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TD Bank discounts 5-year variable mortgage rate as competition heats up

Posted on 17 May 2018 by admin

TD Bank is joining a rival bank in offering a highly discounted variable mortgage rate as competition among Canada’s biggest lenders heats up.

The Toronto-based bank said Tuesday it’s lowering its five-year variable closed rate to 2.45 per cent, or 1.15 per cent lower than its TD Mortgage Prime rate, until May 31.

TD’s special rate follows last week’s move by the Bank of Montreal, which discounted its variable mortgage rate to 2.45 per cent until the end of May.

Canada’s lenders often offer special spring mortgage rates as home-buying activity picks up, but Robert McLister — founder of rate comparison website — said last week that BMO’s special discounted variable rate was the biggest widely advertised discount ever by a Big Six Canadian bank.

TD’s discounted rate on Tuesday brings its variable mortgage rate offer in line with BMO’s.

TD spokesperson Julie Bellissimo says its special five-year variable rate applies to new and renewed mortgages, as well as the variable rate term portion of certain TD home equity lines of credit.

“We are confident this is a strong offer for new and renewing customers, while ensuring we remain competitive in a changing environment,” Bellissimo said in an emailed statement.

The moves come amid slowing mortgage growth. The Canadian Real Estate Association said Tuesday that national home sales volume sank to the lowest level in more than five years in April, falling by 13.9 per cent from the same month last year. The national average sale price decreased by 11.3 per cent year-over-year.

Home sales have slowed due to various factors, including measures introduced the Ontario and B.C. governments to cool the housing market, such as taxes on non-resident buyers.

Other headwinds for mortgage growth include higher interest rates and a new financial stress test that makes it more difficult for would-be homebuyers to qualify with federally regulated lenders, such as the banks.

As of Jan. 1, buyers who don’t need mortgage insurance must prove they can make payments at a qualifying rate of the greater of two percentage points higher than the contractual mortgage rate or the central bank’s five-year benchmark rate. An existing stress test also stipulates that homebuyers with less than a 20 per cent down payment seeking an insured mortgage must qualify at the central bank’s benchmark five-year mortgage rate.

The tighter lending rules are making it harder for homebuyers to qualify for uninsured mortgages, and shrinking the pool of qualified buyers for higher-priced homes, CREA’s chief economist Gregory Klump said in April.

Meanwhile, Canada’s largest lenders all raised their benchmark posted five-year fixed mortgage rates in recent weeks as government bond yields increased, signalling a rise in borrowing costs.

In turn, the central bank’s five year benchmark qualifying rate — which is calculated using the posted rates at the Big Six banks — increased last week to 5.34 per cent. This qualifying rate is used in stress tests for both insured and uninsured mortgages, and an increase means that the bar is now even higher for borrowers to qualify.

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Toronto home prices are steadying, amid dramatic year-over-year declines

Posted on 09 May 2018 by admin

Despite a 12 per cent April decline, the Toronto Real Estate Board predicts moderate increases ahead.

Toronto area housing statistics continue to look dramatically lower than the steeply rising figures of early last year. But there are signs that the market is flattening.

The average home or condo sold for 12.4 per cent less year over year in April with all types of resale houses and condos averaging $804,584 across the region.

But preliminary seasonally adjusted prices from the Toronto Real Estate Board (TREB) show prices down only 0.2 per cent from March with 1.6 per cent fewer sales month over month, about the same as February to March, a much gentler drop than the start of the year.

The number of homes that actually sold in April — 7,792 — was down 32.1 per cent from last year.

The decline in both sales and prices was greatest among detached houses, which sold for about $1.03 million on average, down 14.4 per cent from a year ago. The number of house sales dropped 38.4 per cent.

Condo sales saw a moderate 3.2 per cent price increase compared to last year, to an average of $559,343, with the number of units sold dropping 26 per cent.

The average cost for all houses and condos this year to date, including semi-detached and townhomes, was $779,400 in April, compared to $886,923 a year ago.

York Region continues to see the biggest year-over-year price declines in the Toronto area, while city of Toronto home values held steady, according to the real estate board’s Home Price Index.

Jason Mercer, TREB director of market analysis, says the dramatic year-over-year differences “mask the fact that market conditions should support moderate increases in home prices as we move through the second half of the year, particularly for condominium apartments and higher density lowrise home types.”

Condos and townhouses have become the predominant starter homes in the Toronto region because of their relative affordability.

Meanwhile, high-end homes in the $2-million-plus range accounted for only 5.5 per cent of detached house sales this year compared to 10 per cent in April 2017.

“The year-over-year change in the overall average selling price has been impacted by both changes in market conditions as well as changes in the type and price point of homes being purchased,” said a TREB release.

