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Toronto Condo Commentary – 2nd Quarter 2010

Active Listings Growth for Condo Apartments Outpacing Listings for Low-Rise Home Types.

Following very tight market conditions in the first quarter of 2010, the resale
home market became better supplied between the beginning of April and the
end of June.

The number of active listings climbed strongly in the second
quarter compared to the same period last year.

Leading the growth in listings was the condominium apartment segment. In the central districts in
particular, active listings for condominium apartments grew by 79 per cent
year-over-year in the second quarter – a much stronger growth rate relative
to the 25 per cent increase for all other home types.

The active listings trend for condominium apartments follows the trends for
annual median price growth and new condominium apartment completions
in the GTA.

With the exception of a brief downward blip in the third quarter
of 2009, new condominium apartment completions have remained strong
over the past year.

This suggests that many new units, which are owned by
investors or buyers whose housing needs have changed since their preconstruction
purchase, continue to be listed in the GTA resale market.

This is especially the case within the City of Toronto where almost 80 per cent of
GTA condominium apartment construction is taking place.

Strong price growth has also attracted more listings into the market, as some owners
look to convert substantial “paper” returns into actual “dollar” returns. Of
course, with a surge in active listings over the past few months, buyers have
benefitted from more choice and the annual growth rate for the median price
has moderated to a certain degree.

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Canada’s Hot Resale Housing Market Starting to Cool

Home sales activity in Canada came up short of the record for the month of April and new listings continued to climb, according to statistics released by The Canadian Real Estate Association (CREA).

“Many of the sales that would normally have occurred in May were pulled back to April, due to buyers trying to avoid the May 1st transitional implementation date for the HST, as well as new mortgage regulations that came into effect April 19th,” said Ottawa Real Estate Board President Pierre de Varennes. “Buyers knew they would be paying 8% more for all of the service costs associated with a real estate transaction if their closing date was after July 1st, and that it might be more difficult to qualify for financing, so they moved quickly to avoid either situation. In addition, by comparison May 2009 was a record-breaking month as the floodgates opened on pent-up demand following the brief downturn in the market,” he added.

In general the Canadian real estate market is moving towards a balanced market where inventory is increasing well to meet demand. Buyers, sellers and REALTORS® can all relax and enter a sales transaction without pressure.

The easing trend in national sales activity masks a rising trend in a number of major markets. Real estate is local, so buyers and sellers should engage the services of a REALTOR® for knowledge about housing market trends in their market. For sellers, getting specific advice about home values in their local neighbourhood is crucial in a competitive market.

Ontario – Slower May after record-setting April: could it be the HST?

Toronto, June 3, 2010 – Greater Toronto REALTORS® reported 9,470 sales through the Multiple Listing Service® (MLS®) in May, representing a 1% dip from May 2009. In comparison to previous years, this was the third highest May sales result on record.

“The pace of transactions slowed in May following record-setting sales in February, March and April,” said Toronto Real Estate Board President Tom Lebour. “Buyers who otherwise would have been purchasing a home in May moved more quickly this year, likely to get ahead of mortgage rate hikes.”

New listings were up 38% annually to 18,940. The average price for May transactions was $446,593, up 13% compared to the average of $395,609 recorded in May 2009.

“The gap between listings and sales has widened, which means there is more choice for buyers,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “The annual rate of price growth will slow in the second half of 2010, from the current double digit pace into the single digits.”

Ottawa, June 3, 2010 – Members of the Ottawa Real Estate Board sold 1,694 residential properties in May through the Board’s Multiple Listing Service® system compared with 1,967 in May 2009, a decrease of 13.9%.

Of those sales, 353 were in the condominium property class, while 1,341 were in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, stacked, etc.) which is registered as a condominium, as well as properties which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.

The average sale price of residential properties, including condominiums, sold in May in the Ottawa area was $333,408, an increase of 6.9% over May 2009. The average sale price for a condominium-class property was $246,116, an increase of 6.4% over May 2009. The average sale price of a residential-class property was $356,387, an increase of 8.3% over May 2009.

Hamilton, June 4, 2010 – The Greater Hamilton-Burlington area resale market reported a total of 1,451 units sold in May, an increase of 8.8% over May of last year, according to the Multiple Listing Service® (MLS®) statistics released by the REALTORS® Association of Hamilton-Burlington (RAHB).

