CANADA’S HOUSING BOOM COMES TO AN END
http://www.torontorealestate.ca/pdffiles/TDHousingReport-June26-08.pdf
TREB MarketWatch report
HIGHLIGHTS
• The long awaited end of the Canadian housing
boom has occurred, reflecting more moderate
demand and increased supply of properties
for sale
• Most of Canada’s major housing markets have
moved out of seller’s territory to more balanced
markets
• TD Economics forecasts modest national average
price growth of 2.0% this year (虽然少了很多，今年仍有2.0%的增长）and 3.5%
next year, down substantially from the 10%
annual pace of the last six years
• Sales are significantly lower than in the banner
year that was 2007, but they are returning
to 2004-06 levels, held up by solid economic
and financial fundamentals
• Past erosions in affordability are the main factor
behind weaker sales, but affordability is now
set to improve
• Additional supply of homes for sale is booming
out west and new listings must be absorbed
at more conservative prices before demand
can lift prices again. After a pullback over the
next 12 months, Alberta’s major markets will
stabilize and post mild prices gains thereafter
• Saskatchewan is bucking the national cooling
trend, but price growth will come back down
to earth next year
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hezhegaigua2
2008-08-05 21:23
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Sales Volume Statistics
http://www.randi-emmott.com/market.htm
2008 Monthly Sales versus 2007
The Toronto Real Estate Board reported 9,411 sales of single family homes in May 2008. While this represents a 7 percent increase in sales volume over April (fairly typical for the time of year), it also represents a 16 percent decline in sales volume from May 2007.
Annual Sales Volume 1980-2007
This chart graphically depicts the number of single family homes sold in the years 1980 through to 2007. The volume of sales in the Toronto area experienced peaks in 1986 and 1988 followed by slow years during the early 1990's. Sales volume picked up from 1996 onwards. Sales of resale homes in 2007 were the highest recorded.
Sales Year-To-Date
This chart depicts the number of resale homes sold to the end of May for each of the years 1991 through to 2008. Sales volumes have been consistently lower than 2007 for every month this year resulting in year to date sales in 2008 being 13 percent lower than 2007.
Average Selling Prices
Average Selling Price 1980-2007
This chart presents average price trends for houses in the Toronto area during the last 27 years. House prices clearly peaked in 1989 and then dropped until 1996. House prices have been steadily increasing during the last few years although not at the dramatic rates seen during the late 1980s. The average price reported for 2007 was 38 percent higher than the previous peak in 1989. See the chart below for 2008 month by month average prices.
Average Monthly Selling Price 2008 vs 2007
The average selling price of homes that sold during May 2008 was $398,148 - a very slight decline from the $398,687 reported for April, and 4 percent higher than May 2007. Note: Last month we reported that prices were 5 percent higher than a year ago. Average selling price reported on a monthly basis can be misleading as it is comprised of a combination of the real value of property plus the mix of higher priced to lower priced homes that have sold during the month. The mix of homes sold during April is depicted below in the Sales by Price Breakdown chart.
The average selling price year-to-date for 2008 is $388,839 - approximately 3.3 percent higher than the average selling price for 2007 of $376,236.
Inventory
This chart depicts the number of active listings (properties for sale) on the Toronto Real Estate Board. The number of properties actively listed for sale during May was 27,267 - an 11 percent increase over the number of properties listed for sale in April and perhaps of more significance a 15 percent increase over the number of properties listed for sale in May 2007. The number of properties coming onto the market in May 2008 was 8 percent higher than in May 2007!
Home Sales by Type/Price
Home Sales by Type of Property:
This chart breaks down single family residential sales during May 2008 into the various different categories of property such as single family detached, semi-detached, townhouse etc. As always, single family detached homes make up the bulk of all sales with condominium apartments coming in second.
