andymacteam-blog

[andymacteam-blog]

After the recent real estate market downturn, due to the provincial government's imposition of several measures to cool the market after a spike in Toronto-area home prices earlier this year, the GTA real estate market is on the road to recovery. But will this recovery last now that new mortgage rules are being introduced in the new year?

First, let’s take a closer look at the current state of the real estate market then I will attempt to answer this question.

•       On a month over month basis, Home sales in Toronto saw a 12% increase in October. While a strong gain month-over-month is normal for the September to October period TREB president Tim Syrianos pointed out that the increase was more pronounced than usual compared to the previous ten years.  On a year over year basis, although home sales were down 26.7% in October they are trending upwards i.e., sales were down 37.3% in September 34.8% in August, and 40.4% in July.

•       According to Jason Mercer, TREB’s Director of Market Analysis, “Similar to the track followed in the Greater Vancouver Area, it appears that the psychological impact of the Fair Housing Plan, including the tax on foreign buyers, is starting to unwind”.

•       RBC senior economist Robert Hogue said, "We interpret this rebound as the market starting to adjust to the fair housing plan. Buyers are starting to come back into the market".

The latest real estate market numbers from TREB.

•       Prices: The average year over year price of a home in the GTA was up 2.3% from $762,691 in October of 2016, to $780,104 in October of 2017. However, the average price decline since house prices peaked in April of this year at $919,589 is 15.2%, a drop of $139,485.

Compared to October of last year, the average price of a detached home has declined 2.5%. However, the average price of $1,008,207 has held steady from last month. Since October 2016 Semi-detached homes are up 6.3% to an average of $764,293 and townhouse prices are up 7.4 per cent to an average of $629,507. The market for Condominiums has remained strong with prices up 21.8 per cent to an average of $523,041 from 12 months ago.

•       Sales: The number of home sales in the GTA was 7,118 in October. This is a 26.7% drop from October of 2016 but an increase from last month. The number of detached homes sold in October of this year fell 29.8% compared to October 2016.  Semi-detached home sales fell 23.5%, Townhouses 22.0% and Condos 24.9%.

•       Active listings: Year over year active listings were up by a significant 78.5% in October

•       Inventory Levels:  remain low but are increasing. The number of months of inventory available in October 2017 was 1.7, an increase from October 2016 when it was 1.2 months.

 The New Mortgage Rules

What is changing?

The Office of the Superintendent of Financial Institutions (OSFI) has been tightening underwriting standards for home loans for the past five years as the federal and provincial governments have also introduced market cooling measures in Vancouver and Toronto. A new OSFI mortgage change, that will come into effect on January 1, 2018, is the latest attempt to slow down the housing market and to ensure that uninsured borrowers can withstand higher interest rates.

The new mortgage rule takes aim at a section of the market that until now has been mostly exempt from government regulation, people with down payments of 20 per cent or more. These homebuyers will have to qualify for a mortgage based on either the Bank of Canada posted rate for the five-year fixed rate product or two percentage points above their contracted mortgage rate, whichever is higher.

What does this mean for home buyers?

·       20%-25% lower mortgage borrowing power for borrowers with a down payment of 20% or more: For example, a family with an annual income of $100,000 with a 20% down payment at a five-year fixed mortgage rate of 2.83% amortized over 25 years can currently afford a home worth $727,000. Under new rules, they need to qualify at 4.89%. They can now afford $571,000, a difference of $156,000.

How will this Mortgage Rule change impact the GTA Real Estate Market?

·       Short-term increase in sales activity: Those that are impacted by these changes will rush to buy a home during the autumn/Holiday season to beat the deadline. Mortgage brokers are expecting a wave of buyers seeking pre-approvals in the final quarter of this year since OFSI’s deadline is tied to when a financial institution extends the mortgage loan, not when the transaction takes place.

·       Buyers are not about to stop buying, but they will move to a lower price point that they can qualify for under the new rules.

·       RBC senior economist, Robert Hogue, has stated that the revised stress test, coupled with the expectation that the short-term interest rate will hit two per cent by the end of 2018, could have a short-term "cooling effect" on buyers, though it won't be a large shock on the GTA housing market.

·       Chief economist at the Conference Board of Canada, Craig Alexander, view is that the impact of mortgage changes has been and will be minimal because they have been introduced in an incremental fashion over many years. “If the government had implemented all the changes at once, we would have had a very severe housing correction on our hands.”

What can home buyers do to mitigate the impact?

 1.     Longer Amortizations: In the high-ratio market, where consumers have smaller down payments, amortizations are limited to 25 years. In the low-ratio market, there is nothing to say consumers cannot amortize a loan over 35 years, a move that effectively wipes out the higher qualification rate and gives those buyers the same level of buying power they currently enjoy. It is possible that some financial institutions may not take advantage of this loophole because they risk upsetting the regulator if they do.

2.     Variable Rate Mortgages: Buyers could consider going with a lower rate, more volatile variable rate mortgage. A typical conventional borrower would qualify for a home that’s about six per cent more expensive by choosing variable rate mortgage.

3.     Credit Unions: A good option for home buyers seeking mortgage financing as Credit Unions are not regulated by OFSI.

Although the Canadian economy is expected to slow next year, the underlying factors for the housing market remain strong. We have strong population growth, we still have relatively low interest rates, job growth has been robust, and consumers are confident. Consequently, this new mortgage rule should not drive the market down abruptly in the new year, but it will have a dampening impact.

These are turbulent times in the GTA real estate market. I encourage you to seek the help of an experienced realtor who can take the guess work out of finding a home that meets your expectations, is within your budget and is in the neighbourhood you want to live in.

[andymacteam-blog]

GTA Real Estate Autumn Market – Recovery Underway?

Is the GTA real estate market on the road to recovery after the recent downturn? To gain insight into what is going on, let’s look at the latest stats from the Toronto Real Estate Board (TREB).

Prices: The average year over year price of a home in the GTA was up 2.6% from $756,021 in September of 2016, to $775,546 in September of 2017.  However, the average price decline since house prices peaked in April of this year at $919,589 is 15.7%, a drop of $144,000.