When compared to April of this year, May’s total unit sales were down 5.5%.

“The market is beginning to settle a bit,” said RAHB President Joe Ferrante. “We saw big highs in both the numbers of listings and sales in March and April, and now we are seeing how things will probably be continuing for the next few months.”

Residential properties sold during May totaled 1,406, which included 1,114 freehold properties and 292 condominiums. Commercial sales for May, including industrial, farm, vacant land and business, totaled 45 units.

The average price of freehold residential properties sold in the month of May was $339,484, an increase of 8.5% over the same month last year and an increase of just under 1% over last month.

In the condominium market, the average price of condominiums in May was $224,707, a decrease of 3% compared to May, 2009 and a decrease of slightly more than 2% from last month. The average sale price reflects the dollar volume of residential sales divided by the number of total residential units sold.

May’s total average residential sale price increased 6% over the same month in 2009. The total number of units listed for sale during May was 2,370, which is almost 33% higher than were listed in the same month in 2009. “This is still a strong market by any measure,” added Ferrante, “and is performing pretty much as we expected.”

Alberta – REALTORS® face relaxed housing market with stable pricing

Edmonton, June 2, 2010 – The housing market was relaxed in May with slightly lower sales than last year and prices generally stable. Despite the sales drop, the current sales figures compare favourably with levels set in 2008.

“Financial incentives, changes to mortgage qualifying rules and the threat of increasing mortgage rates caused the local market to peak a little earlier this year,” said Larry Westergard, president of the REALTORS® Association of Edmonton. “Many buyers exercised their options in April leaving the customer base a little leaner in May.”

Single family residences in the Edmonton area rose in price by less than one percent and sold on average* for $390,583 in May. Condominium prices dipped just 2% to an average of $248,526. Duplex and rowhouse prices of $320,204 were down 2.3% from last month. Overall, the average residential price was up a quarter of a percent to $340,192.

There were 3,670 residential listings in May with residential sales of 1,682 properties resulting in a sales-to-listing ratio of 46%. The average time to sell a home was 44 days (the same as April) and inventory at month end was 8,780 residential units (as compared to 8,056 in April). At current sales levels the inventory will last for over five months.

“Buyers, sellers and REALTORS® can all relax and enter a sales transaction without pressure,” said Westergard. “That does not mean that you can delay making or accepting an attractive offer because 50-60 homes sell each day and you would hate to see your dream home snapped up by someone just a little more eager to live there.” He emphasized that the REALTOR® can be a calming influence in a sale but can also be relied upon to provide expert advice and coaching.

British Columbia – Housing market push and pull: economic growth versus affordability

Vancouver, June 7, 2010 – The British Columbia Real Estate Association (BCREA) released its Housing Forecast for the second quarter of 2010 today.

BC Multiple Listing Service® (MLS®) residential sales are forecast to ease back 3% from 85,028 units in 2009 to 82,350 units this year, before increasing 4% to 85,900 units in 2011.

“Eroding affordability will trim home sales by 3% this year despite improving economic conditions and related employment growth,” said Cameron Muir, BCREA Chief Economist. “The push and pull of positive economic growth versus rising mortgage interest rates is expected to keep BC home sales near their 10-year average of 85,569 units both this year and next.”

The average MLS® residential price is forecast to climb 6% to $494,600 this year and remain relatively unchanged in 2011, albeit increasing by 1% to $499,700.

“Strong consumer demand in Vancouver, Victoria and the Fraser Valley was largely responsible for driving the average home price in the province higher over the last three quarters,” added Muir. “However, demand has moderated in those markets and a larger inventory of homes for sale has pulled market conditions into balanced territory, providing less upward pressure on home prices.”

Surrey, June 5, 2010 – Property buyers continued to see an increase in selection while sellers faced more competition as listings grew and sales decreased on Fraser Valley’s Multiple Listing Service® (MLS®) in May.

The Fraser Valley Real Estate Board posted 1,477 sales in May, a decrease of 2% compared to the 1,501 sales processed on the MLS® during May 2009. At the same time, the Board received 3,457 new listings, taking the number of active listings to 11,411, an increase of 14% compared to the 10,047 listings available during May of last year.