It urged provincial parties to make housing a priority in the June election. The board is pushing for tax relief for buyers, particularly the provincial land transfer tax and the municipal land transfer fee unique to Toronto.

“We believe that any attempt to increase the Toronto land transfer tax should require approval from the provincial government given the significance of Toronto’s economy to the province, and the connections between the Toronto real estate market and that of the broader GTA,” said TREB president Tim Syrianos in the release.

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Millenials rank affordable housing among top concerns for upcoming provincial election, real estate study says

Posted on 02 May 2018 by admin

A historically high number of young adults still live with their parents but want to own a home, says the Ontario Real Estate Association.

A provincial party that offers hope for overcoming the high cost of housing will have an edge with a generation of highly educated millennials looking for a way out of their parents’ basements and into the housing market, says the Ontario Real Estate Association (OREA).

At a time when nearly half the people aged 25 to 34 are living with their parents, 91 per cent of millennials still believe that owning a home is a smart financial investment. But nearly 70 per cent of those in that age bracket said they agree or somewhat agree that buying a home in their neighbourhood is unaffordable, according to OREA research published Monday.

It released Nanos telephone poll results to put home ownership on the June 7 provincial election agenda, said CEO Tim Hudak, the former head of the Ontario Progressive Conservative party. The association that represents about 70,000 members, including real estate agents, has suggested tax relief for first-time buyers, increasing the supply of starter homes and building more “missing middle homes,” midrise apartments, stacked and traditional town homes, as ways to make home ownership more accessible.

“Millennials still want to be homeowners just like previous generations. There are a lot of pundits and so-called experts who say that’s a dated concept. In fact, just the opposite. An overwhelming number of millennials want to get into home ownership,” he said.

About 70 per cent of the 2,098 respondents — including 503 aged 20 to 35 — said the government needs to do more to help young people buy homes.

Among the millennials, housing affordability ranked close to the environment in terms of community concerns — 81 per cent, compared to 83.1 per cent. Jobs and the economy was a close third with about 79 per cent among those polled.

Healthcare, hydro prices and property taxes were all ranked between 73 and 78 per cent as top concerns among millennials. The quality of schools, traffic and transit were all lower among the issues polled as concerns.

But the results were very similar to those of the overall group.

“We want all three parties to speak to this in the election campaign,” said Hudak.

“We will give credit that the (Premier Kathleen) Wynne government did double the land transfer tax rebate for 2017. It has made some commitments on increasing housing supply and choice. Our goal is ‘let’s press this a bit farther with all three political parties,’ ” he said.

OREA’s poll shows that Toronto’s municipal land transfer tax — it is the only city in Ontario to impose its own in addition to the provincial land transfer tax and adds about $10,500 to the cost of a $700,000 home — remains unpopular. About 70 per cent of respondents said they were opposed to the tax.

Asked about the kind of government home ownership assistance that would have the most impact on how they voted, assistance with making their home energy efficient was the top consideration for 62 per cent of respondents. Fifty-three per cent said a first-time buyer exemption to land transfer tax would be most persuasive and 50 per cent said a commitment to building public transit in their community would be likely to sway them.

When it came to which party they would vote for, the Progressive Conservatives led in the OREA poll with slightly less support, 38 per cent, from millennials compared to 44 per cent of other voters. The Liberal party came second with 30 per cent, followed by the NDP, which had 21 per cent overall but 25 per cent support among the millennials polled.

PC leader Doug Ford was the preferred provincial party leader, named by 32 per cent of those polled, followed by the NDP’s Andrea Horwath with 21 per cent and Premier Kathleen Wynne with 17 per cent.

“The Ontario PCs currently enjoy an 11-point lead,” said OREA. “But a swing of one in 20 voters from PCs to Liberals could make it a horse race.”

About 57 per cent of millennials voted in the last federal election in 2015, according to Elections Canada. That higher-than-usual turnout could have been due to the appeal of a relatively young prime ministerial candidate in Justin Trudeau, said Hudak.

The poll results were released the same day that a video surfaced showing that Ford promised developers that he would open up the protected farmland and environmentally sensitive areas around Toronto, known as the Greenbelt, to home construction.

The polling was conducted between April 3 and 22. Results are considered accurate within 2.1 percentage points 19 times out of 20. The results on millennials are considered accurate within 4.4 percentage points 19 times out of 20.

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Canadian home sales dropped 22.7% in March, national average price down 10.4%: CREA

Posted on 26 April 2018 by admin

The Canadian Real Estate Association said the level of sales activity marked a four-year low for the month of March and was seven per cent below the 10-year average. Still, national home sales were up from the previous month by 1.3 per cent, according to CREA’s latest statistics.

The most-affordable segments of Canada’s housing market are seeing the biggest price hikes as recent changes to mortgage regulations fuel demand for lower-priced homes such as condominiums, according to the country’s real estate industry organization.