Compared to September of last year, the average price of a detached home has not increased. However, the average price of $1,015,067 is up 4.6% from last month. Since September 2016 Semi-detached homes are up 7.4% to an average of $752,379 and townhouse prices are up 7.1 per cent to an average of $609,382. The market for Condominiums has remained strong with prices up 23.2 per cent to an average of $520,411 from 12 months ago.

Sales: The number of home sales in the GTA was 6,379 in September. This is a 35.1% drop from September of 2016. The number of detached homes sold in September of this year fell 40.4% compared to September 2016. Semi -detached home sales fell 30.2%, Townhouses 34.4% and Condos 27.5%.

Active listings: Year over year active listings were up by a significant 69.0% in September

Inventory:  Despite the significant decline in sales and the sizable increase in active listings, inventory levels remain low. The number of months of inventory available in September 2017 was 1.5, a small increase from September 2016 when it was 1.3.

If we take a closer look at the numbers and the market in general, there is evidence of a real estate market recovery in the GTA.

The average price for all types of homes increased by 5.9 per cent in September from August. This is the first month over month increase since prices peaked in April 2017.

The September recovery was driven primarily by buoyant sales of detached homes in the City of Toronto where prices climbed 13.8 percent in September compared to August. However, in the areas surrounding the City of Toronto the average detached house price was virtually unchanged.

Although the volume of homes sold in September fell 35 per cent compared to the same month last year, the decline comes off record levels in 2016, so not a big as it seems. September total monthly sales are only slightly lower that the 10-year average.

Toronto's market recovery is following a similar path to Vancouver's market. The B.C. government implemented a new foreign-buyer's tax last August, and average house prices immediately fell, hitting bottom by January this year, or roughly five months later. The Ontario government announced a similar foreign-buyer's tax, among other measures, for the Toronto region in April, and it appears prices may have bottomed in August, about four months later.

This view is supported by CIBC deputy chief economist Benjamin Tal who recently stated, "Vancouver had a nice rebound and now is going kind of sideways, and that's more or less what we're going to see in Toronto, which is a good scenario," he said.

Eryn Richardson, general manager of Century 21 Heritage Group, said agents in his firm have seen the return of buyers who are looking for houses as investment assets, which he sees as another sign of turnaround in the market. Investors and speculators largely left the market in the spring and summer, when it was unclear how far prices would fall.

Bank of Montreal economist Sal Guatieri recently stated, “Tentatively, it looks like the worst is over for the Toronto housing correction”.

Chris Slightham, president of Royal LePage Signature Realty, said “The frothiness of the spring has corrected itself, it has come back to a much more healthy number and looks like it has found its bottom”.

·       “For now, the Toronto and Vancouver housing markets have returned to earth,” said Royal LePage CEO Phil Soper. “After a period of unsustainable price inflation and sharp market corrections, we are seeing low single digit appreciation in each.”

There are reports of a return to multiple offers for well priced homes in good locations.

Market Recovery Headwinds:

Although the real estate market appears to have turned a corner there are factors that could potentially slow or even stall the real estate market recovery:

· OSFI Mortgage Changes

Mr. Tal said Toronto's housing strength in September will likely spur Canada's banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), to move ahead with proposed mortgage changes.

Key among the changes is a stress test for consumers borrowing with 20 per cent or more down requiring them to qualify at a rate two percentage points above their mortgage agreement. OSFI will release final changes to its mortgage lending guidelines by the end of the month and they will go into force two or three months later.

· Interest Rates

There have been two interest rate hikes this year and at least one more is expected before the end of 2017. Additional hikes in 2018 are possible. An increase in interest rates makes it more difficult for home buyers to qualify for a mortgage.

· China’s new strict controls on capital leaving China

Chinese capital is having a tougher time getting out of China. The co-founder of Better Dwelling, which specializes in housing data, said the volume of money leaving China in August was down close to 40 per cent compared to August last year.

Even though Chinese and other foreign capital will continue to flow into the GTA the high volume of detached home sales of the past few years will ease.

Despite these headwinds average home prices appear to be on the road to recovery after the decrease in prices earlier this year. The market between buyers and sellers is more balanced and the frenzied conditions of earlier this year have gone. The time is right to seek the help of an experienced realtor who can provide you with the expertise that will take the guesswork out of making sense of a real estate market in transition.

[andymacteam-blog]

GTA Real Estate Autumn Market – Is it Time to Buy?

Although we have been experiencing a rare downturn in the GTA real estate market over the past few months we may be turning a corner. To gain insight into what is going on, let’s look at the latest stats from the Toronto Real Estate Board (TREB).

· Prices: The average year over year price of a home in the GTA was up 3.0% from $710,410 in August of 2016, to $732,292 in August of 2017. However, the average price decline since house prices peaked in April of this year at $919,589 is 20.4%, a drop of $187,000.

· Compared to August of last year, the average price of a detached home is up 0.3 per cent to an average of $968,494, semi-detached homes are up 12.1% to an average of $715,167 and townhouse prices are up 8.9 per cent to an average of $604,618. Condominium sales have held up better, with prices up 21.4 per cent to average $507,841.

· Sales: The number of home sales in the GTA was 6,357 in August. This is a 34.8% drop from the 9,748 sales during August of 2016 and a 45% drop since April of this year. The number of detached homes sold in August this year fell 41.6 per cent compared to Aug 2016.  Semi -detached home sales fell 31.3%, Townhouses 27.5% and Condos 28.0%.

· Active listings: Year over year active listings were up by 65.0% in August

· Inventory:  Despite the significant decline in sales and the sizable increase in active listings, inventory levels remain low. The number of months of inventory available in August 2017 was 1.4, a slight increase from July 2017 but the same as Aug 2016.

If we take a closer look at the numbers and the market in general, there are indications that the GTA real estate market is stabilizing.

· While average prices for all types of homes slid 1.9 per cent in August from July, it was by far the lowest month-over-month price drop since prices started to decline in May

· Although active listings increased by 30% from April 2017 to May 2017, the last two months the number of active listings has declined 14.2%.

· The number of homes sold increased by 5.9% from July 2017 to August 2017. The first month over month increase since March.

· Calm has settled on the market. Buyers are now able to buy a house conditional on inspection and financing without getting involved in a bidding war.

· Affordability is still a concern, but now buyers can take their time and make a reasoned decision.

· The condo market continues to be strong. Condo prices are still up over 20 per cent from where they were a year ago.

