Board is championing the fight against the Toronto land transfer tax, OREA is actively voicing its concerns to the province in efforts to prevent a potential spread of this tax to the entire province.

For more information on this or any other Real Estate/Mortgage matter, please feel free to contact Kyle Bouchard anytime at 647-287-8744 or info@kylebouchard.ca

Examining Toronto Real Estate Market Trends

KANETIX Examines Toronto Real Estate Market Trends

Toronto boasts a population of more than 2.7 million people and its real estate market is often under a lot of scrutiny from well-known economists and real estate experts says KANETIX. The Toronto housing market is constantly being watched by investors and residents so they can strategically plan their purchase and also take advantage of any declines in housing prices.

Despite rumors of downward pressure, there are several factors that are keeping the housing market relatively stable, balanced and healthy. While many areas in Canada have posted declining housing prices for the last six months, several areas, including Toronto, posted gains in April. With a closer look at the housing market trends in Toronto-trends that include an improving economy and a high-demand for property-residents and investors will see that the market is likely to remain relatively strong in the coming months and throughout 2014. With mortgage rates in Toronto at new lowsit would appear there in no end in sight.

Growing Population and an Improving Economy

Toronto is currently the country’s leader in urban population growth, increasing by 9.2 per cent since 2006 (compared with the average national increase of 5.9 per cent). Stable growth in the economy is expected to continue through mid-2013, and is projected to gain momentum toward the end of 2013 and into 2014 according to the Canada Mortgage and Housing Corporation (CMHC). A growing population, coupled with a growing labour force, may help to produce continued gains in the housing sector for Toronto, Canada.

Housing Starts

While Toronto has experienced declines in new housing starts, property in the area remains in high demand. The CMHC reports that one reason for the stall in new housing is due to the large number of apartment complexes currently under construction. More construction, and subsequently more housing construction, is expected to be carried out pending the completion of these units. The Halton area of Toronto has already reported an increase in housing starts for the month of April.

Housing Prices

The average MLS (Multiple Listing Service) price for existing home sales in 2013 is $382,200, though this is expected to increase to $390,000 in 2014. This modest growth is anticipated to keep pace with the low inflation rate, or may fall slightly below the rate of inflation. The rather flat housing prices coupled with low interest rates will continue to make homeownership attainable for those who strive to purchase property in the area.

Increasing prices in certain areas highlights a strengthening market. Single-detached homes in particular show promise, with prices increasing 7 per cent from the same quarter in the previous year.

While some prices remain high in spite of low home starts and sales, the region has also reported “robust employment gains” according to CMHC, which may keep high prices appealing. Despite the fact that the resale market has not shown substantial growth, CHMC asserts that the greater Toronto area remains balanced.

Home Sales & the Demand for Housing

Home sales in Ontario peaked in the first part of 2012 with 196,383 units sold, although this rate was projected to decline to 191,300 units for 2013. With improving economic conditions toward the end of 2013 and early 2014, however, the projection of units sold for 2014 may be as high as 201100. Aggressive Ontario mortgage rates could likely help foster this growth.

While economists and real estate experts projected a cooling market earlier in the year, recent reports indicate the market in Toronto has taken a step forward for spring of 2013. Home sales in May were up 24 per cent from March. While the pace at which housing prices in the area are growing has slowed, housing prices in Toronto were still up 2 per cent in April, marking the average price of a home at $526,335. April reports also indicate an increase in demand for luxury single-detached homes.

What Could Change

It is important to note that different economists have different outlooks on the housing market in Toronto. While analyzing current data and statistics can provide important information about market trends and can help to project trends in the coming year or two, any major changes to interest rates or to the local or national economy could alter these trends.

Currently, housing starts in The Greater Toronto Area are moderately stable and reasonable for the area’s rate of population growth, economy, and employment rate. Additionally, interest rates are expected to remain low for the coming months. Those who are waiting for housing prices to reduce, or who are waiting for the real estate market to decline rapidly may be disappointed if current market trends hold true.

The strength of the Toronto market perhaps truly lies in its location-where the demand for rental units continues to grow rapidly. While part of the increase in leasing is due to new mortgage restrictions, those desperately seeking in-demand property in this popular area are now facing a vacancy rate that is “barely above one per cent,” states to Urbanation’s Director of Market Research, Pauline Lierman. As a result, the Toronto housing market may soon see increases in both existing home and multi-family unit home sales.

For more information on this or any other Real Estate/Mortgage matter, please feel free to contact Kyle Bouchard anytime at 647-287-8744 or info@kylebouchard.ca

 

Home building to pick up pace later this year: CMHC

Home building to pick up pace later this year: CMHC

Canada Mortgage and Housing Corp forecast latest sign that housing market will avoid a major correction.