The tighter mortgage lending rules, which make it harder for home buyers to qualify for uninsured mortgages, are also shrinking the pool of qualified buyers for higher-priced homes, said Gregory Klump, chief economist of the Canadian Real Estate Association.

“Given their limited supply, the shift of demand into lower price segments is causing those sale prices to climb,” he said in a statement as the association released its latest figures for the month of March. “As a result, ‘affordably priced’ homes are becoming less affordable while mortgage financing for higher priced homes remains out of reach of many aspiring move-up home buyers.”

Home sales across the country have dropped in the wake of several government policy measures, including a stress test for home buyers with a down payment of more than 20 per cent, that were implemented to cool the country’s hot housing market. Last March, national home sales activity had reached an all-time record for that month, according to CREA.

The number of Canadian homes sold in March plunged 23 per cent and the national average price was down 10 per cent from the same month last year amid double-digit plunges in most housing markets across the country, according to the latest monthly sales data released Friday.

CREA said Friday the level of sales activity marked a four-year low for the month of March and was seven per cent below the 10-year average. Still, national home sales were up from the previous month by 1.3 per cent, according to CREA’s latest statistics.

Sales prices are slipping too, with the national average price for all types of residential property down to about $491,000, down 10.4 per cent from March of last year — with the Vancouver and Toronto markets causing most of the drag.

Excluding Canada’s two most expensive real estate markets, the national average price would be $383,000 — a decline of two per cent from March 2017.

But a closer look at the different housing segments reveals a mixed landscape, with lower-priced homes showing the largest gains.

Apartment units posted the largest year-on-year price gains in March, up 17.8 per cent, followed by townhouse/row units at 9.4 per cent. One-storey single family homes saw price gains in March of just 1.3 per cent, and two-storey single family home prices were down two per cent from a year ago, CREA says.

“The housing market continues to adjust to stricter mortgage rules, recent Bank of Canada rate hikes and some provincial policy moves,” said BMO Capital Markets’ senior economist Robert Kavcic in a research note Friday. “While we’re seeing some signs of stability, the adjustment likely has some time yet to go.”

As of Jan. 1, home buyers with a down payment larger than 20 per cent seeking a mortgage from a federally regulated lender are now subject to a financial stress test. These borrowers now have to prove that they can service their uninsured mortgage at a qualifying rate of the greater of the contractual mortgage rate plus two percentage points or the five-year benchmark rate published by the Bank of Canada.

The new policy reduces the maximum amount buyers will be able to borrow to buy a home. An existing stress test already requires those with insured mortgages to qualify at the Bank of Canada benchmark five-year mortgage rule.

In turn, home sales activity was pulled forward to the end of 2017 as homebuyers tried to lock in a mortgage before the new rules took effect.

Sales in the first quarter slid to their lowest quarterly level since the first three months of 2014.

March marked the third consecutive double-digit decline compared with the same month last year, when prices in the Greater Toronto Area soared to record highs.

CREA said activity was below year-ago levels in more than 80 per cent of all local markets, in all major urban centres except for Montreal and Ottawa, with the vast majority of year-over-year declines well into double digits.

Phil Soper, chief executive of real estate company Royal LePage, said the new stress test for uninsured mortgages introduced by the Office of the Superintendent of Financial Institutions has “interrupted” the flow of move-up home buyers looking to upgrade from their entry level home or move to a more desirable location.

“That cycle has been interrupted with the OSFI stress test, because it impacts the ability to move up,” he said. “The question is, is it temporary, or will it actually take demand out of the market permanently? I believe it’s temporary.”

Markets are likely to remain under pressure from recent changes to mortgage lending guidelines, higher mortgage rates, and provincial regulations in some regions, TD’s senior economist Michael Dolega said in a research note Friday.

“However, lower-priced markets where affordability is good should generally outperform in the current environment.”

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Tight supply drives up new house prices and condo values in February: Report

Posted on 28 March 2018 by admin

Fewer than 20 per cent of new single-family homes priced under $750,000

There is little relief so far this year for first-time buyers in the Toronto region looking to purchase a new construction home.

The overall limited supply of newly built and pre-construction homes is particularly severe in the single-family category — detached, semi-detached and townhouses — priced for first-time buyers, according to the home building industry.

That shortage is continuing to send first-time buyers into the condo market where the benchmark price of a condo rose 39.5 per cent year over year in February, compared to a 12.8 per cent price rise for single-family homes.

The ongoing supply squeeze helped drive up single-family home prices to $1.22 million on average year over year last month, said David Wilkes, president and CEO of the Building and Land Development Association (BILD) in a press release Thursday.

Condo apartments and stacked townhouses, which had an average selling price of $729,735 in February, continue to dominate the new housing market, accounting for nearly 1,900 of the 2,159 new homes sold, said BILD.

