Wednesday 23 February 2011

CMHC Forecasts Return to Stability in 2011

There is news that demographic fundamentals will be a guiding force in 2011 for housing activity, according to the Q1 2011 forecast released by CMHC.


After moving somewhat lower during the end of 2010, CMHC predicts that housing starts will start to stabilize in 2011 and continue through to 2012.

According to the forecast, "Housing starts will be in the range of 157,300 to 192,900 units in 2011, with a point forecast of 177,600 units. In 2012, housing starts will be in the range of 154,600 to 211,200 units, with a point forecast of 183,800 units."

"Modest economic growth will continue to push employment levels higher this year and next. This, in conjunction with relatively low mortgage rates, will continue to support demand for new homes. Housing starts will remain in line with long term demographic fundamentals over the course of 2011 and 2012," said Bob Dugan, Chief Economist for CMHC

CMHC predicts that existing home sales will be in the area of 398,500 to 485,500 units for 2011- with a point forecast of 441,500 units with expectation that this will increase through to 2012. The point forecast for 2012 is 462,900 units; they expect MLS sales will move from 406,300 to 519,700.

There is expectation that the market, although achieving some balance in 2011, will remain in the sellers' market range. Building on MLS price gains that happened at the end of 2010, as a further indication of a return to balance, they feel that MLS price will keep on a growth curve consistent with "economy wide" inflation that will carry through 2011-2012.

Highlights from across the country include a Western bucking of the rest of the national trend, where in B.C, there is expectation that starts will increase by 1.6%. Alberta will hold the status quo.

In Ontario, the improving economy will provide momentum for an upswing in housing starts, but CMHC feels that they will not be realized until 2012.

New Brunswick is expected to be the weakest of the Atlantic Provinces.

Most of the rest of the country is expecting to see a decline in housing starts, but there is promise of return to growth towards 2012.

Tuesday 22 February 2011

First-Time Home Buyers’ Tax Credi

Program
First-time home buyers may be eligible for a 15 per-cent income tax credit for closing costs.

Details
•  To assist first-time home buyers 
with the costs related to the 
purchase of a home.

•  The First-Time Home Buyers' 
Credit (FTHBC) provides a 15 
percent credit on a maximum of 
$5,000 of home purchase costs 
(e.g. legal fees, land transfer 
taxes, etc.), meaning maximum 
tax relief of $750.

•  Applicable to first-time buyers 
purchasing a home closing after 
January 27, 2009.

•  The FTHBC is claimable for the 
taxation year in which the home 
is acquired.

•  An individual will be considered 
a first-time home buyer if neither 
the individual nor the individual's
spouse or common-law partner 
owned and lived in another 
home in the calendar year of the 
home purchase or in any of the four preceding calendar years.

Friday 18 February 2011

Market Update

GTA REALTORS® Report Mid-Month Resale Housing Market Figures 
TORONTO, February 17, 2011 -- Greater Toronto REALTORS® reported 3,084 sales during the first two 
weeks of February 2011 – a 13 per cent decrease compared to the first two weeks of February 2010. 
"We are on pace for a strong sales result in February, but transactions will come in lower than the record 
result reported last February.  Sales remain strong because the GTA resale market contains a diversity of 
housing types catering to a wide array of home ownership needs," said Toronto Real Estate Board 
(TREB) President Bill Johnston.  
The average price for transactions during the first 14 days of February was $451,257, representing a five 
per cent increase compared to the first two weeks of February 2010. 
"Average selling price growth for existing homes is expected to range between three and five per cent this 
year.  Tighter market conditions over the last four months have pushed price growth to the top end of this 
range," said Jason Mercer, TREB's Senior Manager of Market Analysis. 

