August 6, 2010
The classic Georgian home in Toronto’s posh Forest Hill neighborhood had all the hallmarks of a sought after property that might provoke a bidding war.
The marble foyer, grand living and dining rooms and french doors leading to a stately garden meant that the home fetched $3.5 million this week.
Yet that figure, while not an inconsiderable sum, even for one of the city’s finest neighborhoods, had property watchers wondering whether it is a sign of the declining fortunes of the market. After all, in 2007 it sold for $3.68 million.
“I think this is a reflection of the marketplace, prices have firmed up and are not going any higher. They have topped out,” said Kevin Loberg, a broker with Coldwell Banker Terrequity.
Earlier this year the home at 148 Forest Hill Rd. had been listed at $4,195,000. Even that had come down from the $4,675,000 being asked last year.
Two reports on Thursday provided further evidence that the market has been seriously ratcheting down.
Building permits in June saw a 15.3 per cent drop in June over May as developers cooled their heels on future projects.
And home sales in the Toronto market saw a 34 per cent drop in July compared to a year earlier.
This is the third consecutive month of falling sales, according to figures from the Toronto Real Estate Board.
In June, sales had dipped by 23 per cent. But this has been the steepest drop yet, with sales dipping to 6,564 in July, compared with 9,967 a year earlier.
“The level of July sales remained below the expected long term trend,” said TREB president Bill Johnston. “The market has become more balanced.”
The average price for July transactions was $420,482, representing a six per cent increase over last year. Average prices for the city of Toronto remained higher at $444,459. In the 905 region average prices were $404,935.
Loberg, who sells luxury homes in the central core, said his sales are actually up from last year as more move-up buyers enter the market.
“We are seeing fewer first-time buyers. You can spend a million dollars on a home downtown and it doesn’t buy you much nowadays,” said Loberg.
Sales of homes priced at a million and above were up by more than 30 per cent in the central core compared with last year. But sales have started to fade dramatically in neighborhoods with less blue-chip potential.
Developers, meanwhile, have also started to scale back their building plans.
Building permits in the Toronto area fell thanks to a drop in residential building intentions in both the single detached and high rise segments. Non-residential building such as commercial and industrial projects showed an increase, but not enough to offset the drop in residential permits.
“Looking forward we are likely to see further declines in residential permits in the summer months as housing is expected to take a big hit from the recent monetary tightening from the Bank of Canada, as well as significant dampening from the implementation of the HST,” said Brian Bethune, chief economist for IHS Global Insight.
John Turner, director of mortgages for the Bank of Montrea,l said buyers are more worried about their cash flow after the introduction of the provincial HST tax and higher interest rates.
“They’re more cautious when they purchase because they wonder what the changes mean to their lifestyle when you add it all up,” said Turner.
The Bank of Canada has already raised its key overnight rate by 50 basis points this year, and could add another 25 basis points in September.
Turner said this has some buyers turning to fixed five-year rates to lock in their mortgages. BMO reduced its five-year rate on Wednesday by 10 basis points to 3.89 per cent.
As for the Toronto market, total sales through the first seven months are still up by 12 per cent, thanks to record sales during the first half of the year. And prices are still up over last year.
One reason is that new listings were down by 11 per cent from last year, the lowest level for July since 2002. Lower listings meant more competition for existing homes, which kept prices from declining.
“Vendors now seem to be in a bit of a sit and wait mode because of the recent uncertainty in the economy,” said BMO’s Turner.
Tony Wong
BUSINESS REPORTER
Friday, August 6, 2010
Thursday, August 5, 2010
Survey identifies trend to multi-generational homes
An increasing number of homebuyers are looking for a property to accommodate more than one generation of their family, says a recent survey by Coldwell Banker Real Estate of its network of real estate professionals across Canada and the U.S.
Thirty-seven per cent of survey respondents saw an increased demand for multi-generational homes, while in Canada the number was even higher at 45 per cent.
In Canada, 52 per cent of all Coldwell Banker survey respondents cited health care issues as the No. 1 reason why home buyers or sellers would move into a house with other generations of their family. Financial drivers followed closely behind (45 per cent), while less than one per cent cited a strong family bond as the main factor. In the U.S., where the real estate market has experienced tougher times after the recent mortgage meltdown, financial drivers (39 per cent) edged out health care issues (29 per cent) as the No. 1 reason buyers were looking for multi-generational homes.