Home Sales by Price Range
This chart breaks down sales of single family homes during May 2008 into price ranges so that the most popular (highest selling) price ranges can be quickly determined. Homes in the $300,000 - $400,000 price range clearly outpace all other price ranges. The mix between sales of higher priced homes versus lower priced homes directly affects the average selling price reported for the month.
http://www.torontohomes-for-sale.com/4a_custpage_2578.html
Updated January 10, 2008
The real estate market in the Greater Toronto Area Toronto has been on an up-swing for a long time now, and clients ask us what are the prognosis. Can this level of activity last? Can the pricess keep going up? Are we going to see another 1989 crash?
2005 was a record-breaking year. 84,145 properties changed hands, the largest number ever recorded by TREB. The average price rose by 6% - a healthy but not excessive amount. In the City of Toronto (E01 to E11, C01 to C15 and W01 to W10) the average price rose by 10 percent to $361,055.
2006 real estate sales did not exceed the 2005 records, but came fairly close at 82,969. The average price increased by a modest 5.4% to $351,941. Last quarter of the year was slower than the first quarter. The number of sold properties was lower by 10.9% than in the first quarter, there were 47% fewer listings taken, but the inventory of available properties was higher by 6.6%. The comparison with the fourth quarter of 2005 is more favourable, with the number of sold properties lower by only 2.6%, 2% more listings taken, and 5.6% higher inventory.
2007 beat the 2006 records. 12% more sales were recorded (11% more than in the previous reccord-setting 2005). Average prices rose by seven percent to $376,236, and the average time required to seel a property went down to 32 days from 34 required in 2006. The number of listings taken in 2007 fell by 1.8%, and the average sell-to-list price ratio stayed constant at 98%.
There are several factors at play that affect our real estate market.
1.
Although the interest rates have risen somewhat, they are still at their historical low, lowering the real cost of purchasing a house, townhouse, condo apartment or loft, at least for the length of the mortgage term. The recent increases have neither dampened the activity down in any significant way, nor remarkably reduced affordability.
2.
Our dollar is high, hovering around par with the US dollar and giving us an increased purchasing power,
3.
Inflation, although higher than last year, is still low at only 2.4%, and
4.
Young people, immigrants, and foreign investors are fuelling the demand, while older generation stays longer in their homes.
The province imposed a freeze on urban boundary expansions, which means that land prices are bound to increase. Increased land values lead to an increase in property prices. Increases in single family development charges in the City of Toronto will increase the cost of newly constructed housing, which is already suffering from the higher materials and energy costs. New Toronto Land Transfer Tax fuelled some frantic activity in December. That activity may slow down in February, when the new tax comes into effect.
Real estate remains a sound investment. In the last 11 years, since the end of March 1996 (the lowest point in the recent years) the average value of a house in Toronto rose by approximately 90 percent. In contrast, the increase in average house price in just 5 years between 1984 and 1989 was an astonishing 168 percent. Houses were often re-sold several times each time selling for a higher price. Such frenzied market had to burn itself out. If we take into account inflation, average house prices have not reached yet the 1989 level. They are still 7% lower than the inflation-adjusted average of $402,457 of 1989.
Experts predicted that in 2006 in Toronto we should see a slow-down in the number of properties being sold, with that number falling down by about 4 percent, but with the prices still rising by an average of 4%. In reality, the number of properties sold was lower by only 1.4%, and the prices increased by close to 5%. The high level of home ownership was the main reason quoted for the expected slow-down, additional reasons being the rising interest rates and other costs of home ownership. Although the TD Bank economist predicted a stron market for 2008, the new land transfer tax may slow down the sales.
Using average house prices from just over 50 years, corrected for inflation (for comparison purposes I brought the historical data up to today's equivalent values), I produced the following graph. The average prices are courtesy of TREB.
As you may see on the graph, during this time span there were two significant 'spikes' in house prices, and three 'dips'. Blue line denotes the trend. Each time the average prices rose above the trend line a 'correction' ensued.
At the end of 2003, when the average house price reached $293,067 (which, corrected for inflation amounts to $310,502, the price line has crossed over the trend line. But the increase rate is moderate, at 7% for a year-to-date average.
