Toronto condo sales set May record | Toronto Real Estate Blog

Economy Lab

Toronto condo sales set May record

Globe and Mail Blog

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The Greater Toronto Area condo market set a sales record for the second month in a row, with May sales up 37 per cent compared to a year ago.

Realnet Canada Inc. said there were 4,289 new homes and condos sold in May in the Greater Toronto Area, with sales of low-rise housing up 25 per cent and high-rise condos up a “whopping” 50 per cent.

 

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Sales this year are 12 per cent ahead of where they were last year.

BILD Toronto attributed the boost to “relative affordability (compared with low-rise here and high-rise globally), low interest rates and, to give the builders their due, some great building and suite designs in some great locations.”

The Toronto Real Estate Board recently released its market update for the first two weeks of June, and said the average resale price for a condo in the GTA was $326,750, up six per cent from a year ago. A detached home, meanwhile, sold for an average $599,208 up 11 per cent from a year ago.

 

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Flaherty says no new mortgage rules despite record high household debt | Toronto Real Estate Blog

Flaherty says no new mortgage rules despite record high household debt

By John Morrissy, Financial Post June 21, 2011

Canadians fell even deeper in debt in the first quarter of this year, Statistics Canada reported Monday, as they used low interest rates to buy into the housing market.

Canadians fell even deeper in debt in the first quarter of this year, Statistics Canada reported Monday, as they used low interest rates to buy into the housing market.

Photograph by: File, Reuters

OTTAWA — Canadians fell even deeper in debt in the first quarter of this year, Statistics Canada reported Monday, as they used low interest rates to buy into the housing market, sending household debt to a new record high.

 

The report showed that household debt has risen to a new record of $1.548 trillion from $1.526 trillion in the previous quarter. On a per-capita basis, the amount rose to $45,000 from $44,500 in the previous quarter.

 

Also worsening was the capacity of Canadians to handle that debt.

 

The ratio of household debt to personal disposable income increased to 147.3 per cent between January and March, the federal agency said. That surpassed the previous mark of 146.2 per cent in the fourth quarter of 2010. Household debt includes mortgages, consumer credit and loans.

 

 

“The increase in household consumer credit debt slowed in the first quarter, as consumer spending on durable goods fell,” the federal agency stated, adding however that “mortgage debt advanced, partly reflecting “relatively stable borrowing costs as well as higher housing resale and renovation activities.”

 

Despite strong warnings last week from the Bank of Canada about rising debt — along with an analysis from the Certified General Accountants Association of Canada saying that the situation is “dire” for some Canadians — Finance Minister Jim Flaherty said Monday he had no plans to tighten mortgage rules again, stressing that the real estate market remains healthy.

 

“We just took action” in March and activity is already starting to moderate, Flaherty said at a speech in Toronto.

 

The impact of Canadians’ indebtedness is that “households must devote more of their income to paying off debt, leaving less room for saving and consumption,” said Diana Petramala, an economist at TD Securities.

 

“Overall we expect households will continue to cool their pace of borrowing, but household the household balance sheet will remain highly leveraged for sometime. This will thereby constrain consumer spending growth into a range of two to 2.5 per cent over the next three years,” Petramala said.

 

Household net worth also climbed, reaching a new record of $6.37 trillion — or $184,700 per capita in the first quarter, up from $183,300 in the previous three-month period — as the value of homes and equity prices continued to rise in the first quarter.

 

However, “the growth in credit market debt exceeded that of both assets and new worth,” RBC economist David Onyett-Jeffries said in a research note.

 

As Petramala pointed out, “With a large share of financial assets tied to equity gains, the household balance sheet is likely to suffer a setback in the second given that the S&P/TSX has retreated roughly nine per cent since the end of the quarter.”

 

Douglas Porter, deputy chief economist at BMO Capital Markets, said “Canadian households can’t fully resist the lure of interest rates at persistently rock-bottom levels . . . leaving their U.S. counterparts in the rear-view mirror.”

 

But Porter said his bank has been less alarmist that others on the debt buildup, as in many cases, there are solid assets on the other side of the ledger.

 

Household debt should stabilize once interest rates start to rise in the year ahead, he added

 

Failing that, “look for Governor Carney to become more vocal in his warnings to households and financial institutions, to potentially push for another round of regulatory moves to curb credit growth, and to possibly raise interest rates more aggressively than he (or the economy) would like.”

 

Postmedia News

 

Twitter.com/johnmorrissy

 

 

 

Desperation a factor in housing market | Toronto Real Estate Blog

Desperation a factor in housing market

 

More buyers are doing less research before jumping into home ownership, a Toronto-Dominion Bank survey suggests.

 

More buyers are doing less research before jumping into home ownership, a Toronto-Dominion Bank survey suggests.

Photograph by: John Moore/Getty Images, John Moore/Getty Images

You better buy a house in this market before it’s too late.

 

How many times have you heard those words? The panic thinking is driven partially by prices continuing to rise to record levels but also by the sense that near-record-low interest rates could rise at any moment.

 

The sense of desperation to buy now out of fear you won’t be able to get it tomorrow is probably one of the first things taught to any sales person. Create a sense of urgency.

