Jeremy Torobin
Ottawa — From Wednesday's Globe and Mail
Published on Tuesday, Jul. 20, 2010 9:05AM EDT
Last updated on Tuesday, Jul. 20, 2010 7:55PM EDT
.Mark Carney has now done twice what no other Group of Seven central banker appears even close to doing once – he raised interest rates for the second month in a row – but global developments could slow his hand.
Tuesday’s move, which brought the Bank of Canada’s benchmark overnight rate to a still-low 0.75 per cent, reflects Canada’s unique position as a rich country that has recovered almost all of the jobs lost during the recession, where a post-crisis housing boom has already come and gone, and where record overseas demand for safe government bonds is poised to allow Ottawa and the provinces fund a few more years of deficit spending without being crippled by interest payments.
But the Bank of Canada Governor’s window for taking back some of the super-low borrowing costs, both to ensure that inflationary pressures don’t build and to persuade consumers and businesses that they should start paying off debts now before rates go higher, may be closing sooner than expected.
Even as it raised its key rate by one-quarter of a percentage point, the central bank trimmed its forecast for Canada’s economic growth this year and next, as austerity measures in Europe and a fizzling rebound in the United States make for a slower global recovery and a “more gradual” bounce-back at home. Future moves will “be weighed carefully” against developments around the world, policy makers reiterated in the statement accompanying the rate hike, and, in turn, on what impact those may have on Canada’s exports.
Tuesday, July 20, 2010
Monday, July 19, 2010
RE/MAX Professionals adds Extranet Service
Communication is the greatest barrier to an agents success. Where do I find it! What must I do! When is that event? Who is the listing on John Street? Where is that web site?
With the launch of the RE/MAX Professionals Extranet a huge leap forward has been made to communicate many of the answers to the most difficult questions encountered by the in house or at home office agents. This Virtual office site will assist you in moving your business forward with easy access anywhere to the information you need to do your job.
Today the journey begins as the front desk paging system begins to send messages to agents in a real time fashion. As the week progresses, other enhancements will be added including a library of resources, common Internet links of importance and timely calendar events.
Already the calendar is up and running. All office listings are search able on the Extranet. As well new listings and changes will be posted daily.
Check out the "Needs and Wants" section. Do you have a client who cannot find the prefect home on the market today. Post your need for other sales staff to know and assist you in the search. Got a listing or property for a client that is available but not on MLS? A short posting of the property on this area may generate a quick sale to another staff persons client. Give it a try!
As with any new system, problems may occur so you patience is requested. With the experience of Lone Wolf Systems however, this change should be almost problem free.
So check our your new tool, The REMAX Professional Extranet!
With the launch of the RE/MAX Professionals Extranet a huge leap forward has been made to communicate many of the answers to the most difficult questions encountered by the in house or at home office agents. This Virtual office site will assist you in moving your business forward with easy access anywhere to the information you need to do your job.
Today the journey begins as the front desk paging system begins to send messages to agents in a real time fashion. As the week progresses, other enhancements will be added including a library of resources, common Internet links of importance and timely calendar events.
Already the calendar is up and running. All office listings are search able on the Extranet. As well new listings and changes will be posted daily.
Check out the "Needs and Wants" section. Do you have a client who cannot find the prefect home on the market today. Post your need for other sales staff to know and assist you in the search. Got a listing or property for a client that is available but not on MLS? A short posting of the property on this area may generate a quick sale to another staff persons client. Give it a try!
As with any new system, problems may occur so you patience is requested. With the experience of Lone Wolf Systems however, this change should be almost problem free.
So check our your new tool, The REMAX Professional Extranet!
World of Golf comes to Etobicoke at the RBC Canadian Open
Written by Darryl Mitchell, Managing Broker
Etobicoke the world of golf is here!
From July 19 to 25 the best golfers in the world will be in Etobicoke at St. George's Golf and Country Club in quiet central Etobicoke residential neighbourhood. This was a complex challenge for organizers who to mix the residential area with Canada's premier golf experience. Islington Avenue one of Toronto's prime streets has been partially closed to allow parking and a street festival of golf ware. From 7 a.m. to 7 p.m. during the RBC Canadian Open Islington and 74 other residential streets will be golf Canada to the world. One of the first Open's to have access to TTC transit, taxi access and bike parking, accessibility should be second to none for those who wish to come without the inherent parking problems associated with a city venue such as this.