Deanna Horn, president of the Board, puts the numbers into context. “May’s sales were 16% below our ten-year average, 1,760 sales for that month. Considering how busy the market has been in the last decade that represents solid sales activity, slower yes, but steady.

“What’s changed most is the increase in inventory. The last time this many homes were available on Fraser Valley’s MLS® in May was in 1995.” Horn adds, “Tremendous selection allows buyers the luxury to find the right home, comparison shop and gives their REALTORS® the ability to negotiate hard on their behalf.”

In May, the benchmark price for Fraser Valley detached homes was $515,375, a 10.6% increase compared to $465,939 in May 2009. The average number of days to sell a detached home in May was 43 days, one day faster than it was in May of last year.

The benchmark price of Fraser Valley townhouses in May was $328,295, a 10.1% increase compared to $298,308 in May 2009. Townhomes in May sold on average 27 days faster than they did a year ago – 39 days compared to 66 days in 2009.

The benchmark price of apartments increased by 8.6% year-over-year going from $232,170 in May 2009 to $252,221 in May 2010. The average days to sell in May for apartments in the Fraser Valley was 51 compared to 69 days during the same month last year.

Is an Open House Worth the Effort?

Open houses require a lot of preparation and are inconvenient to the home occupants and the selling agent. Many agents now refuse to hold open houses, considering them a waste of time and a security threat. And many sellers prefer to open their doors to serious buyers only.

Holding an open house might help you sell your home, but it is not the most important factor to consider. An open house is usually not the major marketing tool that agents rely on when they are trying to sell a property.

Many real estate agents believe that open houses serve more to attract semi-interested prospects rather then serious buyers. Agents admit that few sales traditionally come from open houses. As well, the Internet is also making open houses even less valuable.

But there are agents and homeowners who view open houses as an effective marketing tool that does help with sales.

So is an open house worth the effort?

There are times when an open house is not practical at all, such as if a house is off the beaten path, or in a gated community. Likewise, it might be best to avoid an open house on a shabby listing or one that requires a lot of work. It probably won’t get much traffic, and agents will be reluctant to have their name advertised heavily in association with it.

However, an open house can be a valuable opportunity to get feedback about what is and isn’t attractive about a house. But it is not a good idea to hold them too often, as it can send a signal that the house is “market worn” and a tough property to sell.

On the other hand, in a hot sellers market where houses are selling rapidly, there is no need for an open house. If the MLS listing and posting pictures on the internet are already generating enough traffic to help you sell your house an open house is also no longer necessary.

The development of internet listings and other online real estate information is quickly making open houses more of an option, rather than a requirement for selling a home.

Many agents believes that an open house is only worth having if it’s done properly and this includes sprucing up the house and its landscaping and advertising it well in advance.

If you’re planning an open house:

* Clean like crazy beforehand, preferably with good-smelling organic cleaners that won’t upset anyone’s allergies.
* Clear out the clutter, pets, toys and even extra cars from the garage.
* Draw back the drapes, clean the windows and remove the screens so the most light shines in.
* Mow the lawn, trim the hedges and put some blooming flowers in pots by the doorway.

To increase traffic, try some unusual marketing strategies, like holding your open house during rush hour, or coordinating your open house with others in the neighbourhood.

Great New Listing in Mississauga

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To view the full listing and virtual tour go to 3071treadwells.com
The home is priced at $399,000. With 3 bedrooms, 3 baths, main floor family room and spacious kitchen and principal rooms.

This Month In Real Estate – Toronto May 2010

U.S. Style Real Estate Meltdown Unlikely In Canada

The Canadian Real Estate Association (CREA) released a new report last week indicating that home prices will stabilize,
and remain stable for some time. This means that Canadian homeowners are unlikely to experience a US-style decline in the value of their homes.

While the relationship between average price and income has recently been cited as signifying a US-style correction in Canadian home prices,
these warnings ignore the longer-term relationship between prices and income, and disregard typical Canadian housing market cycle dynamics, CREA says.

Home prices tend to rise in cycles, characterized by periods of sharp growth and periods of stability.
By contrast, income generally follows an orderly upward trend over time. For home prices to keep pace with incomes,
they must rise faster during housing booms to make up for periods of little or no price growth.