· With the economy remaining strong and unemployment levels low there is no fundamental economic reason for sales to continue to languish.

Taken together, these are signs that the downturn is slowing and the market is poised to stabilize and even recover this fall with prices climbing again.

Factors that could slow the turnaround in the real estate market include,

· A move by the Bank of Canada to higher interest rates: This creates a head wind for the real estate market due to reduced affordability for the average buyer. However, the impact should not be significant since interest rate increases are expected to be modest and over an extended period of time.

· The number of active listings: It is difficult to predict the number of houses that will be listed for sale this autumn. If active listings begin to rise more quickly than sales then this would mean a further softening of prices before they stabilize and begin to rise again.

Royal Bank of Canada economist Robert Hogue has issued a report on Toronto's housing market, saying people worried about a major collapse in the market "can breathe a little easier now." Mr. Hogue believes the market probably bottomed in July. Mr. Hogue said buyers have absorbed the impact of a new housing rules the Ontario government announced in late April to cool the hot housing market in the GTA. In Vancouver, the market dipped and then adjusted and prices began increasing again within months of a similar move by the British Columbia government last year.

Doug Porter, chief economist and managing director of BMO Financial Group, stated in a recent interview with CBC, “My own view is we'll see further softening in prices. There will be a softening of prices for a short amount of time, then they'll stabilize”.

The Toronto Real Estate Board believes there is significant pent-up demand in the market, which should lead to growing sales. Jason Mercer, TREB's director of market analysis, said the association commissioned a special survey of buyer intentions at the end of May as the market downturn was taking hold. It found an even greater proportion of people said they planned to buy a home in the GTA in the next 12 months than a similar survey showed last October. However, despite the cautious optimism, don’t expect the Toronto market is headed back to the type of 30-per-cent price gains experienced earlier this year

If you are looking to buy a home, you may want to consider getting into the market a bit early rather than wait for things to start to accelerate, even if there is the potential for the market to soften a bit more in the short term.

If you are considering selling your home, it is suggested that you base your decision on factors in your local neighbourhood. For example, if you have the only condo unit available for sale in a popular building there is no need to hold back because the condo market has remained strong. On the other hand, if you have a detached house on a street with several homes already on the market you may want to wait.

Whether you are looking to sell or buy be sure to seek the help of an experienced realtor who can provide you with the expertise that will take the guesswork out of dealing with a real estate market in transition.

[andymacteam-blog]

GTA Real Estate Market – Is the Sky Falling?

Are we in the midst of a soft landing or the beginning of a housing crash? Although no one can accurately predict the future, let me attempt to provide an unbiased look at what’s going on in the market. First, let’s look at the latest stats from the Toronto Real Estate Board (TREB).

· Prices: The average year over year price of a home in the GTA was up 5.0% from $710,471 in July of 2016, to $746,218 in July of 2017.  However, the average price decline since house prices peaked in April of this year at $919,589 is 18.9%, a drop of $173,371. The current average home price is now close to the average home price in January of this year.

Compared to July last year, the average price of a detached home is up 4.9 per cent to an average of $1,000,336, semi-detached homes are up 5.2% to an average of $704,207, and townhouse prices are up 13.5 per cent to an average of $608,907. Condominium sales have held up better, with prices up 23.2 per cent to average $501,750.

· Sales: The number of home sales in the GTA was 5,921 in July. This is a 40% drop from the 9,929 sales during July of 2016 and a 49% drop since April of this year. The number of detached homes sold in July this year fell 47.4 per cent compared to July 2016. Semi -detached home sales fell 38.6%, Townhouses 36.5% and Condos 30.7. It is noteworthy that the number of homes that sold for over $1M has dropped by over 70% since April.

· Active listings: Year over year active listings were up by a whopping 65.3% in July

· Inventory: Despite the significant decline in sales and the sizable increase in active listings, inventory level remains low. The number of months of inventory available in July 2017 was 1.3, a slight increase from June 2017 but lower than it was July 2016 (1.4 months)

Let’s take a look at what’s behind the market and the numbers to get a clearer picture of what’s going on.

Why the Sky is not Falling…

1. The average Selling Price is misleading: Averages can be misleading since the quantity and quality of the properties sold in any given area change over time. As a result, average prices can fluctuate dramatically, making the housing market appear unstable. The drop in the average home selling price in the GTA since its peak earlier this year has been exaggerated by the fact that the greatest home sales declines have been more expensive homes. The percent of homes sold for over $1M has dropped from a peak of 30% of total homes sold earlier this year to just 16% in July.

The MLS® Home Price Index (HPI) for all home types, which is considered a more accurate measure of home prices in the GTA, was up by 18 per cent in July on a year-over-year basis whereas TREB’s average year over year price for all home types in the GTA was up only 5.0 per cent in July.

2. The “Real” Impact of The Ontario Fair Housing Plan is minimal: The Ontario Fair Housing Plan launched in April not impact the majority of home buyers. Buyers and sellers will eventually realize their situations haven't changed with the new rules in place.

3. Interest Rates are still at historic lows: Although there has been a minor increase, the impact on the cost of a mortgage has been minimal.

4. The Economy is strong: The GTA economy is strong, driving growth in jobs. According to the June report from Scotiabank Economics, “…Canada’s job market is in a state of near Nirvana with strong job growth, productivity gains, and our expectation that wage growth is likely to double or more into next year…”

5. Significant Immigration continues: Approximately 100,000 immigrants settle in the GTA every year. Toronto consistently ranks as one of the top cities in the world to live, so it's no surprise that people want to move here and eventually buy a place to live.

6. Foreign buyers represent a small percentage of the market: The new Foreign Buyers tax will only have a modest effect. The most recent study from the Toronto Real Estate Board says that only 4.9% of buyers in Toronto are from overseas therefore only represent a small percentage of all transactions. With all the turmoil and uncertainty in the world today, Toronto real estate is view by foreigners as a safe investment. Many foreign investors will look at the 15% tax as simply the cost of doing business.

7. The Vancouver Experience: In August of last year, Vancouver implemented a very similar set of housing rules, including the 15 per cent foreign buyer tax. Vancouver’s market experienced a home price drop but prices are now back to previous levels. BMO chief economist Douglas Porter in a recent analyst note supported the view that Toronto's market will likely follow what has happened in Vancouver.