The St George's course, rated one of Canada's three best courses, is in prime shape, lush green and ready for the assault of the world's best golfers.
So join us in Etobicoke.
And by the way, if you wish to stay longer, I am certain a RE/MAX Professional Realtor can find you a home to purchase in beautiful Etobicoke!
Enjoy!
Etobicoke the world of golf is here!
From July 19 to 25 the best golfers in the world will be in Etobicoke at St. George's Golf and Country Club in quiet central Etobicoke residential neighbourhood. This was a complex challenge for organizers who to mix the residential area with Canada's premier golf experience. Islington Avenue one of Toronto's prime streets has been partially closed to allow parking and a street festival of golf ware. From 7 a.m. to 7 p.m. during the RBC Canadian Open Islington and 74 other residential streets will be golf Canada to the world. One of the first Open's to have access to TTC transit, taxi access and bike parking, accessibility should be second to none for those who wish to come without the inherent parking problems associated with a city venue such as this.
The St George's course, rated one of Canada's three best courses, is in prime shape, lush green and ready for the assault of the world's best golfers.
So join us in Etobicoke.
And by the way, if you wish to stay longer, I am certain a RE/MAX Professional Realtor can find you a home to purchase in beautiful Etobicoke!
Enjoy!
To Love, To Risk
To love is to risk not being loved in return.
To hope is to risk disappointment.
But risks must be taken because the greatest risk in life is to risk nothing.
The person who risks nothing, does nothing,
sees nothing, has nothing and is nothing.
He cannot learn, feel, change, love and live.
Author unknown.
Wisdom for Life, A Helen Exley Giftbook, Select Edition, 2000.
To hope is to risk disappointment.
But risks must be taken because the greatest risk in life is to risk nothing.
The person who risks nothing, does nothing,
sees nothing, has nothing and is nothing.
He cannot learn, feel, change, love and live.
Author unknown.
Wisdom for Life, A Helen Exley Giftbook, Select Edition, 2000.
Thursday, July 15, 2010
Realtors - How to give yourself a raise
There is no better way to increase your income than to price your listings to sell the first time.
Too many agents rely on advertizing to promote themselves. Others depend on referral marketing. Still others have the classiest, most up to date website. The newest trend is to use social media such as Facebook, Linked in Craigslist, etc. etc. to promote yourself.
But, you know what, real estate is still a people business based on selling the homes of people to people. And what better way to promote yourself than through a fast efficient sale!
Listings that stay on the market for longer than others in the same area show that, either the home has a problem, or the agent is a problem! So price correctly the first time. Listings priced right sell fast, for greater dollars and with better terms than homes that are overpriced.
The faster the sale, generally speaking the lower the costs and the more the profits. Agents with great sales reputations are selected more often than those whose listings sit on the market, regardless of the commission rate.
In strong, high priced markets real estate companies may use lower commission rates to entice people to list their home with them. In softer markets, such as has occurred in the United States, commission rates begin to actually rise, as a concerned consumer wants a successful sale and is prepared to pay a higher, or shall I say, non-discounted commission rate, simply to work with a successful, high selling Realtor. Successful sales are the best indicator of a successful Realtor. So price it right for sale and you will achieve more success in listing properties.
In this market, where the consumer is taking a breather for the summer, list price is even more critical to success. Believe me when I say that your client will love you more for pushing back on the list price, than if you except a much too high, out of market list price and sell the property much later than expected.
So Price Right the First Time. You will get a raise, and so will your client!
Darryl Mitchell is Managing Broker for RE/MAX Professionals Inc. Brokerage in Etobicoke Ontario
Too many agents rely on advertizing to promote themselves. Others depend on referral marketing. Still others have the classiest, most up to date website. The newest trend is to use social media such as Facebook, Linked in Craigslist, etc. etc. to promote yourself.
But, you know what, real estate is still a people business based on selling the homes of people to people. And what better way to promote yourself than through a fast efficient sale!
Listings that stay on the market for longer than others in the same area show that, either the home has a problem, or the agent is a problem! So price correctly the first time. Listings priced right sell fast, for greater dollars and with better terms than homes that are overpriced.