The number of new home sales continues to be low. The number of single-family homes that sold in February — 264 — was down 82 per cent year-over-year, 79 per cent below the 10-year average.

Condo sales also dropped 50 per cent compared to February 2017, but remained 17 per cent above the 10-year average number of sales.

Of the 12,896 new homes on the market at the end of February, 9,285 were condos. But supply for all types of homes is below what the industry considers a healthy level. There are about four months’ worth of inventory on the market, says BILD. Ideally there should be about nine to 12 months’.

Although there are more single-family homes on the market compared to last year, historically, the inventory is still low, said Patricia Arsenault, executive vice-president of Altus Group, which compiles the building industry statistics.

“There is a dearth of new single-family product that is affordable to a broader range of buyers,” she said. “Fewer than one in five single-family homes available to purchase at the end of February were priced below $750,000.”

The high price of traditional low-rise houses is a key driver in the more moderately priced condo sector on both the new construction and re-sale home sectors.

Condos cost $814 per sq. ft. on average in Feburary, compared to $652 per sq. ft. a year ago and $802 per sq. ft. in January. The average size of a condo was 896 sq. ft.

BILD, which blames regulation for limiting the supply of new homes on the market, wants the issue on the upcoming provincial and civic election agendas.

“We encounter excessive red tape, out-of-date zoning, and lack of developable land service with critical infrastructure,” said Wilkes.

The most single-family homes sold in the Toronto area last month were in Halton, which accounted for 117 of the total 264 sales. There were only three in the City of Toronto.

Toronto remains the king of condos with 973 of the 1,895 sales, while York Region had 748 condo sales.

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Canadian home sales drop 6.5% in February — lowest in nearly 5 years: CREA

Posted on 21 March 2018 by admin

 “The drop off in sales activity following the record-breaking peak late last year confirms that many homebuyers” raced to purchase before new mortgage rules came into effect, CREA’s chief economist said.

Canada’s housing market saw another so-called payback sales drop in February, when the national average home price slumped by five per cent from a year ago, after a surge in sales late last year from homebuyers looking to purchase ahead of this year’s new mortgage rules.

The latest monthly figures from the Canadian Real Estate Association showed that sales volume was down 16.9 per cent in February compared with a year ago, and down 6.5 per cent compared with January.

February’s home sales decline marked the second consecutive month-over-month decline and the lowest reading in nearly five years, the national association said.

 “The drop off in sales activity following the record-breaking peak late last year confirms that many homebuyers moved purchase decisions forward late last year before tighter mortgage rules took effect in January,” said Gregory Klump, CREA’s chief economist in a statement Thursday.

The federal banking regulator’s tougher rules, which took effect Jan. 1, now require a stress test to be applied even to borrowers with more than 20 per cent down payment.

To qualify for federally regulated mortgages, borrowers must be able to afford interest rates that are two percentage points above the contracted rate or the Bank of Canada’s five-year benchmark rate, whichever is higher.

The stricter residential mortgage lending regulations introduced by the Office of the Superintendent of Financial Institutions were aimed at reducing risk in the market amid high housing prices.

CREA’s latest monthly statistics show that home sales were down in February in almost three quarters of all local housing markets tracked by the national association.

The widespread pattern was yet another indication that recent regulatory changes, and not local market conditions, were behind softer sales activity in early 2018, said RBC economist Josh Nye.

“The roller coaster ride that was Canada’s housing market in 2017 has continued this year with resales posting another sizeable decline in February,” he said in a research note.

The number of homes sold nationally hit a record high in December.

But homebuying activity has also since been dampened by the Bank of Canada’s move in January to hike interest rates to 1.25 per cent. The quarter-point increase was the central bank’s third since last summer, after hikes in July and September.

“While the give-back related to the pull-forward in activity experienced late last year, as buyers rushed to close deals prior to the updated B20 rules, appears to have been largely complete in January, the softness in sales nonetheless persisted this month,” said TD economists Michael Dolega and Rishi Sondhi in a research note.

“We believe that much of it has to do with lingering uncertainty, with additional regulations introduced in the B.C. budget adding further tensions, along with B20 impacts and rising rates.”

In February, the B.C. government unveiled additional measures in its budget to tackle the housing market, including raising its foreign buyers tax and expanding it to areas outside of Vancouver, while bringing in a new levy on speculators.

The national average house price for homes sold in February 2018 was just over $494,000, down five per cent from a year earlier. But excluding Toronto and Vancouver, the country’s most active and most expensive markets, the national average price was just under $382,000, up 3.3 per cent from $369,728 a year ago.