Wednesday 16 February 2011

TORONTO CONDO FORECAST







By Nate Hendley
Urbanation, which describes itself as "Canada's leading condominium market research company" recently released a market overview of condo sales in the Toronto Census Metropolitan Area (CMA). The study pegged new and resale condominium sales at 37,041 in 2010—only three percent lower than the 2007 record of 38,306 sales.
Urbanation also forecasts that 15,000 – 17,000 new condo units will be launched in the Toronto CMA during 2011, with 16,000 sales.
Studio Toronto interviewed Ben Myers, executive vice-president and editor of Urbanation for more details.
Q. Condo sales in the Toronto CMA reached a near-record high in 2010. What's driving this surge?
A. New investors are buying units in droves to rent them out because we're not building a lot of new rental buildings and we're still getting plenty of immigration. Then, there are first-time buyers. People realize the benefit of getting into real estate as soon as possible. With interest rates low and units small, they're able to purchase. We see also single women getting into the market more than they ever have before.
Q. Is the trend towards strong sales going to continue into 2011 or are we going to hit a slump very soon?
A. I don't think we'll hit a slump. If we have a slow-down it's going to be more gradual, it won't be a drop off a cliff. I think people realize the benefit of owning over renting if you're going to be there for any significant period of time.
Investors are still purchasing even though prices keep going up. People keep looking and saying, 'Oh, is this the point where investors are going to drop off?' because they're not going to get the returns that they want. Every time we think that's going to happen we have another quarter where we had 6,000 sales and that's what happened in Q4 2010 in the new condo market. It doesn't seem like anything can slow [the condo market] down.
Q. What's the average price people are paying for new condos?
A. In the new market we track … the sold price per square foot (psf) and the unsold price per square foot (psf). The sold price per square foot basically takes into account projects over the course of their life, as long as they are still active in the market. That's about $471 per square foot in the Toronto CMA area. The unsold is basically the average of all the unsold units in the Toronto market and that was $530 per square foot in the Toronto CMA at the end of the fourth quarter 2010.
Q. What parts of the Toronto CMA have the most new condo developments and strongest sales?
A. Certainly, the downtown core is always very strong, but North York city centre has been very strong too. Even the Etobicoke waterfront is doing very well. I think people see the value of having a waterfront view even if it isn't downtown.
Q. What neighbourhoods are going to be hot in the next year or two?
A. I always keep my eye on the downtown east. There seems to be a pretty big gap between Parliament Street and the DVP (Don Valley Parkway) where there's not a lot of activity. I think that's an area where developers are going to look now that we have the West Don Lands getting a little built up.
Q. What kind of condos are doing well in this market?
A. Smaller suites, as in, 500 square feet … 500 to 600 square feet is kind of the unit investors look at because they can find easier rents. First-time buyers [also like them] because those are the ones that are affordable. Developers aren't building as many large units now.
Q. Are there any particular developments you're keeping an eye on?
A. We put out a list of the top sellers from 2010. One Bloor was the best selling site in 2010, with somewhere in the neighbourhood of 550 sales.
Q. Anything that isn't doing well on the market? Anything you've noticed over the last year or so that's fizzling?
A. We did mention in our January press release, there's a kind of flatness overall in the resale market. It was at $374 per square foot in Q4 2010 and that's only up from $369 per square foot overall in Q1.
Q. Are you seeing more seniors getting into condos?
A. I don't think so. Everyone's kind of waiting for this with the baby boomers, but we certainly haven't seen that in droves. A lot of the buildings are aimed at first-time buyers in the investor market because that's what's selling. As a senior, you may not necessarily want to be living in a building that's 40 – 50 percent rented with a whole bunch of students. You'll want more of a boutique style in a quieter neighbourhood with larger suites and those just aren't getting built right now, certainly not in the former City of Toronto. There's a few being built in the suburbs, but if you're used to living in Toronto all your life you may not want to move to Aurora.
Q. Is there a demographic of the typical condo buyer in the Toronto CMA?
A. The typical condo buyer is either a young single or a couple … first-time buyers and move-up buyers.
Q. Are any new demographics emerging?
A. I think the new demographics probably came out five years ago where we started to see what we call "marriage casualties". Lots of divorcées buying units for themselves and single women getting into the market.
[In the past] a lot of families would buy a condominium unit as a first time purchase. They would get some appreciation for [the unit] then buy a house. But now we're seeing people buying the smaller unit—500 to 600 square feet—then they move up to a 700 to 800 square foot unit and then potentially even buy a third unit as opposed to going out to buy a house. That's certainly a change from where we were 10 years ago.
Q. Are there any upcoming projects we should keep an eye on?
A. The spot to watch is Waterfront Toronto's waterfront projects. I think that's going to totally change the city … You've obviously seen the Corus building being built. It's completed now. Great Gulf is going to launch a condominium tower—the first residential down there. I think that's going to be a fantastic transition down there. They've looked at other cities [to see] what works and what doesn't. [They want commercial space at ground level] and I think that will really drive it as opposed to other areas where we've had giant patches of land that we've put a bunch of towers up and there's no life at the bottom—people just going to work and coming back. This is actually going to be an area where people stay, 24/7.
Q. Final question. What are your thoughts for this year?
A. I'm a little more bullish than some people out there. I think it's going to be a good 2011.