The faster the sale, generally speaking the lower the costs and the more the profits. Agents with great sales reputations are selected more often than those whose listings sit on the market, regardless of the commission rate.
In strong, high priced markets real estate companies may use lower commission rates to entice people to list their home with them. In softer markets, such as has occurred in the United States, commission rates begin to actually rise, as a concerned consumer wants a successful sale and is prepared to pay a higher, or shall I say, non-discounted commission rate, simply to work with a successful, high selling Realtor. Successful sales are the best indicator of a successful Realtor. So price it right for sale and you will achieve more success in listing properties.
In this market, where the consumer is taking a breather for the summer, list price is even more critical to success. Believe me when I say that your client will love you more for pushing back on the list price, than if you except a much too high, out of market list price and sell the property much later than expected.
So Price Right the First Time. You will get a raise, and so will your client!
Darryl Mitchell is Managing Broker for RE/MAX Professionals Inc. Brokerage in Etobicoke Ontario
Wednesday, July 14, 2010
Double-digit gains characterize average price appreciation in most Toronto neighbourhoods in 2010, says RE/MAX http://ping.fm/AAw1p @remax
Double-digit gains characterize average price appreciation in most Toronto neighbourhoods in 2010, says RE/MAX
Mississauga, ON (July 14, 2010) - Toronto's housing market roared back to life in the first half of 2010, with single-detached homes and condominium apartments and townhouses posting unprecedented double-digit gains in average price in most districts, according to a report released today by RE/MAX Ontario-Atlantic Canada. This is in stark contrast to the July 2009 RE/MAX report that found that values in approximately 80 per cent of neighbourhoods surveyed in Toronto had depreciated over the same period in 2008.
RE/MAX examined 63 Toronto Real Estate Board (TREB) districts in the single-detached category between January and June of 2010 and found that 85.7 per cent experienced double-digit gains. Mississauga's Lorne Park (W13) led in terms of percentage increase in average price with a 30.2 per cent upswing in the first six months of the year, bringing year-to-date values in the area to $880,373 (vs. $676289 in 2009 and $830,041 in 2008). Markham (N01) ranked second with a 27.7 per cent jump to $779,168 (vs. $610,322 in 2009 and $683,050 in 2008) while Armour Heights, Bathurst Manor (C06) came in a close third at 27.5 per cent (rising to $732,535 from $574,599 in 2009 and $589,808 one year earlier). Mississauga's Creditview, Erindale area (W16) secured fourth spot with an average price of $561,973-up 26.5 per cent over 2009's $444,221 and 2008's $476,877. Rounding out the top five was York Mills, Hogg's Hollow, Bridle Path (C12) with a 26.2 per cent increase over last year and an average price of $1,868,591 (vs. $1,480,296 in 2009 and $1,580,851 in 2008).
"While first-time buyers dominated housing markets during the first half of 2009, move-up buyers ruled during January to June of 2010," says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. "Rising interest rates and the introduction of the Harmonized Sales Tax (HST) in the province helped drive activity, with more than 50,000 sales reported year-to-date-a figure on par with record 2007 levels."
RE/MAX examined 63 Toronto Real Estate Board (TREB) districts in the single-detached category between January and June of 2010 and found that 85.7 per cent experienced double-digit gains. Mississauga's Lorne Park (W13) led in terms of percentage increase in average price with a 30.2 per cent upswing in the first six months of the year, bringing year-to-date values in the area to $880,373 (vs. $676289 in 2009 and $830,041 in 2008). Markham (N01) ranked second with a 27.7 per cent jump to $779,168 (vs. $610,322 in 2009 and $683,050 in 2008) while Armour Heights, Bathurst Manor (C06) came in a close third at 27.5 per cent (rising to $732,535 from $574,599 in 2009 and $589,808 one year earlier). Mississauga's Creditview, Erindale area (W16) secured fourth spot with an average price of $561,973-up 26.5 per cent over 2009's $444,221 and 2008's $476,877. Rounding out the top five was York Mills, Hogg's Hollow, Bridle Path (C12) with a 26.2 per cent increase over last year and an average price of $1,868,591 (vs. $1,480,296 in 2009 and $1,580,851 in 2008).
"While first-time buyers dominated housing markets during the first half of 2009, move-up buyers ruled during January to June of 2010," says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. "Rising interest rates and the introduction of the Harmonized Sales Tax (HST) in the province helped drive activity, with more than 50,000 sales reported year-to-date-a figure on par with record 2007 levels."
