GTA new home sales up 24 per cent in 2009

Tony Wong

New home sales in the Greater Toronto area were up by 24 per cent in 2009 compared to a year earlier,

according to figures released today.

The Building Industry and Land Development Association (BILD) stated 33,165 new homes and condos

were sold in the GTA, compared to 27,153 in 2008.

Most of those sales were in the second half of the year when consumer confidence, sparked by low

interest rates, returned to the market.

The solid figures were helped by a strong December, with 3,148 home sold, representing a more than

five-fold increase over December of 2008.

The recovery was "kick started by builders slashing costs and margins on inventory and new product to

the bone," said the association.

"It was propelled by an improving economy, increased consumer confidence and overall housing

affordability."

That strength has continued into 2010. Sales in the first two weeks of January were almost double those

of the same period last year - 1,749 so far this year up from 888 at the same time in 2009, according to

figures released by the Toronto Real Estate Board on Monday.

The average price of a home in January was also up, at $395,307, compared with $332,495 in the same

month in 2009.

The board expects the strength in sales and pricing will continue for the next few months.

Source: YourHome.ca

"Sales activity in 2009 came in like a lamb and went out like a lion," 

Toronto developer Jim Ritchie thought his biggest challenge last year would be persuading consumers to purchase his condominiums during the recession.

But it turned out his main problem was getting new developments to market quickly enough to satisfy demand.

"There was very little activity for six months, and then things just started to take off," said the senior vice-president of condominium developer Tridel Corp.

Tridel had shelved projects at the beginning of the year only to scramble six months later to take advantage of a market ignited by low interest rates. Another factor has been spillover demand from the existing homes market and increased consumer confidence.

The strongest December in history for sales of existing homes helped power the Canadian real estate market to a strong finish in 2009.

The Canadian Real Estate Association reported Friday that 27,744 homes traded hands in December, up 72 per cent from a year ago.

"Sales activity in 2009 came in like a lamb and went out like a lion," said CREA president Dale Ripplinger.

The average national residential price was $337,410 in December, up 19 per cent year over year.

On an annual basis, prices were up 5 per cent to a record $320,333. Sales rose 7.7 per cent, representing the fourth-best year on record.

In the Toronto market, existing home sales bettered 2008 by 17 per cent, while the average price of a home gained 4 per cent to $395,460.

Like many developers, Tridel had been expecting a slowdown in 2009, but Ritchie said sales have increased by about 15 per cent.

The company launched four projects last year and virtually all sales occurred in the second half of the year.

Another project, the Hull-Mark Centre in North York, which would likely have been shelved under earlier projections, is to be launched next week.

The developer's outlook has been helped by a lack of inventory in the resale home market that has contributed to buyers moving into the new home market.

Friday's powerhouse numbers meanwhile, did nothing to quell the concerns of some economists who say the market is looking a little frothy.

"Canadian home sales just continue to roll right along even in the face of stern warnings from policy-makers, pundits, all and sundry," BMO Capital Markets Economist Doug Porter said Friday.

Porter warns the market is not in "full-blown bubble territory quite yet ... with an emphasis on yet."

The economist said the market could continue to be heated with "a risk of further sales and price surges in the coming months ahead."

Ritchie, meanwhile, said he doesn't see a bubble.

"I haven't seen prices and values increasing to such a point that they would collapse," he said.

"The Toronto market has been incredibly resilient."

Some economists have said that Toronto-area housing prices are already overvalued by up to 6 per cent based on demographics and historical valuations.

But some steam may already be coming out of the market, which could help avoid a correction.

In December new listings rose 4.8 per cent from the previous year, the first year-over-year gain in 12 months.

Toronto Star

EDITOR'S PICKS

GTA Resale Market Resilient in 2009

GTA Resale Market Resilient in 2009

January 6, 2010 -- Greater Toronto REALTORS® reported 87,308 MLS® transactions in 2009 – a 17 per cent increase over 2008. This result included 5,541 sales in December. The 2009 result was in line with the healthy levels of sales experienced between 2004 and 2006, but lower than the record of 93,193 set in 2007. “After a slow start to the year, existing home sales rebounded during the second half of 2009,” said TREB President Tom Lebour. “As consumer confidence improved, many households moved to take advantage of affordable home ownership opportunities in the GTA. The strong residential real estate sector was a key contributor to overall economic recovery in Canada.” The average home price in 2009 climbed four per cent to $395,460. The average price for December transactions was $411,931. “Market conditions became very tight in the latter half of 2009. Sales climbed strongly relative to the number of homes listed for sale, resulting in robust price growth that more than offset average price declines in the winter,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “A greater supply of listings in 2010 will see home prices grow at a sustainable pace.”

Median Price In December, the median price was $349,000, from the $305,000 recorded during December of 2008.

Canada's real estate market expected to continue strong gains into the first half of 2010

- Demand and supply finding balance in the second half of the year -

TORONTO, Jan. 7 /CNW/ - Canada's residential real estate market is forecast to remain unusually strong through the first half of 2010 as economic conditions across the country improve and the stimulus impact of low interest rates continues to stoke demand, according to today's Royal LePage Market Survey Forecast and House Price Survey. As confidence in the recovery builds in early 2010, increases in average house price levels and overall market activity are expected to continue. The gradual erosion of affordability driven by higher house prices and the expected late-year modest upward movement of interest rates, together with an improvement in listings supply as confidence improves, are expected to bring the market back into balance in the second half of the year, when home price increases are expected to moderate.

