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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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Canada adds 15,400 jobs, unemployment dips to 5.8% but part-time work surges, full-time positions decline

Posted on 15 March 2018 by admin

Statistics Canada’s latest labour force survey, released Friday, showed the country lost 39,300 full-time jobs and generated 54,700 part-time positions in February. It also found the job gains were driven by an increase of 50,300 in public-sector jobs.

OTTAWA—The economy got a job-creation lift last month that nudged the unemployment rate down to 5.8 per cent — but a closer look reveals a rush of part-time work and a big decline in full-time positions.

Statistics Canada’s latest labour force survey, released Friday, showed the country lost 39,300 full-time jobs and generated 54,700 part-time positions in February. It also found the job gains were driven by an increase of 50,300 in public-sector jobs.

The national unemployment rate slipped from 5.9 per cent in January to 5.8 per cent — to match its lowest level since the agency started measuring it in 1976. The jobless rate has only fallen to 5.8 per cent twice during that time, once in 2007 and again in December.

Looking back, the job market added 282,500 positions for a 1.5 per cent expansion over the past 12 months — with growth entirely due to full-time work. Canada’s year-over-year job creation last month showed signs of moderation after the number climbed above 420,000 positions in December.

Experts, including the Bank of Canada, have been expecting the job market’s red-hot pace from last year to cool, along with the rest of the economy as it approaches full capacity.

Manulife Asset Management senior economist Frances Donald said there’s very little in the jobs report that will rock the boat — and she added that in itself is very important.

“These jobs numbers fit quite well into the Bank of Canada’s cautiously optimistic Canadian narrative,” Donald said.

“The Canadian job market, just like the broader economy, is decelerating somewhat, but it’s coming back down to earth in what we might consider a more-reasonable pace of gains with fewer distortions.”

Donald underlined a couple of key indicators from the jobs report — the upward trend for hours worked, which suggests continued strong demand for labour in the economy, and average wage growth that’s still hovering around three per cent, which suggests more Canadians are benefiting from the healthier market.

Average hourly wage growth, which is under close watch by the Bank of Canada ahead of interest-rate decisions, stayed solid at 3.1 per cent. In January, wage growth hit 3.3 per cent following a steady flow of monthly increases after the indicator bottomed out at 0.5 per cent last April.

“At 3.1 per cent in February, wage growth posted a fourth consecutive month above its longer-term average of 2.6 per cent,” Sherry Cooper, chief economist for Dominion Lending Centres, wrote in a research note.

Cooper said the February reading won’t set off inflation warnings for the Bank of Canada, which noted this week that wage growth is still below what it considers a normal level for an economy without labour market slack.

“This suggests the bank will maintain its cautious stance,” she said.

Earlier this week, the central bank highlighted wage growth as one of the key data points that it will scrutinize ahead of future rate decisions. The Bank of Canada kept its trend-setting rate at 1.25 per cent on Wednesday after introducing three hikes since last summer.

The central bank has remained cautiously upbeat about the economy and has said more interest rate hikes will likely be necessary over time, despite mounting protectionist and competitiveness unknowns that have clouded the economic outlook. It said future decisions will continue to be guided by incoming data, such as the economy’s sensitivity to higher rates, the evolution of economic capacity and changes to wage growth and inflation.

Deputy governor Timothy Lane said in a speech Thursday that while the future is subject to notable uncertainties, trends over the past few quarters have been broad-based across regions and sectors, and “quite encouraging.”

Last month’s job growth, while small enough to be statistically insignificant, represents an improvement over the January report that showed a drop of 88,000 positions for the labour force’s steepest one-month drop in nine years.

By industry, the goods-producing sector shed 10,400 positions last month, led by a decline of 16,500 jobs in manufacturing, while the services industries added 25,900 jobs.

The survey also said the number of paid employee jobs increased last month by 58,800 positions, compared with a decrease in self-employed positions of 43,300.

By region, New Brunswick saw the biggest percentage increase — a boost of 1.5 per cent compared with January — as it gained 5,100 jobs. Ontario added 15,700 positions, which was a 0.2 per cent boost compared with January.

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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

$988,343

Townhouse

$903,054

Semi-detached house

$782,488

Condominium

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

MASTER SUITES

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.

KITCHENS

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.

ENERGY EFFICIENCY

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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Annual rate of homes entering construction jumped in October, CMHC reports

Posted on 16 November 2017 by admin

Vancouver hit a 12-month high as housing starts doubled, while Toronto saw a slowdown in its pace.

OTTAWA—Canada Mortgage and Housing Corp. says the annual rate of housing starts ticked higher in October as the pace of new construction in the Vancouver region hit a 12-month high.

The housing agency said Wednesday that housing starts for the month came in at a seasonally adjusted annual rate of 222,771 units in October, up from 219,293 units in September.

The annualized pace of urban starts increased by 2.5 per cent in October to 205,935 units, boosted by a 12.5-per-cent jump in multiple urban starts to 149,593. Single-detached urban starts fell 17.1 per cent to 56,342 units.

In Vancouver, the annual pace of housing starts nearly doubled to 34,850 compared with 18,116 in September. Multi-unit starts soared to 30,384 compared with 12,864, while single-detached starts in Vancouver fell to 4,466 from 5,252.