Friday, July 9, 2010
Eco 'fees' discussed in the Windsor Star
Eco 'fees': "On July 1, Ontarians began paying an eco 'fee' on thousands of products, all in the name of helping the environment. But don't be fooled. This is just another expansion of the provincial tax base, one that apparently never stops as far as the Dalton McGuinty government is concerned.
So, in addition to the impact of the new 13-per-cent HST, Ontarians can now expect to pay a few cents or a few dollars more on products like hairspray that are sold in aerosol containers, syringes and needles, prescription medicine, fluorescent tubes and bulbs, fire extinguishers, rechargeable batteries, dish detergent, smoke alarms and the list goes on and on.
This is essentially Round 2 of a program run by Stewardship Ontario -- a government-regulated body -- to dispose of and recycle hazardous materials. The first items to be taxed two years ago included paint, computers and TVs.
Conveniently for the McGuinty government -- already reeling from the imposition of the HST -- there was no significant mention of the expanded eco tax until after it was instituted."
To read the entire article select the link about. This article is copywritten to the Windsor Star, thank you for your candour on this new tax.
So, in addition to the impact of the new 13-per-cent HST, Ontarians can now expect to pay a few cents or a few dollars more on products like hairspray that are sold in aerosol containers, syringes and needles, prescription medicine, fluorescent tubes and bulbs, fire extinguishers, rechargeable batteries, dish detergent, smoke alarms and the list goes on and on.
This is essentially Round 2 of a program run by Stewardship Ontario -- a government-regulated body -- to dispose of and recycle hazardous materials. The first items to be taxed two years ago included paint, computers and TVs.
Conveniently for the McGuinty government -- already reeling from the imposition of the HST -- there was no significant mention of the expanded eco tax until after it was instituted."
To read the entire article select the link about. This article is copywritten to the Windsor Star, thank you for your candour on this new tax.
Thursday, July 8, 2010
RE/MAX: Agents Taking Action
RE/MAX: Agents Taking Action
Real Trends Magazine feature article this month is on RE/MAX and its agents who lead the industry with the tools and performance that no other Brand offers today. Although written to an American audience this article mirrors the advantages RE/MAX Ontatio-Atlantic offers its clients and sales staff.
In fact in Canada the advantage is even larger as consumers choose RE/MAX over 35% of the time at the writing of this blog piece.
Choose Wisely! Choose RE/MAX!
Also check out the RE/MAX Professionals Inc., Brokerage web site in the link provided to learn more about RE/MAX Professionals.
Check it out on this flip book! Enjoy!
Real Trends Magazine feature article this month is on RE/MAX and its agents who lead the industry with the tools and performance that no other Brand offers today. Although written to an American audience this article mirrors the advantages RE/MAX Ontatio-Atlantic offers its clients and sales staff.
In fact in Canada the advantage is even larger as consumers choose RE/MAX over 35% of the time at the writing of this blog piece.
Choose Wisely! Choose RE/MAX!
Also check out the RE/MAX Professionals Inc., Brokerage web site in the link provided to learn more about RE/MAX Professionals.
Check it out on this flip book! Enjoy!
Re/Max Professionals has donated $1 million to SickKids Foundation | REM - Real Estate Magazine
Re/Max Professionals has donated $1 million to SickKids Foundation REM - Real Estate Magazine: "Re/Max Professionals and its sales associates and support staff officially became the first Re/Max franchise in Ontario-Atlantic Canada to donate $1 million to SickKids Foundation through Children’s Miracle Network. The company has championed the support of sick and injured youngsters and their families for nearly 20 years.
The brokerage, with 250 sales associates operating out of three offices in Toronto’s West End and Mississauga, has been a strong supporter of the CMN since its inception. Through the Miracle Home Program, sales associates donate a percentage of their earnings on the sale of each Miracle home. The money has been used to purchase medical equipment, upgrade facilities and help fund critical research, outreach programs and support services.
Linda Sansom, general manager of Re/Max Professionals, has been instrumental in the process for 18 years, encouraging new agents to participate in the program and those already involved to increase their donations. She has also arranged numerous fundraising events, including summer barbecues, raffles, 50/50 draws and dress-down Fridays to bolster contributions to SickKids."