8. Supply and Demand: A better supplied market, due to a sharp increase in new home listings, has certainly been a key factor influencing the moderation in price growth. But now sellers, who did not have to sell their homes but were fishing for a high price in the frothy market earlier this year, are taking their homes off the market.  In addition, despite the increase in listings and drop in sales, home inventory is still low. The supply of housing and land continues to be limited by the greenbelt. A lack of supply coupled with a strong demand for housing is are the key factors that created a robust real estate market in the GTA

9. Buyer Psychology: According to real estate expert John Andrew, a professor at Queens University, the price decline in Vancouver was short-lived because the new policy only managed to affect buyer psychology. Some prospective buyers sat on the sidelines to see how the tax would play out. "Any time you've got an uncertain market, that's always a temporary effect". Toronto downturn will also likely be temporary for the same reasons. TREB president, Tim Syrianos, stated in the July 2017 Market Watch Report “Clearly, the year over year decline we experienced in July has more to do with psychology, with would be home buyers on the sidelines waiting to see how market conditions evolve”.  

10.    Slow Summer Market: The summer real estate market is traditionally slower as people focus on vacations and family.

What Next?

The real estate downturn we are seeing now is a good thing. The wild run up in prices from earlier this year was not sustainable. Sellers are becoming more realistic about the price their house can fetch. Buyers are waiting to see what happens in the fall, when the real estate market traditionally sees an upswing.

Now that we have moved firmly into a balanced market, experienced Realtors will list houses with an asking price close to the market value and accept offers at any time with conditions. Bidding wars have subsided and buyers are now able to negotiate more favourable deals. Home offers once again include conditions such as financing and home inspection.  

Nobody can accurately forecast the future, especially when you consider how difficult it is to predict public sentiment and its effects on home buyer and seller behavior. However, unless the government introduces more housing rule changes, interest rates increase significantly or the economy moves into recession (all unlikely at this time) buyers are expected to return to the housing market. When they do, prices will begin to rise…but don’t expect a repeat of the frenzied real estate market we experienced earlier this year!  

If you’ve been holding off making your home purchase, now is the time to start your search with the help of an experienced realtor who can guide you through the current real estate market turbulence.

[andymacteam-blog]

Has there been a major Shift in the GTA Real Estate Market?

The latest stats from the Toronto Real Estate Board have created quite a buzz. Are we about to see a collapse in GTA home prices or is this a pause before prices continue their relentless rise?

Prices: The average year over year price of a home in the GTA was up 14.9% from $752,100 in May of 2016, to $863,910 in May of 2017.  However, when compared to April 2017, the May 2017 average home price is down 6%. Detached house prices dropped 5.3 per cent to an average of $1,141,041 in May compared to April. Prices for semi-detached homes fell 2.4 per cent in May to an average of $824,667 compared to April, and townhouse prices fell 6.4 per cent to an average of $656,392. Condominium sales held up somewhat better, with prices dropping 1.8 per cent to average $531,659 in May compared to April.

Sales: Home sales in Toronto dropped to 10,196 in May, down 20.3 per cent from a year earlier. A 20% drop in sales is significant, especially if you consider that May is historically the busiest month of the year.  

The number of detached homes sold in May this year fell 26.3 per cent compared to May 2016.  Semi -detached home sales fell 22.7%, Townhouses 18.1% and Condos 6.4%.

Active listings: Year over year active listings were up by a whopping 42.9% in May! Year over year active listings had been down by 35.2%, 50.5%, and 49.5% in March, February, and January respectively. Although year over year active listings increased modestly in April the significant size of the May increase was not anticipated.  

Inventory:  Despite the decline in sales and the increase in active listings, inventory levels remain low. The inventory of condos in May was actually lower than it was a year ago.

The Toronto home market has not seen such substantial declines in both sales and prices since the recession of 2008.

Why Now?

Is the Ontario Government’s announcement regarding new housing market rules the cause of this major shift? TREB’s director of market analysis Jason Mercer has stated. “The actual, or normalized, effect of the Ontario Fair Housing Plan remains to be seen. In the past, some housing policy changes have initially led to an overreaction on the part of homeowners and buyers, which later balanced out”. He added that the jump in active listings appears to be homeowners taking advantage of higher prices, having delayed selling, perhaps due to expectation that prices would continue to rise. In addition, I suspect the red-hot Jan/Feb/March took a lot of buyers out of the market. 

CIBC chief economist Benjamin Tal said he believes the Toronto market is cooling “under its own gravity,” and the province’s housing measures are only accelerating a trend that was already under way. He said it is ideal that the market is slowing without an external shock. He expects the price decline will be relatively short-lived before the market stabilizes, but it could take six months or a year. “I don’t think we have the trigger – namely a recession or higher interest rates – to get something crazy like a crash,” he said. “This is a very healthy adjustment.”

Like Ontario, British Columbia introduced several measures including a tax on foreign buyers in the Vancouver area last August to stabilize their housing market. There are now signs that Vancouver may be heating up again after that city's real estate board reported Friday that home sales last month have rebounded to near record levels. Toronto’s experience may turn out to be similar to Vancouver’s in which case this would be a pause only and the market may pick up again later this year. 

Whether due to the new real estate rules, buyer fatigue with quickly escalating housing prices and bidding wars or sellers deciding to list their homes due to significant growth in their home’s equity, the market has cooled considerably this spring. This is especially the case for low-rise homes. During the first quarter of this year, due to the combination of a very low number of active listings, strong demand and prices moving up quickly, we had an abnormal housing market that was fuelled by speculation and panic. With a significant rise in active listings and buyers now having taken a step back, the GTA’s housing market is now more buyer friendly. 

TREB president Larry Cerqua is quoted as saying, “Home buyers benefitted from a better supplied market in May, both in comparison to the same time last year and to the first four months of 2017”.  He also said, “At the end of May, we had less than two months of inventory. This is why we continued to see very strong annual rates of price growth, albeit lower than the peak growth rates earlier this year,”.

The next few months may be your best home buying opportunity in some time.

This may not last due to continued low inventory and pent up demand. 

To help you decide what to do next in this uncertain housing market it is highly recommended that you speak to an experienced realtor who has a deep knowledge of the neighbourhood in which you wish to buy or sell. 