“While saving money is certainly an incentive for buying a home that accommodates multiple generations, the benefits go beyond just financial reasons,” says John Geha, president of Coldwell Banker Canada. “With two or three generations living under one roof, families often experience more flexible schedules, more quality time with one another and can better juggle caretaking responsibilities as healthcare issues arise.”
Communicating with family is key to a successful transition. “Talk to everyone involved and determine how comfortable people are with sharing bathrooms, office space or common areas, and let that guide your search,” Geha says. “All of these topics are incredibly important in finding the right kind of home to fit the family – like one that has four bathrooms or one that has three.”
The company says extended families purchasing a home together should consider signing a written contract outlining everything from finances to chores and childcare. Each family should assess their situation individually and find a plan that works best for them.
Coldwell Banker conducted the online real estate survey on trends regarding multi-generational home buyers and sellers in January, and a written version of the same survey of Canadian real estate brokers representing 40 markets in April.
Thirty-seven per cent of survey respondents saw an increased demand for multi-generational homes, while in Canada the number was even higher at 45 per cent.
In Canada, 52 per cent of all Coldwell Banker survey respondents cited health care issues as the No. 1 reason why home buyers or sellers would move into a house with other generations of their family. Financial drivers followed closely behind (45 per cent), while less than one per cent cited a strong family bond as the main factor. In the U.S., where the real estate market has experienced tougher times after the recent mortgage meltdown, financial drivers (39 per cent) edged out health care issues (29 per cent) as the No. 1 reason buyers were looking for multi-generational homes.
“While saving money is certainly an incentive for buying a home that accommodates multiple generations, the benefits go beyond just financial reasons,” says John Geha, president of Coldwell Banker Canada. “With two or three generations living under one roof, families often experience more flexible schedules, more quality time with one another and can better juggle caretaking responsibilities as healthcare issues arise.”
Communicating with family is key to a successful transition. “Talk to everyone involved and determine how comfortable people are with sharing bathrooms, office space or common areas, and let that guide your search,” Geha says. “All of these topics are incredibly important in finding the right kind of home to fit the family – like one that has four bathrooms or one that has three.”
The company says extended families purchasing a home together should consider signing a written contract outlining everything from finances to chores and childcare. Each family should assess their situation individually and find a plan that works best for them.
Coldwell Banker conducted the online real estate survey on trends regarding multi-generational home buyers and sellers in January, and a written version of the same survey of Canadian real estate brokers representing 40 markets in April.
Wednesday, August 4, 2010
Toronto new condo sales expected to slow
The heated Toronto condominium market seems to be gearing down as sales start to slow.
New condo sales in the Toronto census metropolitan area declined eight per cent to 4,991 sales in the second quarter of 2010, compared with 5,415 in the earlier quarter, according to figures released Tuesday
It was the first time since 1994 that second quarter sales declined from the first, according to condo market research firm Urbanation Inc.
“We were expecting sales to be stronger in the second quarter, but it looks like the market is softening,” said Ben Myers, Urbanation executive vice president. “The pace is going to be slower for the rest of the year.”
The market is also coming off a record first quarter and fourth quarter of 2009, said Urbanation.
However, one troubling indicator is that there is a potential for another 12,000 completions for the rest of 2010. Those units will be joined by another 6,000 condos that were already occupied in the second quarter, for a total new supply of 19,000 units this year.
“That’s an absolutely huge number and a lot of product coming on to the market all at once,” said Myers.
Many of those units have been purchased by speculators hoping to make a quick profit once they are completed.
There are currently 272 active projects vying for buyers in the Toronto market today. That includes the 23 new projects added in the second quarter. Another 20 new projects are expected to be released in the third quarter.
“The big pending issue for high rises is delayed completions, and the huge inventory that will become available for occupancy late this year and throughout 2011,” said housing analyst Will Dunning. “Investor expectations are due for a big deflation.”
Average prices in Toronto for new condos hit $529 per square foot in the second quarter, up by 12 per cent from last year. In the former city of Toronto, average condo prices were $639 per square foot. That means a 1,000 square foot condo would sell for $639,000.
“It’s becoming pretty tough for the first time buyer to afford somewhere downtown, so affordability is becoming a real issue,” said Myers.
Pricing in the existing condo market was much more affordable, averaging $369 per square foot in the Toronto area.
That’s only up by $1 from the first quarter of the year.
“There is a lot more supply coming on the market, which is helping to keep resale pricing in check,” said Myers.
Still, sales in the resale market remained strong, setting a quarterly record with sales of 5,076.