The brokerage, with 250 sales associates operating out of three offices in Toronto’s West End and Mississauga, has been a strong supporter of the CMN since its inception. Through the Miracle Home Program, sales associates donate a percentage of their earnings on the sale of each Miracle home. The money has been used to purchase medical equipment, upgrade facilities and help fund critical research, outreach programs and support services.
Linda Sansom, general manager of Re/Max Professionals, has been instrumental in the process for 18 years, encouraging new agents to participate in the program and those already involved to increase their donations. She has also arranged numerous fundraising events, including summer barbecues, raffles, 50/50 draws and dress-down Fridays to bolster contributions to SickKids."
Housing market begins to cool -
Housing market begins to cool - : "Judging from the recently released May housing data, it looks like experts' predictions that the real estate market would slow during the second half of the year may be on target. Existing home sales, new listings and housing starts all slipped during May, and indications are that the trend will continue.
According to the Canadian Real Estate Association, or CREA, 37,576 homes traded hands on a seasonally adjusted basis during May, compared to 38,654 homes during May of last year. The average price of homes sold during the period rose by 8.5 per cent, compared to those sold during the same month last year, to $346,881. However, that percentage increase was significantly smaller than the 13.6 per cent year-to-date average."
According to the Canadian Real Estate Association, or CREA, 37,576 homes traded hands on a seasonally adjusted basis during May, compared to 38,654 homes during May of last year. The average price of homes sold during the period rose by 8.5 per cent, compared to those sold during the same month last year, to $346,881. However, that percentage increase was significantly smaller than the 13.6 per cent year-to-date average."
Wednesday, July 7, 2010
What Bubble? Toronto Real Estate Prices Moderating
Contributed by Darryl Mitchell. Managing Broker, REMAX Professionals Inc. Brokerage.
“Lots of talk but no reality,” states RE/MAX Professionals Inc. Managing Broker Darryl Mitchell on the trends in Toronto real estate.
There has been a lot of discussion on the potential of a drop or “bubble” in the Toronto real estate market. Considering all of the negative potential of our global economy it stands to reason that some might bring up the topic of a dramatic fall in our home prices in Toronto or in Canada. The reality shown from many local sources is not holding this to be a true picture of what is happening in our market.
Yesterday the Toronto Real Estate Board June Market Watch stated what many Realtors in the trenches already knew, the market was trending to a balanced situation. This is a normal trend after two distinct market periods, the recession or 2008 and 2009, and the recovery of 2009 and 2010. Although the average price for a home in June 2010 had climbed 8% year over year from $403,972 to $435,034, the number of homes sold had dropped fully 23% from last year’s numbers. Obviously from this slower sales pace and higher sales price, something was happening, but what? This is not indicative of a bubble where prices and volume go together to a lower level.
(See July 5 Post GTA REALTORS® Report Monthly Resale Housing Figure..)
The Terranet Home Price Index is calculated by taking the same home that has been sold at two or more different times and comparing the price increase or decrease to other homes. It is a great tool to see what is actually happening in a changing market. The momentum of a market is calculated very effectively with this Index method. Although the index has not been yet released for May and June, the April index shows the strong momentum that is leading the market forward.
( See July 1, 2010 post Terranet Home Price Index Shows Monthly price rise of 0.8% in April)
In April for instance there was a .8% increase in home values month over month in the Greater Toronto Area. With the increased price of the Toronto average in May and June we can easily assume this index will either flatten of more likely go up. This is again the opposite of what we would expect if we had a bubble ready to burst.
The recession created a huge number of unfulfilled expectations from buyers who wanted to buy a home but felt the time was not good. The uncertainty in the economy simply made purchasing a home risky, or so they felt. This uncertainty, once removed, brought many of these buyers to the market in droves, filling this pent up demand and increasing used home sales dramatically. Thus prices increased, sales increased and the flurry of activity that resulted lead to a Seller’s Market place.
Why should this change now? Well there are a number of very important and other less important issues that are influencing our market today. These can be described as long term and short term and even seasonal influences.
The long term influences are the affordability of a home and the economic environment of the Toronto area. Affordability has come down for the new home owner but only slightly. In June the long awaited mortgage interest rate increase occurred. With the economy fully stimulated by our Federal and Provincial governments, it was felt a cooling in the real estate market was in order. Thus a small, .25% mortgage interest rate increase was affected by the Bank of Canada and the major lending institutions..