BloombergCanada Mortgage and Housing Corp forecast latest sign that housing market will avoid a major correction.
  • Canada is expected to regain momentum in the later part of 2013 and into 2014 as employment, economic growth and migration boost demand for housing in a market that had slowed, the Canada Mortgage and Housing Corp said on Tuesday.

“So far in 2013, the average monthly growth rates of MLS (multiple listing service) sales, new listings and prices have all been increasing. This follows a period of average monthly declines that held sway over the second half of 2012,” Mathieu Laberge, deputy chief economist for CMHC, said in the federal agency’s second-quarter outlook.

The market slowed dramatically in mid-2012 after the government tightened mortgage lending rules to head off a housing bubble. It was the fourth such move in five years. But the market has rebounded in recent months.

In its quarterly outlook, the CMHC said housing starts will be in the range of 173,300 to 192,500 units in 2013, with a point forecast, or most likely outcome, of 182,900 units, down from 214,827 units in 2012. Starts are expected to range from 166,500 to 211,300 units in 2014, with a point forecast of 188,900 units.

Existing home sales will slow to a range of 412,000 to 474,800 units in 2013, with a point forecast of 443,400 units, down from 453,372 in 2012. In 2014, sales are expected to move up in the range of 435,800 to 501,400 units, with a point forecast of 468,600 units.

Price gains are expected to slow in 2013 but regain some strength in 2014. CMHC’s point forecast for the average price calls for a 1.6% gain to $369,700 in 2013 and a 2.1% gain to $377,300 in 2014.

For more information on this or any other Real Estate/Mortgage matter, please feel free to contact Kyle Bouchard anytime at 647-287-8744 or info@kylebouchard.ca

Canadian house prices holding firm

Canadian house prices holding firm

Sales up again as market defies the naysayers

Home sales have been off almost 2.6 per cent this year over last, but average home prices have gone up.

KEITH BEATY / TORONTO STAR

Home sales have been off almost 2.6 per cent this year over last, but average home prices have gone up.

By: Susan Pigg Business Reporter

The Canadian housing market has defied the naysayers yet again — sales rose 3.6 from April to May, average prices went up 3.7 per cent and the market appears poised to return to the 10-year sales norm by 2014, according to a revised forecast Monday from the Canadian Real Estate Association.

BMO chief economist Douglas Porter termed the 3.6 per cent sales increase, the third month in a row that transactions have edged up across the country, “snappy.” The fact that house prices are up in 24 of 26 major markets tracked by CREA is “making a mockery of talk of an imminent collapse,” he added.

“Until recently, it seemed that the only debate on Canada’s housing market was whether the landing was going to be of the soft or rough variety. Well, it appears that housing may not be so keen on landing at all at this point,” said Porter in a statement Monday.

In fact, almost all the economic indicators have left housing watchers — not to mention home owners and potential buyers — both confused and deeply divided about where the market is heading.

It’s been an unusual and unpredictable spring market. Transactions are off 2.6 per cent year over year, but the average price of a Canadian home was $388,910 in May, up from $375,062 a year earlier.

The month-over-month increase in home sales was the biggest gain seen in more than two years, according to CREA.

“The increase lifted national activity almost to where it had been just before new mortgage rules came into force last summer, marking the first noteworthy increase in the past nine months,” the national real estate association said.

In Toronto, prices hit a record $542,174 in May, up 5.4 per cent from May of 2012.

CREA expects sales activity to reach 443,400 units by the end of this year, down just 2.5 per cent from the 454,573 home sales recorded in 2012, rather than down 2.9 per cent, which the national real estate association had predicted earlier this year.

Alberta and Prince Edward Island are the only two provinces where sales are expected to actually increase year-over-year in 2013, according to CREA.

The association also revised its sales forecast for 2014 and now anticipates some 464,300 houses and condos will change hands, a 4.7 per cent jump in sales that’s more in line with 10-year sales norms.

Scotiabank Economics warned in a note Monday morning that what’s more worrisome now isn’t the resale transaction numbers, but “that the correction has now migrated into the new home sales market.”

It points out that new home sales were down 38 per cent in April year over year. Some 43 per cent of that decline was in single-family low-rise homes, and 33 per cent was in new high-rise homes, where developers have been putting the brakes on new condo projects.

“This matters much more than the resale correction that began over a year ago because of the value added in construction of new home sales as opposed to resales, that are mostly just paper swaps with a few added services to facilitate the transaction,” says the note from Scotiabank.

For more information on this or any other Real Estate/Mortgage matter, please feel free to contact Kyle Bouchard anytime at 647-287-8744 or info@kylebouchard.ca

Construction cranes are intensification in action

As you move around the GTA, you’ve no doubt noticed all the condominium buildings under construction.