When the prices rise faster than the trend suggests, the market eventually slows down. Whether the prices become stable, following the trend line, or actually drop, seems to depend on the speed with which the price increases happen. The steeper the angle of the curve representing house prices, the more likely is a price 'correction'. If the interest rates continue rising, the affordability will erode and the demand will slow down.
Price increases since 1996 are much more gradual and follow a much gentler curve than the ones leading to the past two peaks of 1974 and 1989. In the long term the average real estate prices seem to follow the trend line.
August 4, 2008 in Toronto Real Estate Trends
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Real estate comes back to earth
Anecdotes about hard-to-sell houses and cooling real estate markets abound in Toronto these days, but the discomforting rumours have yet to play out in the data. The housing market, according to the Canadian Real Estate Association, has lost considerable momentum, but is probably just coming back to earth.
In the first half of 2008, existing home sales were 13.1 per cent lower than a year earlier. The number of homes on the market rose 9.6 per cent. But CREA points out that the market was merely coming off record-high activity last year, and settling back to levels of still-vibrant activity seen in the preceding years.
The ratio of new listings to sales shows that Canada's housing market is less of a sellers' market than since 2000, but is still not heavily in favour of buyers, say economists at National Bank Financial. That's the case in seven out of 10 provinces, they say.
And prices are not falling; they're rising, although not as sharply as in the past. The average price of a house in Canada hit a record high in the first half of 2008, at $313,610 - up 3.6 per cent from a year earlier. Only Alberta saw price declines, down 0.1 per cent.
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hezhegaigua2
2008-08-05 18:34
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Toronto's bidding wars continuing
Even as the real estate market softens, vendors still offer conspicuously undervalued homes in some neighbourhoods.
Home buyers still face bidding wars
Even as the real estate market softens, vendors still offer conspicuously undervalued homes in some neighbourhoods
August 4, 2008
Comments on this story (38)
Tony Wong
BUSINESS REPORTER
Since the start of the year, a frustrated Cam Warnock has bid on three Toronto homes, each time losing the property to other buyers in multiple-offer competitions.
One property in Bloor West Village was listed at $199,000. It went for $260,000. Another, near the St. Lawrence Market, asking $209,000 went for $242,000.
"It's just an incredibly demoralizing experience," Warnock says. "Whatever happened to listing properties at true market value?"
Listing properties below the market value has become a common practice in the Toronto area over the past five years – creating a bidding-war mentality for buyers. Even with sales down, the market cooling dramatically and active listings up by 22 per cent compared with last year, multiple offers continue in some highly sought-after areas.
That's because sales remain high in historical terms, even if they're not at the record highs of 2007. Prices continue to rise, albeit at a much slower pace than last year.
While houses sit on the market longer with more inventory available in the Greater Toronto Area, most of the multiple offers are taking place in pockets of the central city still coveted by buyers. But under-listing properties has created a backlash, not just among frustrated consumers, but also from some agents who say the practice is undermining the profession.
"Underpricing a home to create an auction-like frenzy started on really great homes in nice neighbourhoods," realtor Sally Cook says. "Now everyone is doing it on any old piece of crap."
The last home that Warnock looked at in East York was listed at $199,000. But after some investigation, Cook, who acted as Warnock's realtor, found the property was listed originally at $399,000.
"There's no way my client was going to get that home for anywhere near (the listing) price," Cook says.
In Warnock's case, a $400 home inspection he had scheduled was called off since the top price he was willing to pay was $225,000. "Even if I was the only buyer they still wouldn't have sold me the house, which is ludicrous," Warnock says.
Zahid Islam, the agent for the East York home that Warnock was interested in, says bids were taken more than a week after the listing, but the vendor ended up rejecting all offers and took the property off the market.
Cook says under-listing tactics often become a waste of time for both buyers and sellers.