The number of newly listed homes in February increased by 8.1 per cent, following a plunge of more than 20 per cent in the month prior. However, new listings across the country in February were still 6.4 per cent below the 10-year monthly average and 14.6 per cent below the peak reached in December 2017. New home listings in February were also below the levels recorded every month last year except January 2017.

TD’s Dolega and Sondhi point to these listings as some of the “modestly encouraging details” in the latest CREA report.

“New listings also perked up a little during the month, suggesting rising confidence on the part of sellers after recent B-20-related volatility,” they wrote.

The TD economists expect sales activity to stabilize sometime in mid-2018.

“We look for prices to drop, on average, this year, though balanced-market conditions across much of the country should mitigate the magnitude of the decline,” they wrote.

“We expect conditions to improve next year, with price growth returning to the market alongside a rise in transaction activity.”


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Tumbling Toronto home sales signal a return to normal market, say analysts

Posted on 07 March 2018 by admin

Convergence of higher rates, government policy and new mortgage rules hit home sales. But that doesn’t mean homes are more affordable.

The numbers are coming and they won’t be pretty.

That’s what data-tracking realtor John Pasalis expects when the Toronto Real Estate Board issues its official February home sales statistics next week.

Although prices appear relatively flat, house sales were down about 40 per cent over the last two weeks in the Toronto area compared to the same period in 2017, while condo sales dropped about 30 per cent, said Pasalis, president of Toronto’s Realosophy brokerage.

The market has been hit by a confluence of policies: Ontario’s Fair Housing Policy, including a foreign buyers’ tax aimed at cooling the market; a new mortgage stress test targeted at protecting Canadians from dangerously high household debt levels; and the Bank of Canada’s moves to increase interest rates.

Is it a correction? Yes. Over-correction? No way, says Pasalis.

He’s among those who say that the Ontario government had to act to cool the market when it peaked at more than 30 per cent year-over-year price growth last April.

But if the government’s aim was to enhance affordability, that hasn’t happened and, given the short supply of housing and the booming Toronto-area population, it’s difficult to see how government intervention will help, say analysts and economists.

Unlike those who blame the fevered real-estate market of 2016 and early 2017 on mismatched supply and demand, Pasalis thinks there was another factor in the extraordinary climb — too much speculation.

 “There was a bubble in the housing market. Speculative buying was rampant, especially in York Region, and York Region is the area that is getting hit the hardest,” he said.

Real estate sales that now appear so disastrous compared to 2017 and 2016 are actually just returning to normal.

“It’s just the market moving back to where it should have been had all this speculation not happened,” said Pasalis, who thinks sales could end up somewhere back at pre-2015 levels this year.

The provincial policies and the mortgage stress test are causing buyers to sit back and take a breath, said David Amborski, chair of Ryerson’s Centre for Urban Research and Land Development. But he expects sales to return to a normally busy spring level.

“It’s not going to go back to the old boom, but it’s going to normalize — level out,” he said.

The hand-wringing over real estate is generally “much ado about nothing,” and it is almost certainly temporary, said Peter Norman, chief economist with Altus Group, the research company that tracks new construction home sales.

The economic fundamentals, including “incredible job growth last year,” along with the huge influx of population into the GTA — plus household income growth “that has been kind of nascent since the recession” of 2008-09 — mean that the Toronto market will lift, he said.

“Job growth pushes kids out of their parents’ basements and it encourages existing renters to move to home ownership and it encourages existing owners to move up the ladder as well. That’s the key piece and often with a bit of a lag,” said Norman, who expects interest rates to stabilize this year and prices to rise by 5 per cent by the end of 2018.

“At times when we’ve had a terrible real estate market in the city — 1991 to 1995 for example; in a brief way in 2009 — it has always been related to external economic shock. It’s the economics that really drive the market, it’s not the financial conditions. The financial conditions just make people re-adjust how and where they buy,” he said.

The current decline in sales could, in the end, actually improve affordability, if falling sales moderate prices, said Sheila Block, senior economist with the Canadian Centre for Policy Alternatives.

“If you believe we have been in a speculative bubble, bursting those bubbles is never smooth,” she said.

So far, none of the housing or financial policies have done anything to improve affordability. But if governments — federal, provincial and municipal — took a more co-ordinated approach to addressing affordable housing needs, that could ultimately ripple up the line to the middle-income supply, she said.

Given the region’s affordability challenge, it’s possible that more middle-income households will need to reconsider home ownership, as costs here are relatively high. “Affordable stable rental supply might be something that regular, middle-class people need to look at,” she said.

Even price drops such as the 4.4 per cent year-over-year decline that the Toronto Real Estate Board reported in January, are a result of statistics that are skewed by last year’s “out of whack” Toronto region market, said Dana Senagama, an analyst with Canada Mortgage and Housing Corporation (CMHC).

“Yes, prices have started to slow down but it’s coming off an unsustainable peak,” she said.