Market Update

Good Start to 2011

February 4, 2011 -- Greater Toronto REALTORS® reported 4,337 transactions through the TorontoMLS® system in January 2011. This result was 13 per cent lower than the record result reported in January 2010.

"While off the record pace experienced a year ago, the GTA resale market has started the year on a solid footing. Home buyers in Toronto and surrounding areas continue to benefit from a diversity of housing types for sale at many different price points," said TREB President Bill Johnston.

The average selling price for January 2011 sales was $427,037, representing an increase of over four per cent compared to the average of $409,058 reported in January 2010.

"The average selling price is expected to grow at a moderate pace in 2011. Growth rates in the three to five per cent range will be sustainable from an affordability perspective," said Jason Mercer, TREB's Senior Manager of Market Analysis.

Median Price
In January, the median price was $360,000, from the $350,000 recorded during January of 2010.

Sunday 13 February 2011

Housing market will be stable next two years: RBC


A stronger economy will offset the effects of higher mortgage rates and keep Canadian house prices stable over the next two years, according to the Royal Bank of Canada.
In a market update that has the bank forecasting price gains of 0.5 percent in 2011 and 1.3 percent in 2012, economist Robert Hogue said that after two years of "gyrating wildly," the Canadian housing market is likely to be a much less interesting place for the next several years.
"Going forward, we see nearly perfectly offsetting forces driving Canada's housing market," he said. "On the upside, the economic recovery will gather strength in 2011, continuing to boost employment and family incomes. On the downside, interest rates are expected to rise."
The Bank of Canada will likely raise interest rates by 100 basis points this year and another 150 basis points in 2012, he said, making mortgage payments more expensive for the majority of homeowners. But real gross domestic product is expected to increase to 3.2 percent in 2011 from 2.9 percent in 2010.
"The net effect of these forces is expected to be close to nil, thereby leaving resale activity largely flat," he said.
There have been a flurry of forecasts issued in the last week, as the market starts the year stronger than expected. Capital Economics issued a cautious report that suggested higher interest rates could drive prices down as much as 25 percent over the next three years, while the Canadian Real Estate Association raised its sales forecast for the next two years as it suggested that a stronger economic recovery and continued low interest rates would keep the market balanced.
"Even though mortgage rates are expected to rise later this year, they will still be within short reach of current levels and remain supportive for housing market activity," CREA chief economist Gregory Klump said. "Strengthening economic fundamentals will keep the housing market in balance, which will keep prices stable."
Capital Economics economist David Madani said too many optimistic forecasts are based on too short a time frame to be useful, because many mortgages won't reset until rates rise much higher than they are today.
"Let's balance this discussion a bit and think longer term," he said in a recent interview. "As far as housing prices are concerned, we think they're overvalued and we don't see income growth closing that gap."



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