As well, affordability was impacted on July 1, 2010 with the infamous Harmonized Sales Tax (HST), Ontario’s new tax policy. Although this new tax is a re-taxation of the old Provincial Sales Tax (PST), it now covers may services and items that earlier were without tax. Good for businesses, this is a direct assault on the consumer. Real Estate is affected in two ways that did have a dampening effect on our market. First it added what has been estimated to be from .4% to 1.0% added cost to the real estate transaction for an existing home. For a newly built product this is estimated to be an increase of from 8% to as low as 2%. Talk about inflationary!
With these two issues alone consumers chose to buy used and new homes earlier just to keep their costs lower. This is a sample of an informed consumer making good choices with the best knowledge they had available. What was not apparent was that these choices would impact the home market so greatly on the short term. For instance the MLS sales reported for June 2010 by TREB were 23% less in June 2010 than in June 2009 (TREB June Statistics). The effect of pent up demand of 2010 plus the potential increased costs of interest rates and HST had consumers make choices to buy before June and July 2010.
The short term market influences can be categorized into normal seasonal influences and unusual inactive events that have come to the fore at just the same time as these affordability issues. These short term influences are described as seasonality of the market, G20 paralysis, and heat and Global soccer mania.
It seems a bit silly but the Toronto market place was hugely impacted by G20. People simply left town. Businesses went into paralysis simply to not be caught up in any international event so large and so impactive on the community. Property showings in some parts of Toronto simply stopped as access issues stopped the normal activities of the market place. I believe this will be a defining moment in our marketplace which will again build up a pent up demand.
Follow G20 with a heat wave the like of which has not been seen in over 3 years and you elongate the slow down. Add one of the world’s greatest sporting events, The World Cup of Soccer, and again we have another short term event of impact on the market. People who watch the World Cup are not buying homes; they are watching and talking soccer. Silly it seems, but very real. This was brought home to me when I called a Realtor who was on my list of favoured recruits to add to my office. When I asked what he was doing one morning, he proudly related he was watching his favourite national team. Not available to change to my company obviously and certainly not listing or selling homes!
Finally there is the seasonality of the marketplace. July and August traditionally are family move and family vacation times. People use these times to regroup and refresh. Often households with children are moved in the summer for convenience of school transfers. So the negotiations and sales happen earlier in the spring. Again this short term seasonal influence hit in June and July. Talk about the perfect storm!
So what about the short and far term from here forward. The Toronto real estate market is strong with great momentum. New product is being built daily. Existing used home inventory is readily available and of high quality. This is especially the case right now as sales have moderated downwards due to all of the above influences. The expectation is for home prices to moderate slightly lower as Sellers decide they should move their homes rather than wait any longer.
On the other hand, lower sales volume has already impacted mortgage demand. Just yesterday the Bank of Montreal lowered its mortgage rates. All the other major banks are expected to reciprocate today. So affordability will return to what was seen during the previous quarter.
If I had a crystal ball, and I do not, I would suggest the normal, more balanced market has returned to Toronto and area. This is not only sustainable, but good for both the buyer who wants sustained affordability and value protection, and the Seller who wants an optimum sales price, in a reasonable period of time. Employment is strong, people are in general happy and life is generally back to normal. Although international events can impact our real estate market, right now it is liquid, priced affordably and positive. An investment in real estate in Toronto and area is still one of the best opportunities available for the average consumer.
So if you want a bubble, at least in the short term, purchase some bubble gum. Enjoy you summer, because the fall will be very busy and profitable!
“Lots of talk but no reality,” states RE/MAX Professionals Inc. Managing Broker Darryl Mitchell on the trends in Toronto real estate.
There has been a lot of discussion on the potential of a drop or “bubble” in the Toronto real estate market. Considering all of the negative potential of our global economy it stands to reason that some might bring up the topic of a dramatic fall in our home prices in Toronto or in Canada. The reality shown from many local sources is not holding this to be a true picture of what is happening in our market.