[andymacteam-blog]

If you have been keeping up to date on the Greater Toronto Area (GTA) real estate market the past few months it will come as no surprise to you that the very tight market conditions continued into March. Take a look at the following residential market statistics.

High Demand/Increased Sales: In the GTA there were 12,077 residential sales during March. This represents a 17.7 per cent increase compared to March 2016. Annual sales growth was strongest for detached houses and condominium apartments.

Low Supply/Fewer Active Listings: In March, there were 17,051 new listings, a 15.2 per cent increase compared to March 2016, however, there was an even greater 17.7 per cent increase in sales growth. Active listings of homes available for sale in Toronto have plunged 35.2 per cent from a year ago.

Across the GTA, a mere 1,001 new low-rise homes were available in February. And there were only 324 new detached homes available. Ten years ago there were 17,304 low-rise homes and 12,064 detached homes available.

The number of months’ supply of houses on the market has dropped to a miniscule 0.65, down from 1.18 last March. A six-month supply of houses for sale is considered a balanced market. The average home that was put up for sale remained on the market for just 10 days, down from 16 days during March 2016. As well, the sales-to-new listings ratio sits well into “sellers’ market” territory at 70.8 per cent, which compares to 69.4 per cent 12 months ago. A ratio between 40 per cent and 60 per cent is considered indicative of a balanced market.

Higher Prices: This combination of high demand and low supply has lead to intense competition among buyers resulting in a continuation of multiple offers and homes selling significantly above list price.

The average selling price was up by 33.2 per cent to $916,567 last month. This includes detached, semi detached, townhomes and condos. This is up from $688,011 in March 2016! At the high end of the range, the average price for detached houses in the Greater Toronto Area was $1,214,422 in March up from $910,375 (33.4 per cent) from last March. A detached home in the city of Toronto averaged $1.6-million in March. The average price for semi-detached homes in the GTA was up 34.4 per cent at $858,202, the average townhouse price was up 32.9 per cent at $705.078 and the average condo apartment price was up 33.1 per cent at $518,879.

It should be noted that home prices have increase by over 30% in the past year while,

Inflation is 2.0 per cent

Economic output is up 2.3 per cent

Change in hourly wages for people aged 25 to 54 is 1.7 per cent

The monthly mortgage payment for an average Toronto home is now $3,847 using a 25-year mortgage with a fixed five-year rate of 2.65 per cent and a 10-per-cent down payment.

$197,000 is the household income needed to buy the average-priced home in Toronto. $78,667 is the median total income for Toronto families in 2017.

A house in Toronto now costs 11.7 times the median total family income. At one time, it was thought that a house was affordable when it cost three times your income.

Are we in a Real Estate Market Bubble?

1. Strong Fundamentals? While some industry experts are warning that the Toronto housing market is in a bubble, some economists believe the "fundamentals" of the Toronto market, the economy, interest rates, population growth and the sources of demand for housing, are far more solid than they were in the late 1980s.

Dana Senagama, an analyst with Canada Mortgage and Housing Corporation specializing in the GTA market, stated in an interview, "I would say don't compare. It's a very different time period, very different economies. The housing market has very different fundamentals at play. The only similarity that I see has been the rapid increase in price growth,"

In the late 1980s, interest rates were high, some of the rules about qualifying for a mortgage were less strict, developers started building vast amounts of new homes without purchasers lined up and the province was about to get hit with a deep recession.

2. Toronto has emerged as a world-class city:

Toronto is now a major financial, economic and cultural centre.

With more than 250,000 employed in the financial services sector, Toronto is now the second largest financial hub in North America (after New York) and on the 2015 Global Financial Centres Index, Toronto ranked 8th!

When compared to Toronto’s peers globally, prices appear far less crazy. As per data compiled by Global Property Guide, Toronto home prices on a U.S. dollar per square metre basis rank just 14th in the world, well behind the likes of London, New York, Paris and Tokyo

3. Foreign Buyer Influence:

Based on the foreign incomes of those wanting to buy real estate in a stable Toronto amidst a sea of global instability, the prices are reasonable, especially in Canadian dollar terms.

Housing in recent years has become an internationally traded asset class

4. Affordability:

Unlike previous generations Parents, today are much more likely to help their children buy their first home.

 What might deflate the current overheated market?

1. Further tightening of mortgage regulations: Possible changes to mortgage regulations being discussed include,

Decreased amortization periods which would increase monthly mortgage payments

Home buyers shopping for mortgages that are not insured by CMHC having to qualify using the posted 5-year fixed rate of 4.64 per cent

2. Higher mortgage rates: Most industry experts don’t believe Canada will experience an increase in interest rates until mid-2018.

3. Foreign buyers tax: has reduced significant price gains and slowed sales in Vancouver but a similar tax in the GTA could result in buyers looking to buy outside of the GTA putting additional pressure on prices in those areas e.g., Guelph, Kitchener-Waterloo, Barrie.

4. Tax on Empty Homes: Ontario Finance Minister Charles Sousa is considering this after Vancouver imposed a similar tax in January.

5. Speculation Tax on Speculators / House Flippers

6. Increased Capital Gains Tax: for secondary and/or investment properties. This was considered but rejected for inclusion in the Federal budget last month but is still on the table.  

7. Changes to Bank rules: Banks having to pay a deductible on all CMHC mortgage loans that end up in default is being discussed. This would raise the cost of capital for the banks and the banks would likely pass this cost along in higher mortgage rates

8. Looser restrictions on development: Kathleen Wynne is instead looking at fast-tracking the development process. This would improve housing supply and affordability

9. Significant growth in listings: A substantial period of months in which listings growth is greater than sales growth will be required to bring the GTA housing market back into balance.

10. Affordability: Increasing prices will eventually impact affordability and people’s ability to qualify for ever higher mortgages.

11. Severe Recession: This does not appear to be on the horizon. Forecasters are expecting Canada’s GDP to grow, supported by strengthening economies in the U.S. and Europe. However, the current period of economic growth has been long and by historical standards, we are due for a recession.  

In today's overheated, volatile and complex real estate market it is more important than ever to work with an experienced Realtor who has a deep understanding of your neighbourhood whether you are looking to buy your first home or want to cash in at current high home prices and either move up or out of the city.