The current cooling also has not solved the problem of over-valuation that CMHC has flagged in the Toronto area. “The fundamental flaws are still there,” said Senagama, who admits that it’s not clear that the basic supply-and-demand issue is solvable as a prosperous region continues to attract immigrants and workers.

Density — packing more people into less space — is one answer to the affordability issue, but even there, the high-density high-rise housing supply mostly made up of condos is getting tighter, driving up prices, she noted.

“One way to counteract that is to have more rental supply,” said Senagama. But while there are signs of renewal on the purpose-built rental side, there’s a trend to luxury rental. And even then, the level of supply does not approach that of new condos.

Moving to more mid-rise and wood-frame construction could help bring down the price of building rental, she said.

In some ways, the housing supply problem is a by-product of the Toronto region’s success, said Senagama.

“This is something that’s not unique to us,” she said, citing cities such as New York, London and Tokyo.

“We know what is creating these pressures. Any city that tends to receive a lot of people and that is growing, these are problems.”


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Toronto new-home sales down 48% from January 2017

Posted on 01 March 2018 by admin

New single-family home sales hit 10-year low in January, according to the home builders’ association.

New construction home sales — houses and condos — declined by 48 per cent in January in the Toronto region, compared to the frenzied real estate market in the same month last year.

It’s a 31 per cent drop from the 10-year average and reflects a supply shortage that has also helped push up prices in the same period, says Toronto’s building industry association.

The single-family benchmark home price rose 19.6 per cent year-over-year last month to $1.23 million — up from about $1 million last January.

Condo prices climbed about 41 per cent year-over-year to a benchmark of $714,430, said the Building and Land Development Association (BILD).

Prices remained flat, however, from December, according to the research compiled by Altus Group.

Of the 1,251 new construction homes sold last month in the Toronto region, only 365 were single-family units. That marks a 10-year low and a 53 per cent decline from last year.

Condo sales were down 47 per cent year-over-year, 5 per cent below the 10-year average.

The supply of new homes increased by 350 units in January from December to 11,750 — a three- to four-month supply based on the pace of sales in the last year.

“A healthy new home market should have nine to 12 months’ worth of inventory,” said BILD in a Thursday press release.

“The GTA is expected to grow to 9.7 million people by 2041. How are we going to house them,” said the association’s CEO Dave Wilkes in the release.

Meanwhile, despite the high cost of new-build housing in the region, there are some good values available to consumers, says an analysis of searches on BuzzBuzzHome, an online hub for new home developments.

The website had more than 1 million hits last month, up 58 per cent from January 2017, with first-time buyers the biggest segment searching online for a home, according to its “Residential Real Estate Round Up Report.”

The analysis looks at the size, location and price of low-rise and high-rise housing developments throughout the Toronto region.

The east end of the GTA will give buyers the most bang for their buck, but there are some good values to be had in the west, where condos in Brampton and Mississauga are under-valued compared to other kinds of homes in those communities, said Ben Myers of Bullpen Research and Consulting, the report’s author.

The most popular floor plans that home buyers searched were three-bedroom townhouses and four-bedroom detached homes.

Downtown Toronto continues to be the hottest condo market, with units at 357 King attracting the most searches. Those buyers are looking for smaller, less expensive apartments. The most popular units tend to be studios and small one-bedrooms between 375 sq. ft. and 550 sq. ft., priced for less than $500,000.

Interest in condos is also spreading to secondary markets such as Hamilton and Waterloo, said Myers.

In Hamilton, the average condo was priced under $300,000. Projects in that city drew 44 per cent more page views in January compared to December, says the report.

Empty nesters looking to cash out of the city are looking at secondary condo markets such as Grimsby, Collingwood, Barrie, Guelph and Orillia, said Myers.

He warned that the continued price growth in the condo market will push rents higher as investment buyers look for returns on their purchases.

Average asking price for new construction homes

$1.6 million

Detached house




Semi-detached house



Source: Research by Altus Group for the Building and Land Development Association


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What are Canadian new-home buyers looking for? The answer is unsexy

Posted on 04 January 2018 by admin

We rate storage and privacy and showers ahead of whirlpool tubs and home theatres.

Tim Bailey likes to joke that he’s always on the look-out for something sexy in the data he tracks on the preferences of Canadians new-construction home buyers.

“Give me something to work with, consumers,” pleads Bailey, the division president of Avid Ratings, a market research company that has been surveying new-construction home buyers since 2014 for the Canadian Home Builders Association.

What the survey shows is that Canadians’ home-buying tastes are, well . . . quintessentially Canadian.

Forget home theatres and indoor swimming pools — it’s upstairs laundry, walk-in closets and stand-up showers that quicken our collective pulse.

Canadians still like a fireplace, but its desirability has cooled. In the age of open-concept, we have oddly been warming lately to formal living and dining rooms.