Yesterday the Toronto Real Estate Board June Market Watch stated what many Realtors in the trenches already knew, the market was trending to a balanced situation. This is a normal trend after two distinct market periods, the recession or 2008 and 2009, and the recovery of 2009 and 2010. Although the average price for a home in June 2010 had climbed 8% year over year from $403,972 to $435,034, the number of homes sold had dropped fully 23% from last year’s numbers. Obviously from this slower sales pace and higher sales price, something was happening, but what? This is not indicative of a bubble where prices and volume go together to a lower level.
(See July 5 Post GTA REALTORS® Report Monthly Resale Housing Figure..)
The Terranet Home Price Index is calculated by taking the same home that has been sold at two or more different times and comparing the price increase or decrease to other homes. It is a great tool to see what is actually happening in a changing market. The momentum of a market is calculated very effectively with this Index method. Although the index has not been yet released for May and June, the April index shows the strong momentum that is leading the market forward.
( See July 1, 2010 post Terranet Home Price Index Shows Monthly price rise of 0.8% in April)
In April for instance there was a .8% increase in home values month over month in the Greater Toronto Area. With the increased price of the Toronto average in May and June we can easily assume this index will either flatten of more likely go up. This is again the opposite of what we would expect if we had a bubble ready to burst.
The recession created a huge number of unfulfilled expectations from buyers who wanted to buy a home but felt the time was not good. The uncertainty in the economy simply made purchasing a home risky, or so they felt. This uncertainty, once removed, brought many of these buyers to the market in droves, filling this pent up demand and increasing used home sales dramatically. Thus prices increased, sales increased and the flurry of activity that resulted lead to a Seller’s Market place.
Why should this change now? Well there are a number of very important and other less important issues that are influencing our market today. These can be described as long term and short term and even seasonal influences.
The long term influences are the affordability of a home and the economic environment of the Toronto area. Affordability has come down for the new home owner but only slightly. In June the long awaited mortgage interest rate increase occurred. With the economy fully stimulated by our Federal and Provincial governments, it was felt a cooling in the real estate market was in order. Thus a small, .25% mortgage interest rate increase was affected by the Bank of Canada and the major lending institutions..
As well, affordability was impacted on July 1, 2010 with the infamous Harmonized Sales Tax (HST), Ontario’s new tax policy. Although this new tax is a re-taxation of the old Provincial Sales Tax (PST), it now covers may services and items that earlier were without tax. Good for businesses, this is a direct assault on the consumer. Real Estate is affected in two ways that did have a dampening effect on our market. First it added what has been estimated to be from .4% to 1.0% added cost to the real estate transaction for an existing home. For a newly built product this is estimated to be an increase of from 8% to as low as 2%. Talk about inflationary!
With these two issues alone consumers chose to buy used and new homes earlier just to keep their costs lower. This is a sample of an informed consumer making good choices with the best knowledge they had available. What was not apparent was that these choices would impact the home market so greatly on the short term. For instance the MLS sales reported for June 2010 by TREB were 23% less in June 2010 than in June 2009 (TREB June Statistics). The effect of pent up demand of 2010 plus the potential increased costs of interest rates and HST had consumers make choices to buy before June and July 2010.
The short term market influences can be categorized into normal seasonal influences and unusual inactive events that have come to the fore at just the same time as these affordability issues. These short term influences are described as seasonality of the market, G20 paralysis, and heat and Global soccer mania.
It seems a bit silly but the Toronto market place was hugely impacted by G20. People simply left town. Businesses went into paralysis simply to not be caught up in any international event so large and so impactive on the community. Property showings in some parts of Toronto simply stopped as access issues stopped the normal activities of the market place. I believe this will be a defining moment in our marketplace which will again build up a pent up demand.
Follow G20 with a heat wave the like of which has not been seen in over 3 years and you elongate the slow down. Add one of the world’s greatest sporting events, The World Cup of Soccer, and again we have another short term event of impact on the market. People who watch the World Cup are not buying homes; they are watching and talking soccer. Silly it seems, but very real. This was brought home to me when I called a Realtor who was on my list of favoured recruits to add to my office. When I asked what he was doing one morning, he proudly related he was watching his favourite national team. Not available to change to my company obviously and certainly not listing or selling homes!
Finally there is the seasonality of the marketplace. July and August traditionally are family move and family vacation times. People use these times to regroup and refresh. Often households with children are moved in the summer for convenience of school transfers. So the negotiations and sales happen earlier in the spring. Again this short term seasonal influence hit in June and July. Talk about the perfect storm!