[andymacteam-blog]

A 2016 GTA Real Estate Market Review and Outlook for 2017

There has been a sharp rise in all types of homes in Toronto and surrounding areas, including Oshawa, Hamilton, Brantford, Cambridge, Guelph, Barrie and the Niagara Region. The Toronto Real Estate Board says 2016 was a record year for the country’s largest real estate market, with sales climbing 11.8 per cent from the previous year. TREB reported the average home price in the Greater Toronto Area increased to $730,472 last month, up 20 per cent from December 2015, the largest annual gain since 1989.

Prices of detached houses sold in the City of Toronto last month were up 23.7 per cent and in the GTA up 23.1 percent from a year earlier. Last year in the City of Toronto, there were 209 sales at $4-million or higher and over 3,000 homes sold were valued at more than $2 million, almost double the number sold in 2015. 20,000 homes sold last year were at values upward of $1 million, which accounted for 17 per cent of all homes sold.

Price growth accelerated throughout 2016 as the supply of listings remained very constrained.  Active listings at the end of December were down 48 per cent from a year earlier, and were at their lowest levels in 15 years. The basic rule of thumb is that housing inventory below four months (120 days) is solidly in seller’s territory; by the end of 2016, the GTA had only 36 days of inventory!

Toronto home prices have doubled over the past decade and tripled since 2000. The average home price in the GTA has not fallen year over year since 1996 according to the Toronto Real Estate Board’s historical data.

But if you think Toronto housing is expensive take a look at Vancouver. Last month the average price for detached houses sold in the Real Estate Board of Greater Vancouver’s territory was $1.68-million compared with $1.02-million in the GTA. In the city of Vancouver, the price for detached properties averaged more than $2.6-million last month, compared with $1.29-million for sales in the city of Toronto.

Reasons for the continued strength of the GTA’s housing market:

1.       A relatively strong regional economy, low unemployment

2.       Very low borrowing costs

3.       The region’s population continues to grow

·         More prime age first-time buyers (the millennials)

·         Strong international immigration

·         More people migrating to the GTA from other parts of Canada, especially from provinces where the down turn in oil prices has had a negative impact on employment.

4.       Limited Supply

·         Limited development land resulting in low new home construction.

·         A chronic shortage of listings supply relative to market demand.

5.       Enduring confidence in real estate as a secure and appreciating asset

6.       International demand, particularly from mainland China, continues to play a key but secondary role.

What next in 2017?

Many economists believe that because buyers have been pushed out of the housing market due to affordability challenges, recent changes to mortgage regulations and an uptick in mortgage rates we’re going to see a decline in demand.

Despite a decrease in demand, it is expected that house prices will continue to climb, although at a more modest rate. This is mainly due to the pronounced lack of supply of housing stock, particularly for low-density, single-family detached homes.

Unless there are major changes in demand and supply or shifts in the economy, sellers in the GTA can expect bidding wars and further price escalation during 2017.

[andymacteam-blog]

Britain’s decision to leave the European Union has resulted in worldwide economic and political uncertainty which will have an impact on real estate in Canada. What can we expect for the Toronto Real Estate market as a result of this event?

1. Interest rates will remain low: 

The immediate impact of the post-Brexit vote on Canada’s economy will be pressure to keep interest rates at historically low levels, explained BMO chief economist Douglas Porter and senior economist Robert Kavcic in a recent report. This is, in part, because segments of our country’s economy will feel the impact of the Brexit fall-out, such as the nearly $16 billion in products we export to the U.K.  TD Economics says financial and confidence spillovers could shave between 0.5 to 1.0 per cent off Canada’s economic growth in the second half of this year. That could increase if we get a prolonged slump in oil because of Brexit. BMO has forecasted that the Bank of Canada will now not increase interest rates until the end of 2017. As a result, you can expect the cost of borrowing to fall further into historic lows – a process already well underway with bond yields dropping. BMO chief economist Doug Porter warns that prolonged low interest rates will only further fuel Toronto and Vancouver's frothy housing markets. "The concern is that this is going to just stoke a market that is already too hot for comfort," he says.

2. More Foreign Investment in Canada: Due to,

 a. A falling Canadian dollar: CIBC says our currency could lose another five to six per cent against the U.S. dollar in the coming months. A low loonie ensures Canadian real estate remains on sale for rest of the world. Despite headlines of overheated markets, Canada still looks like a great deal to investors from outside the country looking for a place to park their money, away from other governments, other tax agencies and economies experiencing greater uncertainty than Canadas.

b. Increased Risk in Britain and Europe: Bank of America Merrill Lynch says all that foreign money in search of housing assets may “increasingly settle” in Vancouver and Toronto “now that London looks riskier.”  China is among Asia’s most vulnerable economies to Brexit risk resulting in an even greater appetite from mainland buyers for North American assets.

“We’re in early days – it’s hard to sift through how the variables are going to play out,” Sotheby’s Mr. Henderson said. “But capital will look for more attractive, stable markets. And Canada is still very much a bargain.”

With interest rates forecasted to remain low until at least the end of 2017, our Canadian dollar expected to weaken further relative to the U.S. dollar making Canada more affordable to foreign buyers and foreign capital seeking safe havens such as Canada, Toronto’s real estate market is likely to remain strong for months to come.

[andymacteam-blog]

In a hot real estate market, such as the one we have in the GTA, there are not enough homes being listed to meet the high demand. As a consequence, multiple bidders for properties are commonplace resulting in sold prices that are well over asking. Although a real estate market that favours sellers can be challenging and frustrating for buyers, it’s still possible to purchase a home with the right approach. Here are a few suggestions.

1.    Go Shopping

Scan your favourite real estate website for new listings every day and tour open houses. The idea is to gain an understanding of your local market without the pressure of feeling like you need to make an offer. You’ll also learn more about the kinds of homes and neighborhoods you like, or don’t, and which features matter to you.

2.    Determine where you can compromise

Although it’s difficult and costly to change a floorplan, and you’re stuck with a location, finishes and appliances are easy to change once you own the property. A dated kitchen, for example, may eliminate some of the competition.

3.    Get pre approved for your financing

Talk with several lenders or mortgage brokers. Compare interest rates and mortgage terms, such as penalties for paying out your mortgage before end of term. Be sure your lender or mortgage broker has a track record for closing mortgages quickly.