“There’s six left on the shelf, nope, it’s down to five,” jokes certified financial planner Ted Rechtshaffen, president of TriDelta Financial. “It’s an interesting phrase.”

 

Mr. Rechtshaffen says his clients are not uttering panic words but you have to wonder whether Mark Carney, governor of the Bank of Canada, might have been hearing them before making a speech to the Vancouver Chamber of Commerce this month.

 

“One cannot totally discount the possibility that some pockets of the Canadian housing market are taking on characteristics of financial asset markets, where expectations can dominate underlying forces of supply and demand,” Mr. Carney said. “The risk is that expectations become extrapolative, prompting the classic market emotions of greed and fear — greed among speculators and investors — and fear among households that getting a foot on the property ladder is a now-or-never proposition.”

 

It’s hard to measure desperation, but a recent survey from Toronto-Dominion Bank on first-time homebuyers might imply there is some urgency in the marketplace.

 

The survey found 45% of Canadians are willing to buy their home independently without a co-signer. Traditionally people wait until they are married to buy that first home but now they want to establish equity early so they can get their foot in the market.

 

More worrisome out of the TD report was the statistic that buyers are doing less research before jumping in. The bank said mortgage pre-approvals are down to 72% from 84% a year ago and home inspections have dropped from 85% to 67% during the same period. The report also shows declining percentages for buyers researching issues like electricity and closing costs.

 

It all sounds like somebody in a hurry to buy or at least in a bit more of a rush.

“I think people see affordability is still there. The employment numbers are strong and rates are relatively still low,” says Farhaneh Haque, regional manager of mobile mortgage specialists with TD Canada Trust. “In part there is a sense or urgency because they are worried about rates and unsure of what the markets will do.”

 

Benjamin Tal, deputy chief economist at CIBC World Markets, says the Bank of Canada is partly to blame for some of the urgency in the market because of the uncertainty over rates.

 

“People feel the window is closing,” Mr. Tal says. “People have been talking about the Bank of Canada raising rates. They look and say rates will be one or 1.5% [percentages points higher] next year. There is some logic to it.”

 

He adds that if you look at trends over the past 20 years on what happens before rate announcements, you see an acceleration of activity before the announcement.

“Look at the last year and half and we’ve had this sense of urgency,” says Mr. Tal, adding it has driven housing in Canada since the recession. “The real estate market has like nine lives.”

 

It’s easy to say wait until the market crashes in cities like Vancouver, where prices are up 25% from a year ago. But if rates go up, it could be just as expensive to carry a home.

 

Queen’s University professor John Andrew says it’s in the real estate industry’s interests to promote the idea prices will rise forever. But while he thinks it’s obvious in places like Vancouver there will be a price correction, it doesn’t help you if interest rates go up.

 

“You see a 10% price correction but if interest rates go up two [percentage points], you are not better off,” Prof. Andrew says. “Buyers are caught in this quandary that when interest rates go up, prices will come down.”

 

If you are sitting on the housing sidelines, it might seem like you can’t win either way.

 

Financial Post

gmarr@nationalpost.com

 

 

Canadian Mortgage Rate Forecast | Toronto Real Estate Blog

June 20, 2011

 

BOCs Carney Warns of Runaway Housing Market | Toronto Real Estate Blog

June 19, 2011

 

LBC Extends HELOC Promo

LBC Extends HELOC Promo

Laurentian-Bank-MortgageB2B Trust, a division of Laurentian Bank of Canada (LBC), has extended its prime + 0.25% HELOC promotion.

At 3.25%, it’s currently the lowest widely-available HELOC rate in Canada. This pricing will reportedly be available for applications submitted through October.

LBC only offers this special through approved brokers.


Rob McLister, CMT

Zen house sheds a new light on design | 1 Kind Design

 

Architects ONG & ONG designed a 3,100 square-foot, contemporary interior renovation of a Heritage Art Deco Style terrace home in Singapore. The project was called 55 Blair Road, completed in 2009. The concept was to create an open floorplan that promotes harmony between the interior and exterior spaces. The wall-less design of the homes interior enables cross-ventilation throughout the spaces, which is a very desirable element for Singapore’s extremely humid weather. The use of subtle hues and metallic elements balance each other to create a unifying theme throughout the house. Via

The spiral staircase creates not only a focal point but an aesthetically pleasing environment that promotes harmony and balance by breaking up the white interiors. The television and music appliances are all hidden in recesses in the wall behind giant murals, revealed by the touch of a button or by the flip of the hand.

A visually appealing feature to the master bedroom is that there is a large void that allows the homeowner a view down to the first floor.

The sculpted stone bathtub sits at the edge of the cantilevered box that overlooks the pool and garden below. The flooring is walnut planks, keeping with the heritage of the property.

The glass partition doors of the first floor remain open to allow one large living space to be created. Several concrete and wood platforms over the pool oasis allow continuity between the two spaces, the kitchen and the living areas. The kitchen section of the home is the service quarters, which also features a powder room, the maids’ room and a roof terrace.

The 55 Blair Road terrace project was a renovation and restoration to a traditional art deco style shop house. The home was originally renovated 10 years ago but the new homeowner thought the house was too dark and requested that their be more natural light throughout the living spaces.