Canadian home prices were stagnant throughout most of the 1990s, while incomes continued rising, making housing more affordable.
Over the past decade, home prices have climbed sharply as mortgage interest rates declined.

The Canadian housing market is now widely thought to be at, or very near, the top of a cycle, and the ratio of home prices to incomes is currently high.
This ratio will revert to its long-term average as it always does as part of a normal housing market cycle.
History suggests, however, that it will not do so by means of a significant correction in home prices.
The more likely scenario is that home prices will stabilize, giving incomes a chance to catch up again.

The correction in US home prices has sparked fears that Canadian home prices may share a similar fate but,
according to CREA, warnings to this effect ignore solid Canadian mortgage market trends.

Conservative lending practices in the mortgage industry combined with prudent borrowing and accelerated payments
among Canadian mortgage holders have been seen throughout the recent housing market cycle.

Accelerated accumulation of home equity will provide options for the small proportion of homeowners who may face financial difficulty
when their mortgage is renewed at a higher interest rate. These trends are expected to help Canada avoid a US-style housing crisis.

The correction in US home prices is set against a massive oversupply of homes due to distress sales, combined with a drop
in housing demand spurred by unemployment. The unwinding of the housing boom in Canada will be more orderly, characterized
by softening sales activity and stable prices.

Save Money Through Debt Consolidation

We are benefiting from one of the best mortgage environments in history. Take a look at the interest rates on mortgages these days.

Now look at what you’re paying on your credit cards and other debts. You can actually power down your debt load faster by pulling together your credit cards, car loans or any other high-interest debt and rolling everything into a new or existing mortgage. This can be a great money-saving strategy.

The benefits of pooling your debt are immediate and long-lasting: improved cash flow; fewer payments; a brighter credit picture; and big savings on your overall interest costs. If you have equity in your home, there is no reason to be holding large amounts of high-interest debt.

The right refinancing package can help put an end to the monthly squeeze of too much credit card debt or too many loans.
I can assess your situation if you are worried about penalties associated with breaking your current mortgage. The savings each month often far outweigh any penalties:

Debt Amount Monthly
Payment Interest Rate

Mortgage $203,000 $1,239.09 5.5%
Current Car Loan $20,000 $396 7.0%
situation: Credit Cards $20,000 $524 19.5%
Total $243,000 $2,159.09

New mortgage* $250,000 $1,328.64 4.10%
After Car Loan Paid Off Zero N/A
review: Credit Cards Paid Off Zero N/A
Total $250,000 $1,328.64
That’s a savings of $830.45 every month!

The above chart is for illustrative purposes only. It assumes the amortization period for both mortgages is 25 years, with five-year amortizations for the car loan and credit cards. All rates are hypothetical and subject to change.

*The $250,000 mortgage includes a $7,000 fee to break the old mortgage; appraisal and legal fees are an additional cost. OAC.

You can either use these savings to ease your monthly cash flow or apply some of it to hammer down your debts faster than you thought possible. For instance, if you put $450 of that cash flow into your mortgage payment, you’ll reduce your amortization from 25 to 15 years!
As always, I’m just an e-mail or phone call away if you want to discuss debt management or anything else!

416-465-4545. Ask to speak with Aeriol Nicols

April 2010 Video Toronto Market Update

Toronto Record First Quarter Real Estate Sales

April 6, 2010 — Greater Toronto REALTORS® reported 10,430 sales through the Multiple Listing Service® (MLS®) in March, pushing total first quarter 2010 sales to 22,418 – the best result on record under the current Toronto Real Estate Board (TREB) boundaries. The average price for March transactions was $434,696. The average price for the first quarter was $427,948.

“The strong rebound in the existing home market was one of the initial drivers of economic recovery,” said TREB President Tom Lebour. “While we don’t expect to see the same rates growth moving forward, GTA households will remain confident in ownership housing as a quality long-term investment, especially as economic recovery expands across all industries.”

The annual rate of growth for new listings continued to accelerate in March. The number of new listings grew by 42 per cent compared to March of 2008.

“The average home price in the GTA will continue to grow this year, but the pace will slow as we move through the spring,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “As growth in new listings starts to outstrip growth in sales, buyers will experience more choice, resulting in more sustainable single digit rates of average price growth.”

Median Price
In March, the median price was $370,000, from the $317,500 recorded during March of 2009.

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