So what about the short and far term from here forward. The Toronto real estate market is strong with great momentum. New product is being built daily. Existing used home inventory is readily available and of high quality. This is especially the case right now as sales have moderated downwards due to all of the above influences. The expectation is for home prices to moderate slightly lower as Sellers decide they should move their homes rather than wait any longer.
On the other hand, lower sales volume has already impacted mortgage demand. Just yesterday the Bank of Montreal lowered its mortgage rates. All the other major banks are expected to reciprocate today. So affordability will return to what was seen during the previous quarter.
If I had a crystal ball, and I do not, I would suggest the normal, more balanced market has returned to Toronto and area. This is not only sustainable, but good for both the buyer who wants sustained affordability and value protection, and the Seller who wants an optimum sales price, in a reasonable period of time. Employment is strong, people are in general happy and life is generally back to normal. Although international events can impact our real estate market, right now it is liquid, priced affordably and positive. An investment in real estate in Toronto and area is still one of the best opportunities available for the average consumer.
So if you want a bubble, at least in the short term, purchase some bubble gum. Enjoy you summer, because the fall will be very busy and profitable!
GTA REALTORS® Report Monthly Resale Housing Figures
Greater Toronto REALTORS® reported 8,442 sales through the Multiple Listing Service® (MLS®) in June. This represented a 23 per cent decrease compared to the record 10,955 sales reported in June 2009. Sales for the second quarter of 2010 amounted to 28,810 – up one per cent annually. Year-to-date sales through June were up 23 per cent to 50,455 compared to the first six months of 2009.
“We experienced a record number of existing home sales during the first half of 2010, but these sales were weighted more towards the beginning of the year,” said Toronto Real Estate Board President Bill Johnston. “The pace of home sales has moderated from record levels over the past two months with the prospect of higher mortgage rates.”The average price for June transactions was $435,034 – up eight per cent compared to the average of $403,972 recorded for June 2009.
“With more homes to choose from in the second quarter, many home buyers have been making less-aggressive offers. This has resulted in less upward pressure on the average selling price,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “The annual rate of average price growth in the second half of 2010 will be in the single digits.”
“We experienced a record number of existing home sales during the first half of 2010, but these sales were weighted more towards the beginning of the year,” said Toronto Real Estate Board President Bill Johnston. “The pace of home sales has moderated from record levels over the past two months with the prospect of higher mortgage rates.”The average price for June transactions was $435,034 – up eight per cent compared to the average of $403,972 recorded for June 2009.
“With more homes to choose from in the second quarter, many home buyers have been making less-aggressive offers. This has resulted in less upward pressure on the average selling price,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “The annual rate of average price growth in the second half of 2010 will be in the single digits.”
Thursday, July 1, 2010
Terranet Home Price Index Shows Monthly price rise of 0.8% in April
Canadian home prices in April were up 12.9% from a year earlier, according to the Teranet-National Bank National Composite House Price Index™. This acceleration from 12-month rises of 7.5% in January, 9.9% in February and 11.6% in March is attributable to the deflation that was still in progress 12 months earlier. Since April was the anniversary of the index bottom, this base effect has now run its course. The 12-month gain of the composite index in April was strongly influenced by Toronto, up 17.0%, and Vancouver, up 15.6%. In the four other markets surveyed, the 12-month rise was less than 10%.
For the first time in five months, all six metropolitan areas surveyed showed prices up from the month before, and for the first time in eight months, all six monthly gains exceeded 0.5%. These results end a three-month run of deceleration. The April monthly rise was 1.9% in Halifax, 1.1% in Montreal and Ottawa, 0.8% in Vancouver and Calgary and 0.6% in Toronto. For the composite index the rise was 0.8%, the strongest in four months. The string of 12 consecutive monthly increases was the longest since September 2006.
For the first time in five months, all six metropolitan areas surveyed showed prices up from the month before, and for the first time in eight months, all six monthly gains exceeded 0.5%. These results end a three-month run of deceleration. The April monthly rise was 1.9% in Halifax, 1.1% in Montreal and Ottawa, 0.8% in Vancouver and Calgary and 0.6% in Toronto. For the composite index the rise was 0.8%, the strongest in four months. The string of 12 consecutive monthly increases was the longest since September 2006.
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