By:  Real Estate

As you move around the GTA, you’ve no doubt noticed all the condominium buildings under construction. Does it seem like there are more of them going up today than ever before? And that they are being built in places they’ve never been built before — no longer just downtown, but throughout Toronto and across the 905?

Welcome to intensification in action. The provincial growth plan for the region — put in place back in 2006 — mandated a “grow up, not out” approach to development in the GTA. The implementation of that plan has meant there is less development of traditional single-family homes and more development of high-density homes, such as apartment condominiums.

As of Feb. 28, 2013, there were a record 229 projects under construction across the GTA, accounting for 61,048 units.

Many market watchers worry about who is going to buy those units. In fact, though, 89 per cent of all the units currently under construction across the GTA have already been pre-sold with deposits of at least 20 per cent.

Since the early 1990s, the industry has put in place a number of risk-management practices — such as pre-sale requirements — in order to maintain stability.

Does that mean we’ll have 61,048 new condos flooding the market next year? Definitely not. It takes several years to build a highrise. And it’s not unusual for a larger building to take between three and four years to complete. In the past, with work at full capacity, the industry has not been able to deliver more than 15,000 to 16,000 units in a given year.

But when those units do get delivered, don’t be surprised to find them a bit smaller. The units that will be delivered in the next two to three years are those that were sold after 2009. Since that time — following the introduction of the HST — the index size of a new condo has shrunk by approximately 120 square feet. That’s the equivalent of taking a 10-foot by 12-foot room out of an average condo.

Of course, all of those buildings under construction not only provide a significant benefit for the local economy, they ultimately supply the homes that will house a growing population under the growth plan, albeit in a more intensified form of taller and smaller dwellings.

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UPDATE – Canadian May housing starts suggest boost for economy

UPDATE – Canadian May housing starts suggest boost for economy

canada flag

* Groundbreaking for homes rose to 200,178 units annualized in May

* Economists forecast starts at 178,100 starts

* Gains led by condo building in cities

* Latest economic report to suggest firmer Q2 economy

By Jeffrey Hodgson

TORONTO, June 10 (Reuters) – Canadian housing starts jumped much more than expected in May from April, the Canada Mortgage and Housing Corp said on Monday, in the latest sign that the broader economy is gaining momentum in the second quarter.

The seasonally adjusted annualized rate of housing starts was 200,178 units in May, an increase from 175,922 in April. The April figure was revised upward.

Analysts polled by Reuters had expected 178,100 starts in May.

The housing starts data was the most recent report to suggest Canadian economic growth is picking up after struggling in the second half of 2012. A separate report on Friday showed the economy added 95,000 jobs in May, the second-biggest gain in 37 years.

With the pickup in starts, residential construction may contribute to Canadian economic growth in the second quarter for the first time in four quarters, wrote Krishen Rangasamy, senior economist with National Bank.

MORTGAGE RULE CHANGES BITE

The six-month trend level in housing starts was 182,756 units, little changed from a month earlier, suggesting the downward slope in homebuilding since the middle of 2012 may be starting to level off.

“Multi-unit housing starts came storming back in May after falling precipitously through the winter months. Still, the 6-month trend in overall Canadian housing starts sits very close to demographic demand, further hinting at a soft landing,” Robert Kavcic, a senior economist with BMO Capital Markets, wrote in a note to clients.

Canada’s post-recession housing boom, fueled by record low borrowing costs, began to cool last year after Canada’s Conservative government tightened mortgage lending rules in July.

Those changes, prompted by fears a property bubble could be building, were the fourth such move since the financial crisis.

But the data on Monday showed segments of the market are still robust. The number of housing starts in cities increased by 14.6 per cent in May. Urban starts were led by a 22.2 per cent rise in multiple starts to a seasonally adjusted annualized rate 114,346 units. Condominiums are included in the multiple category.

The number of single homes started in cities increased by 3.0 per cent to 62,888 units in May.

The prospect of stronger growth gave a boost to the Canadian dollar, which firmed to C$1.0181 the U.S. dollar, or 98.22 U.S. cents immediately after the data.

Still, economists warned that given the extent of the post-crisis boom, tighter mortgage rules and the prospect of higher borrowing costs, the longer-term outlook for Canada’s housing sector was still tepid.

“With the 6-month moving average now more in line with the rate of household formation, May’s sharp jump in the pace of new home construction is unlikely to be sustained,” Dina Ignjatovic, an economist with Toronto-Dominion Bank, wrote in a research note.

“The overbuilding that has taken place over the last ten years could lead to new home construction falling below this demographic need for a period of time. This should, however, help to prevent further overbuilding and a consequential sharp correction in the housing market.”

For more information on this or any other Real Estate/Mortgage matter, please feel free to contact Kyle Bouchard anytime at 647-287-8744 or info@kylebouchard.ca