July 2009

JULY 28, 2009 – The Durham Region Association of REALTORS® (DRAR) reported 441 sales in the first half of July ’09, an increase of 11% from the 396 sales reported at the same time last year. “Last month we saw an increase in sales and average selling prices,” commented Debbie Dawson, 2009 President Durham Region Association of REALTORS®

Follow this link:
DURHAM’S HOUSING MARKET STILL STRONG

The Bank of Canada held its benchmark overnight lending rate steady at 0.25 per cent at its setting on July 21st, 2009. The trend-setting Bank rate, which is set 0.25 percentage points above the overnight lending rate, remains at 0.5 per cent.

See the original post here:
Bank of Canada holds interest rates steady

You’ll see the terms REALTOR® and MLS® system used frequently in this column, as well as out in the world of real estate advertising.

Originally posted here:
The Meaning of REALTOR® (and MLS®)

Tony Wong
Business Reporter

Sales of existing homes are up dramatically in the Greater Toronto Area. So are building activity and development permits.

Over the past week, consumers have faced a barrage of reports that suggest the market is turning a corner. The jury is still out on whether this is a sustained rebound but the recession’s silver lining of low interest rates has done wonders for the housing market. Not just in the GTA, but elsewhere.

Two other cities had a similar – if not more spectacular – lift in June, ReMax Ontario Atlantic Canada reported yesterday.

Toronto’s stellar 10,955 units sold, up 27 per cent from a year earlier and not far from its historic high of 11,146 in May 2007, was outdone percentage-wise by sales that rose 75 per cent in Greater Vancouver and 28 per cent in Calgary.

“Low interest rates and increased affordability have served to stimulate market activity,” ReMax said.

ReMax’s research is a preview of the Canadian Real Estate Association national figures. Those numbers, expected today, are a snapshot of the state of the whole market.

Vancouver was top performer in June, with its second-best month on record at 4,259 sales, the high being 4,333 sales in June of 2005. 

In Calgary, sales of 3,047 homes last month jumped 28 per cent from the same time last year.

“With increasing competition among first-time buyers the supply of starter homes is tightening in Calgary,” the realtor said.

OTTAWA – July 14th, 2009 – National resale housing market activity bounced back strongly in the second quarter of 2009 above levels reported for the same period last year. Demand continues to rebound sharply in some of the most expensive markets in the country, skewing the national average price upward

Continue reading here:
MLS® home sales rebound in the second quarter

“Sales of single family dwellings are up 8.6% (1115) in June 2009 from May’s reported 1026 sales, and up 15% from the reported 967 sales this time last year,” commented Debbie Dawson, 2009 Durham Region Association of REALTORS® (DRAR) President.

Average selling prices are up 1.2% ($281,765) in June from May’s $278,592, and down only .5% from the reported $283,012 in June ‘08.

“Although many records were set in last year’s housing market, they can be contributed to far better economic conditions,” said Dawson. “To see records being set in what was forecasted to be a slow market; shows that despite the current economic conditions, buyers are confident that better times are to come.”

Total active listings are down 11.7% (2276) from May’s 2579, and down 27% from June ‘08’s 3118.

“The summer market tends to slow as buyers head off to their vacation destinations but June’s numbers have shown no signs of a weak summer market,” commented Dawson. “In fact what was once a buyers market in 2009 has now turned into a seller’s market with listings down and sales up.”

Tony Wong
Business Reporter

New immigrants are an increasingly important driver of the housing industry, particularly in large cities such as Toronto, helping to steer the currently rocky market onto steadier ground, a study by Scotiabank says.

“As recent immigrants to Canada make the transition from renter to owner, they will increasingly drive housing demand,” Adrienne Warren, Scotia Economics senior economist, said yesterday.

Scotiabank forecasts that Canada’s aging population and low fertility rates mean that a decade from now, 75 per cent of the country’s population growth will come from immigration. That compares with 60 to 65 per cent now.

The most recent census data from 2006 show that 72 per cent of immigrants lived in dwellings owned by household members, up from 68 per cent in 2001. The biggest increase was among those living in Canada for less than 10 years, suggesting that immigrants are buying homes more quickly than before.

Accountant Seela Gupta, 35, lived with an uncle for four years in Brampton before buying her first home last year.

“I think it’s important to have some roots, and property is important when you first arrive,” Gupta said. “It is part of the dream.”

Her semi-detached unit is home to a recently arrived cousin. But he, too, will likely buy a home in the not too distant future, she said.

Unlike earlier decades, when newer immigrants struggled to gain a foothold, more immigrants now are involved in high-growth industries such as engineering, construction and skilled trades, the Scotiabank report said. That may have helped the transition to home ownership. Also, “greater geographic mobility” to meet shifting regional labour needs may have been an asset.

While the new housing market has stalled since January due to the economic crunch, there have been signs of life lately, largely thanks to low interest rates.

The seasonally adjusted annual rate of housing starts rose 10 per cent in the Toronto area in June from May, to 24,000 units, according to data yesterday from Canada Mortgage and Housing Corp. Multi-unit development such as condominiums rose 15 per cent.