4.    Offer a quick closing

Some sellers are in a hurry. If this is the case, put in an offer that closes more quickly. This might be the key that makes your offer stand out from the others. Some sellers might even accept a slightly lower offer to get the deal done fast. Using a lender that has an established relationship with your real estate agent may help ensure a quick closing.

5.    Get a pre-inspection

Once you find a home you want to make an offer on, have a qualified home inspector look it over. The pre-inspection will allow you to make an offer that is not subject to an inspection. In a hot market, offers with such a condition stand little chance of being accepted. Many sellers in a hot market will set a specific day for accepting offers to give buyers time to get pre-inspections.

6.    Waive other conditions

For example, in a hot market you can pretty much forget about an offer that’s subject to selling your own home. However, be cautious about waiving conditions. They exist to protect your rights and your money.

You need to be particularly careful about waiving the financing condition. It’s important to stipulate in your offer that your lender’s appraiser can access the home as your lender will insist on an appraisal in order to determine if they can give you final approval for your mortgage. Be aware that if your financing falls through, and you have no financing condition, you will lose your deposit money.

7.    Be nimble

Realtors in hot markets often present offers in person and sometimes even have buyers wait outside so they can quickly modify offers if need be. Some buyers include with their offer a personal cover letter written to the sellers, saying something about themselves, why they love the home and how they plan to live in it.

8.    Be patient

In a hot market, a buyer might make 10 offers or more before winning one. After losing out on several homes, you might feel tempted to make a desperation bid or give up. Don’t do either.

If your search for a home extends into the late fall and winter, you may find the market is less competitive, although there also tends to be fewer homes for sale these times of year.

9.    Most importantly…Find a good real estate agent!

Having a good agent is particularly important in a hot market. You want someone who hears about listings as soon as they hit the market, or before. Also, a good realtor knows how to make your offer stand out.

Good buyer’s agents have a strong track record of winning more of their offers. They keep track of changing techniques and have developed strong relationships with listing agents.

Interview several agents before deciding who you want to work with. Ask them how they’ll help you find a home and put in a winning offer. Get names of their previous clients and check those references.

Although buying your dream home in a hot market can be frustrating, working with an experienced realtor who knows how to win in a multiple offer environment by employing tactics that will get the attention of sellers will substantially increase your chances of success.

[andymacteam-blog]

Millennials, those born between the early 1980s and early 2000s, are poised to take over the world! They are the largest generation since the baby boomers and have recently become the largest segment of the Canadian workforce.

As an increasing number of Millennials move into their early to late 30s, pay off their student loans, get married, start families, and settle into careers, their unique needs and wants will shape the future of the housing industry—much as the Boomers did before them.

Broadly speaking there are two types of Millennial home buyers. Ones who prefer a turnkey home that needs little or no work and those who want to invest sweat equity and money over time, put their personal stamp on the property and add value for the future. But while those 2 groups may seem like they want different things from a home, most younger buyers have these "must-have" features on their lists.

1.       Proximity to work and neighbourhood amenities: Properties that are in proximity to public transportation and that have a good walking score.

2.       Smaller Homes: Millennials as a generation care less about large spaces and more about accessibility and heating and cooling rooms that they don’t often use.

3.       Fewer embellishments: Millennials are not generally looking for all the traditional details and fancy materials that can increase a home’s price. Moldings, which used to be a sign of status and craftsmanship, no longer hold allure and make some buyers wonder what’s hiding behind them.

4.       Open, multifunctional interiors: Fewer partitions and walls since this group likes to socialize and live casually. The kitchen has become the hangout room along with the family room, an open space that can easily transition from kitchen to TV room. Many don’t want a formal living room. Dining rooms are less important than home office space – especially since many Millennials work on the side, run their own businesses or work from home.

5.       Less maintenance: Because millennials work long hours and have many interests they prefer low-upkeep features such as wood floors (as opposed to carpet) and stone countertops, they're both attractive and relatively hassle-free. They want their weekends to themselves and don't want to be cleaning gutters or cutting the grass.

6.       Technology: Millennials demand more technology capabilities in a home. They want a home that is connected to high speed internet and where they can use their Smart Phone to control LED lighting, home heating/cooling, alarm and audio/video systems.

7.       Colorful pow, industrial wow, and comfortable chic: While many of their parents and older counterparts made beige the new white, this generation has veered toward grays and bold accents. And they like the industrial look of weathered, comfortable, furniture and metal.

8.       Less outdoor space: Having a large space to maintain is not of interest but they want their smaller outdoor space to feel like a relaxing retreat for entertaining. They also want to bring the outdoors indoors so big windows, skylights, and glass walls that open are highly regarded.

9.       Eco-friendly Homes: With rising energy costs and a growing interest in protecting the environment, young buyers are conscious of buying homes that are eco-friendly, green homes. Renewable and reclaimable materials such as bamboo and glass rank high, as do low-VOC paints and adhesives and energy efficient appliances.

10.   Good schools: Those born after 1980 are less likely than other generations to compromise on school districts, according to a Realtor.com survey.

11.   Updated Kitchen and Bath: Most of a young buyer’s savings will go toward the down payment and furnishings leaving little left over for upgrades and renovations.

12.   Investment: Millennials desire homes that are going to build equity quickly and will have a high return on their investment.  

For Millennials a house or condo is an important purchase for living and enjoying life. Be sure to work with a Realtor that really understands your unique needs ensuring you find a home that’s right for you!

[andymacteam-blog]

GTA REAL ESTATE MARKET OFF TO A STRONG START IN 2016

The Toronto Real Estate Board has reported a record number of home sales in February 2016.  Even after accounting for the leap year day, sales were above the previous record for February set back in 2010. Seller’s market conditions continue throughout the GTA as strong competition between buyers resulted in a healthy growth in selling prices. The record-shattering pace of Toronto’s housing market is showing no sign of ending as sales far outpace new listings.

Here Are The Details.

·        The number of home sales in February was up by 21.1% when compared to February 2015.

·        This 21.1% annual growth rate for home sales is outstripping the 8.2% annual growth rate for new listings resulting in a 14.8% reduction in active listings. This shows a tightening of market conditions in 2016 when compared to 2015.