And despite the dip in the new condo market, sales in the second quarter were still the seventh best on record, up 68 per cent over a recession impacted quarter of a year ago.
August 3, 2010
Tony Wong
BUSINESS REPORTER
New condo sales in the Toronto census metropolitan area declined eight per cent to 4,991 sales in the second quarter of 2010, compared with 5,415 in the earlier quarter, according to figures released Tuesday
It was the first time since 1994 that second quarter sales declined from the first, according to condo market research firm Urbanation Inc.
“We were expecting sales to be stronger in the second quarter, but it looks like the market is softening,” said Ben Myers, Urbanation executive vice president. “The pace is going to be slower for the rest of the year.”
The market is also coming off a record first quarter and fourth quarter of 2009, said Urbanation.
However, one troubling indicator is that there is a potential for another 12,000 completions for the rest of 2010. Those units will be joined by another 6,000 condos that were already occupied in the second quarter, for a total new supply of 19,000 units this year.
“That’s an absolutely huge number and a lot of product coming on to the market all at once,” said Myers.
Many of those units have been purchased by speculators hoping to make a quick profit once they are completed.
There are currently 272 active projects vying for buyers in the Toronto market today. That includes the 23 new projects added in the second quarter. Another 20 new projects are expected to be released in the third quarter.
“The big pending issue for high rises is delayed completions, and the huge inventory that will become available for occupancy late this year and throughout 2011,” said housing analyst Will Dunning. “Investor expectations are due for a big deflation.”
Average prices in Toronto for new condos hit $529 per square foot in the second quarter, up by 12 per cent from last year. In the former city of Toronto, average condo prices were $639 per square foot. That means a 1,000 square foot condo would sell for $639,000.
“It’s becoming pretty tough for the first time buyer to afford somewhere downtown, so affordability is becoming a real issue,” said Myers.
Pricing in the existing condo market was much more affordable, averaging $369 per square foot in the Toronto area.
That’s only up by $1 from the first quarter of the year.
“There is a lot more supply coming on the market, which is helping to keep resale pricing in check,” said Myers.
Still, sales in the resale market remained strong, setting a quarterly record with sales of 5,076.
And despite the dip in the new condo market, sales in the second quarter were still the seventh best on record, up 68 per cent over a recession impacted quarter of a year ago.
August 3, 2010
Tony Wong
BUSINESS REPORTER
Tuesday, August 3, 2010
Ontario electricity users should prepare for a price shock
A price hike for Ontario's electricity users, set into effect earlier this spring, will hit most consumers with the next round of billing. Some local electricity companies are warning their customers to 'be prepared.'
Energy price hikes have hit Canadians across the nation this year. The federal Consumer Price Index noted that electricity prices increased 5.8% in June - that's on top of a 4% increase applied in May.
The high cost of living has been hitting Canadians, notably with food and shelter costs. Stats Canada said Ontario's "... consumer prices rose 1.6%..." in June, with Ontarians paying " ... more for electricity and telephone services." Stats Canada characterized the June cost of living increase as the "fastest rate of change" in Canada.
And now, reports the Toronto Star, many hydro users in Ontario are being warned that their next bill could be a whopping 16% higher than the last bill they paid.
The increase for any given household will differ, depending on how much electricity a household uses. The location of that household also plays a role because, according to Your Ottawa Region, some municipalities have implemented time of use billing. That means people with smart meters are paying more for their electricity.
The basic rule of thumb is that those who use more electricity will pay more. The real cause of the increase, said the Toronto Star, is the HST, which came into effect in Ontario on July 1st.
After the announcements earlier this year, some consumers forgot about the increases, getting a shock with their latest hydro bill. This is a result of the practice of issuing hydro bills once every two months. The billing practice has meant a lag between when the price increases took effect and when customers will feel the pinch.
But other items on hydro bills have been increased besides the rates and taxes. Distribution costs were increased, and a special purpose charge has been added, reported the Exeter Times Advocate.
The price increases are part of a plan Ontario set in place in 2006, according to the Electricity Distributor's Association. The rate increases are supposed to encourage distribution efficiency.
Many consumers will be switched over to time of use billing by next spring, which means they will face another price increase.
Price increases for essential services are the most difficult for people on fixed incomes, such as retirees and those relying on social assistance. As Canoe reported, London's Manager of Community Services, Ross Fair said
"The costs are going to impact on everybody, irrespective of their income levels. But lower-income residents, especially those relying on electrical heat in winter, will get hit even harder."