“The June numbers provide evidence that residential construction activity is gradually improving,” said Shaun Hildebrand, CMHC’s senior market analyst for the GTA. “Reduced supply in the resale market and increased incentives from developers will attract more buyers to the new home market.”

Despite the positive uptick, starts are down by 44 per cent to date this year in unadjusted data for the Toronto area, so analysts are cautioning that starts will remain “below levels” reached in prior years, until job numbers improve significantly.

“A bottom may perhaps have been formed in the Canadian housing market as homebuyers take advantage of the lower mortgage rates and the various incentives,” said TD Securities economics strategist Millan Mulraine.

“Even so, we expect residential building activity to remain fairly subdued for some time with a full-fledged recovery not likely until some time next year.”

The Ontario Home Builders’ Association said the numbers showed the industry “on the road to recovery” after a tough winter. President Frank Giannone said, “We are now cautiously optimistic that the housing sector is starting to emerge from the downturn.”

The association recently won a battle with the province over a proposed harmonized tax that could have added thousands to the cost of new homes over $400,000, starting next year. The tax was scaled back.

Nationally, starts were up 8 per cent to 140,700 units, driven largely by a rebound in Western Canada.

In contrast to Canadian housing markets, the U.S. development market is still extremely weak, despite unprecedented government attempts to buoy the market with financial incentives, including an $8,000 (U.S.) tax credit. Existing home sales rose just 6 per cent from the January low, as “construction remains deep in the tunnel,” BMO Capital Markets noted yesterday.

TONY WONG
Business Reporter

But, after years of watching home prices rise out of reach, the 28-year-old Scarborough bachelor recently put an offer on a house in Richmond Hill, thanks to what some are calling the silver lining in the worst recession in decades: historically low interest rates.

Tarabay is one of many first-time buyers being lured into the market. The trend is backed up by a report released yesterday by the Royal Bank, which shows houses in Canada have become much more affordable in the first three months of the year, one of the biggest quarterly improvements on record.

“This has opened the door more widely to new buyers and set the stage for a resale market rally this spring,” said RBC senior economist Robert Hogue.

“While it is still too early to wave the all-clear sign – economic uncertainty has yet to dissipate in the region – it appears the Toronto housing market is averting the painful crash scenario,” he said.

The biggest reason: low interest rates. Following a dismal drop to a 10-year low during the fall and winter, resale activity has bounced back this year, as buyers, particularly first-time buyers, have flocked to the market, lured by low monthly payments.

In the Toronto market, said RBC, it took on average 45.9 per cent of pre-tax household income to afford a standard bungalow, valued at $417,900, in the first quarter of this year, down from 51.4 per cent in the fourth quarter of 2008.

The lower the measure, the easier it is to afford a home. A standard two-storey Toronto home (valued at $494,600 in the first quarter of the year) had an affordability measure of 54.6, compared to 61.6 in the previous quarter.

That means the costs of home ownership – including mortgage payments, utilities and property taxes – account for 54.6 per cent of a typical household’s income.

A standard condo, with an average cost of $278,000, had an affordability measure of 31.1 in the first quarter of this year, compared to 35 in the previous quarter.

Tarabay’s opportunity came a little unexpectedly after the sharp economic downturn caused stock markets to plummet and housing prices to stall in autumn.

“Before we hit the recession, I was considering what to do, but prices were really high,” said Tarabay, a custom jewellery designer and owner of Toronto-based 3 D Tech Design. “But then the economy hit the wall and it just seemed like a good time.”

Living with his parents was certainly comfortable, but Tarabay yearned for his own space.

On Monday, he made an offer on a four-bedroom home near 16th Ave. and Leslie St., listed for $539,000. He was bidding against four others and still doesn’t know the outcome.

“I’m on the edge,” said Tarabay. “Considering it’s a recession, it’s been tough finding somewhere.”

He figures he has looked at more than 40 homes since the start of the year. A flurry of market activity and a lack of listings, particularly affordable ones, have sparked bidding wars in some neighbourhoods this spring and summer.

Tarabay said his pre-approved five-year mortgage rate of 3.7 per cent means his monthly payments would be around $1,500, which is manageable for him.

He estimates that the same home would have cost more than $400 extra in monthly payments a year earlier, when five-year rates were at 5.7 per cent.

“The way things were going in the market and given the numbers, I felt this was the best time to start moving out,” said Tarabay.

One problem for buyers is that since the RBC study was conducted in the first quarter of the year, prices and interest rates for long-term mortgages have crept up in the Toronto market.

Other analysts are already cautioning that the spring and summer rally may not last into the fall, once the pool of first-time buyers is exhausted and interest rates head back up.

“The rise in mortgage rates in June is a reminder that the sizable improvement in affordability attributable to lower rates is likely behind us, and with home prices stabilizing or perhaps beginning to rise in some areas, further improvement depends on greater gains in family income,” said Hogue of RBC.

Across Canada, the biggest improvements in affordability were in western provinces, which had seen the sharpest increases in housing prices. In Vancouver, it took 54.6 per cent of pre-tax income to afford a standard two-storey home (valued at $632,900), down from 61.6 per cent. In Calgary, it took 36 per cent of pre-tax income to afford a $390,000 two-storey home, down from 42.6 per cent.