When it comes to home exteriors, there’s a marked preference for brick over vinyl siding, particularly in Ontario. But vinyl still has a place on the Prairies.

Single-car garages are trending up slightly, but double-car coverage continues to be the preference, although it’s our gear rather than our autos that typically take up that additional space, Bailey suggested.

“As Canadians, we tend to be — or at least we want to be — active. That brings with it a lot of gear like bicycles, snowboards, skis, stand-up paddleboards,” he said.

In-unit luxuries are more important than building amenities among condo-shopping, downsizing baby boomers, said Bailey.

“Psychologically, they’re ready to take a smaller footprint in life but they don’t want to sacrifice. They want the treats in the suite — the quartz, the granite, the custom glass showers,” he said.

Builders are seeing a slight uptick in the take-up for homes with two master suites.

“My theory is that culturally we’re more diverse than ever before so you’ll see more multi-generational families under the same roof. If you have a mom and dad still living with a son and daughter-in-law, you might want to have two master suites,” said Bailey.

The online survey, which contains about 200 questions, gives home builders of every housing category — from high-rise condo, to suburban detached houses — a beat on the must-haves and the might-be-nice-if-we-can-afford-it features that buyers want.

The 2,775 survey respondents have purchased a home from one of 86 builder members Canadian Home Builders Association that commissions the survey. So the answers are based on experienced buyers’ preferences for a second or subsequent home, including 47.5 per cent who identified themselves as move-up buyers.

Three years of survey data isn’t enough to see a revolution in the country’s housing tastes, but there are signs some features are fading, as others are growing in popularity.

“Special-purpose rooms have fallen off the grid — the man caves, the wine cellars, the workshops, home theatres,” said Bailey, who attributes that to a space issue. Most condos don’t have room for those specialty spaces.

Skylights, on the other hand, are trending up.

“That could be density. If we’re getting into more townhomes, you don’t have as much exterior wall to put windows on so you’ve got to find other ways to get brightness into your home,” he said.

The drive to density is a national phenomenon that means the Toronto region isn’t unique in building fewer single-family, detached houses, said Bailey.

“In Calgary, where they could sprawl forever, there are government initiatives that don’t let them . . . it’s about intensification. It’s not like they’re constrained by Lake Ontario or a mountain region, and yet they’re still having that drive to density there as well,” he said.

At the same time, the Canadian appetite for a house with a yard is growing. The 2017 survey found 65.5 per cent of respondents want a single-family house, up from 55.7 per cent in 2015.

That desire for low-rise, single-family homes is impacting affordability in markets such as Toronto, said Bailey.

“There’s not a lot of product coming on stream. Again, desire and actuality don’t necessarily mingle,” he said.

But the study report notes that buyers are increasingly reluctant to save money by buying a smaller lot and — no surprise in the Toronto area — will commute farther for a more affordable home.

About 91 per cent of new-construction homes sold in October in the Toronto region (4,884 units) were condos or stacked town houses. Only 9 per cent were low-rise homes, including detached and semi-detached houses and townhomes, according to the Building and Land Development Association.

When it comes to traditional ground-level homes, Canadians must be good neighbours, because they like their patch of paradise to be private. Fences are considered a must-have item by 49.7 per cent of new-construction buyers, and a further 28.2 per cent said that’s something they really want.

In the most recent research, 42 per cent of respondents were families with children; 37.9 per cent were singles or couples with no children. The respondents were almost evenly split among millennials (36.9 per cent) and Generation Xers (35.9 per cent) followed by baby boomers (23.7 per cent).

Those with household incomes of between $100,000 and $149,000, comprised 23.9 percent of respondents, followed by 18.6 per cent who made less than $75,000 a year and, 18 per cent, with incomes of $75,000 to $99,000.

The findings are considered accurate within 2.45 per cent.

What Canadians want in new construction


A luxury, spa-like bath is a priority for home buyers. But the shower beats the tub in buyer preferences.

48.5 per cent of buyers of Toronto-area detached, two-storey homes considered a whirlpool tub a priority, compared to 68.2 per cent who wanted an oversized shower. Among high-rise consumers in Toronto, 48.2 per cent wanted the oversized shower versus 30 per cent who wanted the whirlpool.

The most popular en suite feature was a double sink. Among single-family home buyers in Ontario and the Toronto region, about 80 per cent consider that a priority. Among mid-rise buyers in the area, the quest for a double sink rose from to 63 per cent from 50 per cent in 2015. Only 61 per cent of high-rise buyers in the Toronto area considered the double sink a priority.


Open concept is the overwhelming design choice across all categories of home buyers in Ontario and the Toronto region, the preference of between about 85 per cent and 90 per cent of consumers.