·        Sales were up strongly from the 15th day of February onward as well, despite the new federal mortgage lending guidelines coming into effect that require at least a 10 per cent down payment on the portion of purchase prices between $500,000 and $1,000,000

·        The average selling price is up by 14.9 per cent annually to $685,278.

·        The average number of days that a home was on the market decreased by 8.7%.

What Next?

·        A recent polling conducted for TREB by Ipsos suggested that GTA households will remain upbeat about purchasing a home in 2016.

·        Mortgage rates are expected to remain at historical low.

·        The Ontario Chamber of Commerce 2016 Ontario Economic Update states that

o   the Toronto region underwent an economic resurgence in 2015 and will continue to perform strongly over the next two years.

o   The MLS® residential average sale price in Toronto and Hamilton/Niagara will continue to climb during the next two years.

o   With net migration into Ontario continuing at 100,000 annually, 30,000 households will need to be created in the GTA.

All of these factors suggest that the housing market in the GTA will remain strong throughout this year and likely into 2017.

[andymacteam-blog]

Will Higher Minimum Mortgage Down Payments Affect You?

The federal Finance Minister Bill Morneau announced this past December that the federal government is increasing the down payment requirements for some home buyers as of February 15, 2016. The move is designed to cool down the hot housing markets in Vancouver and Toronto.

Here are the five things you need to know about the changes:

What is staying the same?

· Home buyers in the market for homes worth less than $500,000 will still only need a 5% down payment.  

· Homes priced at more than $1 million will still require a minimum down payment of 20%

What is changing?

· Home buyers purchasing a home for between $500,000 and $999,999 must add a further 10 per cent to their down payment for the portion of the house price over $500,000.

Who's affected?

· If you are a first-time buyer purchasing a home for over $500,000 and putting less than 20% down you will be impacted since you'll be required to have a bigger down payment.

· If you are selling your home in order to size up you likely won't feel the pain since you’ve built up equity in your property and therefore should have a down payment of 20% or more. This is especially pertinent to the GTA where house prices have been increasing for several years,

· Canadians who already hold mortgages will not be affected by this announcement.

What does it mean in Dollars and Cents?

· For someone purchasing a $700,000 home, a common list price in Toronto, the minimum down payment required will rise by $10,000 (from $35,000 to $45,000).

· Here is a formula you can use to calculate your down payment under the new rules.

(first $500,000 of your purchase price x 5% down payment) + (portion of your purchase price over $500,000 but under $1,000,000 x 10% down payment)

What is the Real Estate Market Impact?

· CIBC World Markets estimates that only 5% of Toronto home sales will be impacted. This is based on the number of Toronto home buyers seeking properties in the $500k to $1 million price range that also require high ratio mortgages (less than 20% down).

· The effect on demand and prices for homes should be small given the narrow reach of the new rules.

· First-time buyers are expected to continue to be a strong force in the coming years.

[andymacteam-blog]

What to Look for in a Realtor

What you can expect from your realtor

For many people, buying a home can be just as stressful and intimidating as it is exciting. So many things to think and learn about, so many decisions to make.

This is where the services of an experience and knowledgeable realtor come in.

Whether you’re buying your first home or downsizing from your fourth – or even buying an investment property – your and your family’s financial health is too important to entrust to someone you’re not comfortable with or confident in.

Here are some tips on what to look for in a realtor:

Experience: Look for an agent who has some good years of excperience and a track record of success in the business – and in your target area. Local knowledge is key.

Referrals: In our business, referrals are like gold. An agent who has happy clients will gladly supply you with a list of people you can talk to. One who is hesitant? It may be time to look elsewhere.

Honesty, integrity and availability: Trust is paramount, so if you’re dealing with someone you don’t believe is honest, or who seems to lack integrity – or is never available for you – the trust won’t be there. Buying a home is one of the most important decisions you will ever make, and your realtor should respect that and value your business accordingly.

And here’s what you can expect from them:

Home search: Your realtor should research to find available properties in your area that meet your needs.

Property assessment: Realtors have access to a variety of resources, and can provide information on utilities, zoning and schools and anything else you want to know – including value and potential appreciation.

Negotiating skills: Price, financing, terms, possession date, inspections, inclusions, furnishings and so on. This is the area where your realtor can really show their mettle.

These are just some of the considerations when buying a home and working with a realtor. The bottom line is, you’re the boss!

And, at the end of the deal, if you’re not happy with your realtor – tell them. If you are – tell your friends!

[andymacteam-blog]

First-Time Home Buyers, Relax!

Buying your first home? Relax, there is help

If you’re a prospective first-time homebuyer, you may be fretting over how difficult it is to get into the market. Saving for a down payment, learning all about real estate, researching where you want to live and what you can afford…

And then there’s the scary topic of mortgages – made a little more intimidating with the recent changes to lending rules.

There’s no doubt the latest round of changes – namely limiting amortizations for government-insured mortgages to 25 years – is making it more difficult for first-timers to buy a home.

But, relax, there is also some help.

The federal government –yes, those same folks making it more difficult to qualify for a mortgage – also has some helpful programs available for first-time buyers.

Home Buyers’ Plan: The HBP allows first-time buyers to withdraw up to $25,000 from your registered retirement savings plan (RRSP). To qualify, you cannot have owned a home as a principal residence in the previous four years. Generally, you must repay the funds into your RRSP within 15 years, paying an amount each year until your HBP balance is zero.

First-Time Home Buyers’ Tax Credit: This program is intended to help first-time buyers with the costs associated with buying a home, such as legal fees and land transfer taxes. The credit is a $5,000 non-refundable income tax credit, providing eligible buyers with up to $750 in federal tax relief.

Land Transfer Tax Credit: Ontario residents can claim up to $2,000 if you are buying a home as a principal residence for the first time. Similar credits are available in Quebec and BC.

GST/HST New Housing Rebate: This program allows buyers to claim a rebate for part of the five-per-cent GST/HST you pay on a newly built home. Different rebate amounts apply to different levels of a home’s value. For example, if you buy a home worth less than $350,000, you can claim a GST/HST rebate to a maximum of $8,750.

Want to know more about these programs, whether you qualify or anything else about buying your first home?

Contact me at one of the numbers below, or visit my website, and let’s get started on making your dream of homeownership come true!