"The Canadian real estate market enters 2010 with considerable momentum from an unusually strong finish to the previous year," said Phil Soper, president and chief executive, Royal LePage Real Estate Services. "The stimulus effect of low borrowing costs has contributed to a sharp rise in demand that has driven activity levels to new highs. This demand, coupled with a typical seasonal undersupply of homes for sale, should cause home prices to continue to appreciate significantly during the early months of the year. Improving supply as the year unfolds and easing demand as the cost of home ownership rises should moderate home price increases in the second half of 2010."

In contrast to the difficult months during the worst of the recession, house prices appreciated during the later part of 2009, with fourth quarter price averages surpassing averages from the fourth quarter 2008. The average price of detached bungalows rose to $315,055 (up 6%), the price of standard two-storey homes rose to $353,026 (up 5.2%), and the price of a standard condominium rose to $205,756 (up 6.4%). The first two quarters of 2009 saw significant year-over-year price declines across the housing types surveyed and the third quarter provided the first signs and saw a strong rebound in Canadian home values.

Regions that saw the strongest declines during the recession are now showing marked gains. Those regions include Toronto and the Lower Mainland, B.C. Vancouver in particular experienced a robust quarter, with home prices rising across all housing types surveyed.

"No other sector of the economy has been as highly affected by economic stimulus as housing," commented Soper. "As consumer confidence has improved, Canadians have shown a lingering reluctance to acquire depreciating assets such as consumer durables, but have embraced the opportunity to invest in real property. Predictably, the regions benefiting most from this renewed interest in home ownership are those with lower average house prices and strong economic confidence, such as Winnipeg and parts of Atlantic Canada."

Soper added, "Our forecast is built upon an expectation that interest rates will ease upward before the year's end, which should have a dampening effect on demand, allowing it to come into balance with the supply of resale homes on the market. Further, we expect to see an increasing number of homes listed for sale as the year progresses - as Canadians regain confidence in the economy, they should be more willing to enter into a large financial transaction such as the sale of a home."

REGIONAL MARKET SUMMARIES

Halifax saw varied gains across all surveyed housing types in comparison to fourth quarter 2008. Notably, more affordable homes posted the highest price increases due to the influx of workers returning from Western Canada.

Montreal saw strong gains this quarter as year-over-year price levels rose across all three housing types surveyed. Recent increases in demand have resulted in lower than normal inventory levels. Inventory levels are expected in increase in 2010. Continued demand is expected to result in moderate price levels.

House price levels in Ottawa are moderately higher this quarter compared to fourth quarter 2008 across all housing types surveyed. Fourth quarter sales activity did not slow as expected, and the demand has resulted in higher incidences of sellers receiving multiple offers, an unusual occurrence in end of year activity for this region. While inventory levels are low and there is competition among home buyers, this may abate as the government eases economic stimulus in 2010.

The Toronto market saw year-over-year price increases across the housing types surveyed in the fourth quarter. Of particular interest is the increase in sales of higher priced units, which were hit hard by the recession over the previous 12 months. There was a surge of first-time buyers active in the market last year, depleting the inventory of entry-level units. They are expected to be joined by move-up, executive, and luxury buyers in the coming year, resulting in additional price appreciation.

Winnipeg saw some of Canada's largest home price increases this quarter. More than one third of homes sold in the region went for above their asking price driven largely by first time buyer activity. This strong growth is expected to continue well into 2010.

Inventory levels in Regina are low, as much as thirty per cent lower than expected for this time of year; this situation should be corrected in the spring of 2010. House prices should continue to increase into 2010, driven by labour force growth in the construction industry.

Price levels in Calgary remain constant as the market is correcting from the record growth seen in the middle of the previous decade. Inventory levels are one quarter the levels seen in 2008, and the reduction in choice has delayed purchases. Activity and price levels are expected to increase modestly in 2010.

House price levels in Edmonton are also still correcting from the 2005 to 2007 boom. Low inventory levels have provided some price support, and activity is expected to increase in the spring of 2010.

Vancouver saw significant gains in price levels, with average increases of approximately ten per cent across the housing types surveyed. Inventory levels are beginning to decrease, and there has been an increase in sales involving multiple offers. Sales activity may drop off due to the city's focus on the Olympics in the first quarter, but the market is expected to be robust for the remainder of the year.

The Highest Offer May Not Be the Best

The Highest Offer May Not Be the Best 
Sellers who get more than one offer should be aware that the highest offer isn't necessarily the best offer, say experienced practitioners. 

In this tough market, going with the buyer who has enough cash to pay a large down payment and who won't be scared away if the inspection uncovers some needed repairs is often the wise choice.

Practitioners should encourage sellers to review all the terms and conditions of the sales contract. In some areas, the allocation of fees can take a big bite out of the net proceeds. While most contracts are written to reflect that, it isn't always the case.

Also, the closing date in the offer should be considered carefully. A buyer who can close quickly can save a seller thousands. Offers contingent on the sale of another property are particularly suspect in this market.

Source: Inman News, Dian Hymer (12/28/2009)