About 90 per cent of buyers of detached homes want a kitchen island. But the number of island-seeking Toronto high-rise buyers fell to about 75 per cent from 87 per cent two years earlier.

When it comes to counters, quartz was edging up on granite’s popularity but the latter stone remained the clear favourite among 90 per cent of GTA mid-rise buyers and 75 per cent of high-rise consumers.

Solid surface counters such as Corian and Staron weren’t as popular as stone, but about 48 per cent of GTA high-rise buyers cited those materials compared to 28 per cent in 2015.

Cabinet preferences didn’t change much over the three-year survey period. Maple and oak remained the clear favourites among detached-house buyers. But more condo buyers were looking for oak in the GTA, where it was the preference of 75 per cent, compared to 39 per cent two years earlier. High-rise consumers looking for oak cabinets rose to 65 per cent in 2017, from 39 per cent in 2015.


The survey shows that consumers will pay more for a house with energy efficient features — but we’re in it to save utility costs rather than the planet. High-efficiency windows were the most often cited preference (91 per cent) among detached home buyers, compared to 77 per cent of high-rise buyers.

LED lighting has increased among detached- and mid-rise home buyers through the three survey periods. Among GTA high-rise shoppers, however, it has dropped to about 70 per cent from 87 per cent two years ago.

Source: Canadian Homebuyer Preference National Study 2017

Top 10 ‘Must haves’ for new-construction homes

Walk-in closets

Energy-efficient appliances

High-efficiency windows

Linen closets

Overall energy-efficient home

Kitchen islands

Open concept kitchens

Large windows

Two-car garage

HRV-ERV air exchange

Source: Avid Ratings for the Canadian Home Builders Association

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CREA slashes its 2018 home-sales forecast due to tighter mortgage regulations

Posted on 22 December 2017 by admin

Sales activity across the country, the association says, will be reduced by OFSI’s revised mortgage underwriting guidelines.

The Canadian Real Estate Association (CREA) has cut its home sales forecast for next year due to the impact of tighter mortgage regulations that come into effect New Year’s Day, which are expected to rein in spending for some buyers.

CREA said in an updated projection Thursday the banking regulator’s revised mortgage underwriting guidelines, which include a stress test for uninsured mortgages, will reduce sales activity across the country, particularly in and around Toronto and Vancouver.

The association now forecasts a 5.3-per-cent drop in national sales to 486,600 units next year. That new estimate shaves about 8,500 sales from its previous 2018 forecast.

 “With some homebuyers likely advancing their purchase decision before the new rules come into effect next year, the ‘pull-forward’ of these sales may come at the expense of sales in the first half of 2018,” CREA said in a statement.

“Meanwhile, other potential homebuyers are anticipated to stay on the sidelines as they save up a larger down payment before purchasing and contributing to a modest improvement in sales activity in the second half of 2018.”

In November, the number of homes sold through its Multiple Listing Service rose by 3.9 per cent compared with October, led by a 16-per-cent sales spike in the Greater Toronto Area. Sales were up 2.6 per cent from last November, marking the first year-over-year increase since March. That helped send the national home price up 2.9 per cent, year over year, to $504,000.

The number of newly listed homes rose 3.5 per cent in November, which reflected a large increase in new supply across the GTA.

In October, the Office of the Superintendent of Financial Institutions (OSFI) announced the final version of its revised guidelines, called B-20. The new rules, which come into effect on Jan. 1, require would-be homebuyers to prove they can still service their uninsured mortgage at a qualifying rate of the greater of the contractual mortgage rate plus two percentage points or the five-year benchmark rate published by the Bank of Canada.

CREA argues the new guidelines make it tougher for potential buyers with more than a 20-per-cent down payment to qualify for a mortgage. These low-ratio mortgages comprise the vast majority of Canadian mortgage originations, it added.

The association also narrowed its forecast for national sales activity this year. It expects sales to decline 4 per cent to 513,900 units in 2017 due to weak activity in Ontario, after the province in April announced measures such as a foreign buyers tax to cool the market.

However, the association expects the national average price of a home to rise this year to $510,400, up 4.2 per cent compared to 2016.

While November sales activity in the Greater Toronto Area was down significantly compared to a year earlier, other large markets posted annual gains, including Greater Vancouver and the Fraser Valley, Calgary, Edmonton, Ottawa and Montreal.

BMO economist Robert Kavcic noted that the adjustment in the Toronto market is ongoing.

“But strong underlying supply-demand fundamentals should prove supportive next year once the remaining froth gets worked off,” he wrote in a note to clients.

“In all likelihood, Bank of Canada rate hikes and the coming rule changes from OSFI should keep the froth from returning. Elsewhere, look for continued strength in Ottawa and Montreal, stability in Alberta and an ongoing supply-demand struggle in Vancouver.”


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