It is anticipated that business owners will pass along their increases to their customers, according to the Guelph Mercury, meaning a double whammy for consumers.
The hot and humid summer conditions experienced throughout Ontario has had people turning up their air conditioning, and this is anticipated to make upcoming hydro bills higher than most people would expect.
Consumers who signed up for fixed rate plans will not be affected by the increases.
The C.D. Howe Institute recently released a paper calling for "Made in Canada" electricity policies that would increase Canada's competitiveness.
Tips on reducing electrical use:
Consumers are not completely helpless in the face of increases in electricity costs. There are steps that can be taken to reduce electricity bills.
The first rule is to turn it off. This tip is easy to implement and incredibly effective.
If you must have air conditioning, turn it off when you are not home. When using it, set the thermostat so that the temperature is in the 70's.
Reduce your reliance on appliances such as clothes driers. If you must use a drier, consider going to a laundromat, where you pay a fixed price for the drier.
Wherever possible, replace older fridges, stoves and other appliances with energy efficient appliances.
If one has the means, solar-generated electricity is an option.
The Ontario Power Authority has a website called Every Kilowatt Counts, gives more tips on conserving electricity use.
Energy price hikes have hit Canadians across the nation this year. The federal Consumer Price Index noted that electricity prices increased 5.8% in June - that's on top of a 4% increase applied in May.
The high cost of living has been hitting Canadians, notably with food and shelter costs. Stats Canada said Ontario's "... consumer prices rose 1.6%..." in June, with Ontarians paying " ... more for electricity and telephone services." Stats Canada characterized the June cost of living increase as the "fastest rate of change" in Canada.
And now, reports the Toronto Star, many hydro users in Ontario are being warned that their next bill could be a whopping 16% higher than the last bill they paid.
The increase for any given household will differ, depending on how much electricity a household uses. The location of that household also plays a role because, according to Your Ottawa Region, some municipalities have implemented time of use billing. That means people with smart meters are paying more for their electricity.
The basic rule of thumb is that those who use more electricity will pay more. The real cause of the increase, said the Toronto Star, is the HST, which came into effect in Ontario on July 1st.
After the announcements earlier this year, some consumers forgot about the increases, getting a shock with their latest hydro bill. This is a result of the practice of issuing hydro bills once every two months. The billing practice has meant a lag between when the price increases took effect and when customers will feel the pinch.
But other items on hydro bills have been increased besides the rates and taxes. Distribution costs were increased, and a special purpose charge has been added, reported the Exeter Times Advocate.
The price increases are part of a plan Ontario set in place in 2006, according to the Electricity Distributor's Association. The rate increases are supposed to encourage distribution efficiency.
Many consumers will be switched over to time of use billing by next spring, which means they will face another price increase.
Price increases for essential services are the most difficult for people on fixed incomes, such as retirees and those relying on social assistance. As Canoe reported, London's Manager of Community Services, Ross Fair said
"The costs are going to impact on everybody, irrespective of their income levels. But lower-income residents, especially those relying on electrical heat in winter, will get hit even harder."
It is anticipated that business owners will pass along their increases to their customers, according to the Guelph Mercury, meaning a double whammy for consumers.
The hot and humid summer conditions experienced throughout Ontario has had people turning up their air conditioning, and this is anticipated to make upcoming hydro bills higher than most people would expect.
Consumers who signed up for fixed rate plans will not be affected by the increases.
The C.D. Howe Institute recently released a paper calling for "Made in Canada" electricity policies that would increase Canada's competitiveness.
Tips on reducing electrical use:
Consumers are not completely helpless in the face of increases in electricity costs. There are steps that can be taken to reduce electricity bills.
The first rule is to turn it off. This tip is easy to implement and incredibly effective.
If you must have air conditioning, turn it off when you are not home. When using it, set the thermostat so that the temperature is in the 70's.
Reduce your reliance on appliances such as clothes driers. If you must use a drier, consider going to a laundromat, where you pay a fixed price for the drier.
Wherever possible, replace older fridges, stoves and other appliances with energy efficient appliances.
If one has the means, solar-generated electricity is an option.
The Ontario Power Authority has a website called Every Kilowatt Counts, gives more tips on conserving electricity use.