"I was at one listing recently where there were 19 bids on one property. That's 19 people who have to call their mortgage broker, maybe get a house inspection, take time off work and pay for babysitters," Cook says. "The problem with listings today is that the list price means nothing."
Realtor Duncan Fremlin, who is also concerned about the underpricing of homes, says sometimes the marketing of a home at a lower price can be flat out dishonest.
He remembers one home in Riverdale being listed as a "Riverdale home at Pickering prices."
"That's a downright lie," Fremlin says. "The truth is, it may be listed at a Pickering price," but the home will sell for far more than that.
The first half of the year has seen six consecutive months of declining sales compared with 2007, and some observers say that agents who consistently use the underpricing strategy may see it become less effective if the cooling continues.
"You might see a lot of agents with egg on their faces if they try and create an auction and nobody shows up," Fremlin says.
The fact the East York home Warnock bid on failed to generate the numbers the vendor wanted may be part of a new market reality.
So far this year, while many homes are still going for more than the listing price, there have been no outsized shockers such as the Beach-area home that sold for $1.9 million last July, more than $600,000 above asking. Proponents of underpricing say the Beach case is spectacular proof the strategy can work in the right circumstances by generating a heated contest between motivated buyers.
But Cook and her husband Thomas, who is also a realtor, say the practice should be stopped outright in good and bad markets. They have complained to the Toronto Real Estate Board saying the practice of deliberately under-listing homes and holding off an offer for seven days is harmful to the industry.
"It is the lazy agent's way of having to deal with a listing for only seven days," Cook says.
The agent may end up "looking like a hero," she says, for putting the property on the market below market value, allowing showings, taking offers and selling the home in just a week But she says it does the client a huge disservice and may not get the best price.
"It's detrimental to the seller. You might have 19 bids, but only two people can really afford the house, because you've attracted everyone else who can't with a lower listing, so it's completely artificial," Cook says. "And of course the house is going to sell over asking – because it's underpriced in the first place."
It's also unfair to the potential buyers who waste time looking at homes they can't afford, she says.
Islam, the agent representing the East York home says using a lower price is a marketing tool that can create more awareness, but it should be used strategically.
"It can work well," he says. "It doesn't work for every neighbourhood, but if you have a popular area, you can generate more interest in the property."
The Toronto Real Estate Board, meanwhile, says there's little it can do to restrict the listing price an agent might place on a property.
"Auctions, bidding wars and the various ways of marketing properties are driven by the marketplace," board president Maureen O'Neill said in a written response to questions by the Star.
"TREB (and others) do not have the right to interfere with a market-driven function."
However, perhaps in an effort to quell concerns, the board this April implemented a new rule that says listings placed on the MLS should be available immediately for showings, inspections and registration of offers. In other words, you can't place a home on the market and only have showings a week later.
Cook's husband, Thomas, says the rule doesn't go far enough.
"The rule should read that the listing should be immediately available for presentation of offers as well," he says.
"That would end up stopping the one-day-auction mentality that agents try to create."
Cook says he wants a return to the tried and true method of pricing a home properly.
"Whatever happened to the old method of doing a proper appraisal, listing it at 2 to 5 per cent above market value, open a listing up for showings and taking offers as soon as they come in? It's much fairer for the buyers, opens up the sellers to get the best possible price, and takes the false hype out of the marketplace."
As for Warnock, he decided to avoid properties that seemed obviously underpriced or were holding out for offers – a lesson he says other buyers might be wise to emulate if they want to avoid futile and emotionally draining bidding wars.
"I just got sick of playing their game and feeling manipulated," he says. "I just didn't even bother looking at a lot of the properties because of that."
After bidding on a condominium that was listed at $239,000 in the St. Lawrence Market area in downtown Toronto last month, Warnock ended up buying for $243,000.
"It was fairly priced at market value and it just made things a lot easier when you're on the same page or even in the same ballpark. The seller was happy and I was happy – and there was just a lot less frustration."
Toronto Star
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