However, Toronto saw the annual rate of housing starts in that city slow to 35,299, compared with 28,049 in September, as both the multi-unit and single-detached categories moved lower.

The overall increase in home starts comes even as the resale market for homes has been slowing this year compared with the fever pitch in the spring.

“We continue to expect a moderation in starts at the national level over the next year that would be more in keeping with what we are seeing on the resale side,” Royal Bank economist Josh Nye wrote in the report.

“The combination of policy changes, including measures set to go into effect in January, and rising interest rates is expected to result in a sustained cooling in existing home sales and less price pressure.”

Rural starts were estimated at a seasonally adjusted annual rate of 16,836 units.

The six-month moving average of the monthly seasonally adjusted annual rates of housing starts was 216,770 units in October, up from 215,153 units in September.

The housing start figures came as Statistics Canada reported that building permits rose in September.

It said Canadian municipalities issued $7.9-billion worth of building permits in September as a 1.7-per-cent drop in the residential sector was more than offset by a 13.9-per-cent increase in the non-residential sector.

 

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Detached Toronto home prices fall, while condo prices soar in October

Posted on 09 November 2017 by admin

The average selling price in October was $780,104, up 2.3 per cent compared with October 2016.

The usual seasonal bounce in re-sale homes between September and October was more pronounced than usual this year in the Toronto region, growing 12 per cent.

But there were still 2,597 — about 27 per cent — fewer sales this October compared to the same month last year.

Home prices also rose 2.3 per cent year over year in October, but new numbers from the Toronto Real Estate Board (TREB) on Thursday showed some areas are doing better than others.

The average price of a home — including all housing types from apartments to detached houses with yards — rose 2.3 per cent to $780,104, compared to $762,691 last year.

But detached house prices were down 2.5 per cent across the region — a 4 per cent decline in the 905 area to an average price of $910,488 and, a 1.1 per cent drop in Toronto to about $1.3 million.

Condos, however, continued to perform well, up 21.8 per cent across the region to an average price of $523,041.

The divide between the City of Toronto and the surrounding region is a function of the housing stock that’s on the market, said Jason Mercer, TREB’s director of market analysis.

In the 905 there are more detached homes on the market, he said, “so you haven’t seen as much upward pressure on prices there.”

TREB’s annual survey will show how the new mortgage stress tests introduced last month are impacting consumers’ buying attitudes, said Mercer.

“While the number of transactions was still down relative to last year’s record pace, it certainly does appear that sales momentum is picking up,” board president Tim Syrianos said in a press release.

Royal LePage agent Elli Davis, said the number of homes she sold last month was almost identical to the same period last year. After a lull in the summer, buyers are starting to come back to the market, she said.

“Condos under $500,000 are flying,” said Davis.

There is also scarce supply to feed the demand from downsizing buyers for condos priced between $1 million and $3 million.

“We have very little supply, so when a listing comes out everybody’s running to it,” she said.

Some sellers still haven’t adjusted to the new market realities and are pricing their properties in the expectation of selling for the prices their neighbours garnered earlier this year or last year, she said.

Some are struggling with whether to sell their home before buying another.

“A lot of people are still buying first, but they have to be cognizant of what their property will sell for so they can be realistic when we get to that point,” said Davis.

South of Bloor St., from Etobicoke to the Beaches, houses are still selling in multiple offers and two- and three-bedroom condos are being snapped up, said Ara Mamourian broker-partner at Property.ca in Leslieville.

“But what’s really going nuts is the rental market right now,” he said. “We can’t keep a rental property on the market for more than 24 hours without at least two or three applications on it.”

Some consumers have been priced out of the home ownership market, said Mamourian.

“They don’t have the down payment money, but they certainly do have the monthly cash flow to float a nice, high-quality rental. That’s why we’re seeing the $3,000- to $4,000-a-month rental market really do well,” he said, adding that it’s difficult to find a one-bedroom apartment for under $2,000 a month.

“We’re seeing folks double up, taking on roommates, taking on two-bedroom apartments for $1,200 to $1,300 each, versus a one-bedroom that would cost them $2,000,” he said.

In Oakville, where ground-level housing comprises the largest share of the market, things are slower, said Century 21 Miller agent Jamie Vieira.

“Everybody assumed that we’d get busy because of the mortgage rules coming in effect Jan. 1, so there would be some rush to buy but that doesn’t seem to be happening,” he said.

“We have a lot of inventory sitting around and (sellers) trying to wrap their heads around the price. September was slow too,” said Vieira, adding that prices are nowhere near what they were in March and April when the Toronto region housing market peaked.

TREB reported 888 active listings this October compared to only 400 last year. While the average Oakville home price of about $1.09 million is up about $43,000 year over year, the median price fell $67,500.

“We’re up at the peak inventory we had at the end of June and sales are 45 per cent down. Take those two things combined and it’s not a good market,” said Vieira.

In April Toronto region home prices peaked at 33 per cent above the previous year. But the provincial government’s Fair Housing policies, including a foreign buyers tax, immediately cooled the market.

That was followed by two hikes in the Bank of Canada rate and, more recently, more mortgage stress testing rules by the Office of the Superintendent of Financial Institutions.

The CHMC warned last month that the country’s hottest housing markets remain “highly vulnerable” with evidence of moderate overvaluation and price acceleration in Toronto, Hamilton, Vancouver, Victoria and Saskatoon.

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