Monday, August 2, 2010
Emerging Trends in Real Estate 2010 : Canadian Summary
Canadian respondents to the Emerging Trends in Real Estate 2010® survey exhibited little smugness despite a relative lack of distress in Canada’s real estate regions from US overleveraging. While Canada’s conservative approach to the markets may have helped the sector elude a direct impact from the US credit market collapse, the report’s interviewees suffered big losses from their south-of-the-border real estate investments. In fact, according to Emerging Trends, a joint undertaking by PricewaterhouseCoopers and the Urban Land Institute, 2010 will be the worst time for investors to sell properties in the report’s 30-year history.
However, Canadian respondents are taking comfort from their predictable local markets. In 2010, Canada will face a mild recovery with “flat to modestly improved” operating performance. Softened markets will avoid potential distress except for small pockets of undercapitalized condo developers.
Domestic and overseas real estate investors may see less opportunity in Canada next year
Canada’s relative market stability comes with a drawback for those looking to take advantage of a cyclical upswing that will hit just before 2011. Canadian investors who seek real estate’s old-fashioned returns will develop projects or head into foreign markets. Big Canadian institutions are also preparing to increase foreign allocations. During recovery, interviewees reported that they would likely find better returns elsewhere and cited Brazil and India as current favourites.
Emerging Trends respondents are worried that disappointed foreign investors may shy away from Canada as well. According to interviewees, “They don’t see enough big gains,”— a five percent return with low risk isn’t compelling enough compared to what’s coming in the US and UK.
Canadian real estate leaders dread more economic shocks from the US
Canadians also fear the state of the US economy. Interviews revealed that it was too soon to venture back in the US. The country’s auto industry negatively impacts Ontario’s integral manufacturing sector and their lower energy product demand cuts at western Canada’s oil and gas energy hubs. In addition, potential for rising interest rates spurred by US fiscal problems could inhibit Canada’s recovery. “We can catch US pneumonia very easily,” said one interviewee.
Curbed construction activity in Canada thanks to cautious real estate lenders
Developers in major city centres faced less demand as banks hamper construction loans. Condo projects in Toronto and Vancouver are put on hold while concern increases about overbuilding office buildings and condos in Calgary’s downtown core. However, refinancing isn’t an issue for bigger real estate players that have established relationships with bankers.
Emerging Trends in Real Estate 2010 reflects the views of more than 900 influential real estate leaders who represent a wide range of industry professionals: investors, developers, property companies, lenders, brokers, and consultants. PricewaterhouseCoopers and ULI researchers personally interviewed over 275 individuals and survey responses were received from 710 individuals
However, Canadian respondents are taking comfort from their predictable local markets. In 2010, Canada will face a mild recovery with “flat to modestly improved” operating performance. Softened markets will avoid potential distress except for small pockets of undercapitalized condo developers.
Domestic and overseas real estate investors may see less opportunity in Canada next year
Canada’s relative market stability comes with a drawback for those looking to take advantage of a cyclical upswing that will hit just before 2011. Canadian investors who seek real estate’s old-fashioned returns will develop projects or head into foreign markets. Big Canadian institutions are also preparing to increase foreign allocations. During recovery, interviewees reported that they would likely find better returns elsewhere and cited Brazil and India as current favourites.
Emerging Trends respondents are worried that disappointed foreign investors may shy away from Canada as well. According to interviewees, “They don’t see enough big gains,”— a five percent return with low risk isn’t compelling enough compared to what’s coming in the US and UK.
Canadian real estate leaders dread more economic shocks from the US
Canadians also fear the state of the US economy. Interviews revealed that it was too soon to venture back in the US. The country’s auto industry negatively impacts Ontario’s integral manufacturing sector and their lower energy product demand cuts at western Canada’s oil and gas energy hubs. In addition, potential for rising interest rates spurred by US fiscal problems could inhibit Canada’s recovery. “We can catch US pneumonia very easily,” said one interviewee.
Curbed construction activity in Canada thanks to cautious real estate lenders
Developers in major city centres faced less demand as banks hamper construction loans. Condo projects in Toronto and Vancouver are put on hold while concern increases about overbuilding office buildings and condos in Calgary’s downtown core. However, refinancing isn’t an issue for bigger real estate players that have established relationships with bankers.
Emerging Trends in Real Estate 2010 reflects the views of more than 900 influential real estate leaders who represent a wide range of industry professionals: investors, developers, property companies, lenders, brokers, and consultants. PricewaterhouseCoopers and ULI researchers personally interviewed over 275 individuals and survey responses were received from 710 individuals
Subscribe to:
Posts (Atom)