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Banking head speaks out on Toronto real estate market
Posted on Sun, 09 Apr 2017, 10:15:00 AM  in Home buying tips,  Home selling tips, etc.
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What are your thoughts?  Article By Doug Alexander

 

Governments may have to impose more measures to cool Toronto’s housing market if prices remain “overheated” after the spring buying season, said Bank of Nova Scotia’s Canadian banking head James O’Sullivan.

Toronto is the housing market of most concern in the country, with unsustainable and unhealthy price increases, O’Sullivan told reporters Tuesday after Scotiabank’s annual meeting in Toronto. He’d like to see how home sales in Canada’s most-populous metropolitan area play out between April and June before pushing for further measures.

“If at the end of that spring market Toronto still has higher volumes, strong double-digit price increases, then we think it’ll clearly be time for further action -- and we will be supportive of that action,” O’Sullivan said. “If it remains overheated, it’s time for action.”

Measures such as a speculation tax or foreign-buyers levy, such as the one British Columbia imposed last year to cool Vancouver’s housing market, should both be “on the table,” O’Sullivan said, adding that mortgage market changes by federal and provincial governments in the last couple of years have removed risks in the housing market.

Still, Toronto remains an issue: the city has seen prices up 24 percent from a year ago, sparking calls by economists at Bank of Montreal and elsewhere that the city is in a housing “ bubble.”

“Double-digit price increases are not sustainable and they’re not healthy, and this market has been going straight up for a very long time,” O’Sullivan said. “So it’s going to come to an end at some point, and it’s a question of how it ends.”

O’Sullivan said he wants a smooth correction and a soft landing, which would argue for action sooner rather than later.

“It’s in the best interest of everyone that we have a soft landing rather than a hard landing,” he said.


Copyright Bloomberg 2017

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Toronto real estate is so ridiculous even the rich can’t afford average houses, says BMO
Posted on Mon, 20 Mar 2017, 05:15:00 PM  in Home buying tips,  Home selling tips, etc.
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What are your thoughts on this article by Josh Sherman?

Some point to tiny homes listed for nearly $600,000 as an obvious sign of Toronto real estate veering out of control.

BMO Chief Economist Douglas Porter takes another approach.

He presents calculations suggesting prospective homebuyers approaching that elusive one-per-center status — and wielding a hefty $100,000 downpayment — would still be priced out of Toronto’s detached-home market.

“Surely they can afford a decent place to live in Toronto?” Porter writes rhetorically in his note titled Toronto’s Torrid Housing: Who Wants to be a Millionaire. “Not so much, as it turns out.”

mortgage-chart

In Porter’s fictional scenario, Dudley and Darlene Doright, who are relying on one high-rolling income — an impressive $225,000 annually — “are at best able to afford a semi-detached home on the fringes of Toronto, or maybe a low-end detached home verging on teardown status.”

The Dorights’ lofty household income is taxed 53.53 per cent, and although the well-heeled couple saved a six-figure downpayment (before one of them took time off to raise their baby), they’ll need that mortgage insured.

Mortgage insurance is required for homes purchased for anywhere between $500,000 and $999,000 if the buyer can’t cough up a 20 per cent downpayment.

Meantime, a downpayment of 20 per cent is mandated by law for homes priced $1,000,000 and above. Canada Mortgage and Housing Corporation won’t even insure homes that expensive any longer.

Given the average price of a detached home in the Greater Toronto Area was $1,205,815 last month, the fictitious couple are virtually priced out of that segment of the market in both the 416 and the outlying 905.

And the new-construction market is hardly any more accommodating. In fact, the average list price for brand new single-family homes in the GTA was an even more unattainable $1,316,325 in January.

Now, the affluent Dorights could opt for a semi-detached home in the 905 area code, where that kind of house costs an average of $712,276 as of February. “However, they’re not that common in that region,” Porter notes, dashing the made-up couples imaginary hopes.

For added realism, Porter’s affordability calculations include estimated heating costs, property taxes and a posted five-year mortgage rate of 4.84 per cent.

“If this stylized example isn’t proof enough that the housing market is out of control and in need of some serious intervention, consider some of the other indicators flashing red,” the economist warns.

The average price of a home, including condos, in the GTA soared 27.7 per cent from a year earlier in February, Porter notes, for instance.

And BMO Economics estimates Toronto home prices have risen a shocking 40 per cent in two years, at least on an inflation-adjusted basis.

To fight this fire, Porter dishes out a solution for policymakers — a foreign-buyer tax, like the 15 per cent levy BC imposed on Metro Vancouver this past August.

“That tax seems to have done exactly what policymakers hoped to achieve in Vancouver: cool the market without crashing it,” he explains.

The benchmark price of a Greater Vancouver home in February was off 2.6 per cent from where it stood six months ago but was up 1.2 per cent compared to January.

Both the Toronto Real Estate Board and Ontario Real Estate Association oppose a foreign-buyer tax for the Greater Toronto Area, although there has been some interest from Toronto city councillors despite Mayor John Tory’s doubts about the “politically sexy” move’s effectiveness.

Porter has some choice words for opponents to the tax.

“The Ontario Real Estate Association frets about the possibility that a foreign student won’t be able to afford a house with the tax (and that is some student, looking to buy a $1.5 million pied-a-terre).”

“But we wonder why they are not equally concerned about the Dorights’ inability to buy a home under current circumstances.”

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Is Toronto Real Estate Market Hotter New-York
Posted on Fri, 10 Mar 2017, 06:45:00 PM  in Home buying tips,  Home selling tips, etc.
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What are your thoughts on this??? http://www.blogto.com/city/2017/03/toronto-real-estate-market-hotter-new-york/

In today's daily dose of news about the red hot Toronto real estate market, a wide-ranging feature from Bloomberg reveals that Toronto's well outpacing some of the strongest US markets when it comes to rising prices.

Not so long ago, Vancouver was the country's hottest housing market, now Toronto has eclipsed its west coast counterpart and is making a case for the title of hottest market in North America. 

We know that's the case when it comes to luxury homes, but it might also be true in more general terms these days. Consider the most recent housing market data from February, a month in which prices in the Toronto area increased by 28 per cent to an average of $875,983.

Using figures from the Zillow Group, Bloomberg notes that "the median price rose one per cent to $1.15 million in San Francisco in the 12 months through January and 8.9 per cent to $604,300 in Seattle."

Perhaps more surprising than these figures, however, is that while the average home in Manhattan is still significantly more expensive than Toronto at $1.25 million, prices have increased 18 per cent over this same 12 month period, which is well "below Toronto’s torrid pace."

And it doesn't show signs of letting up. For all the talk of a bubble that's been circulating of late, Bloomberg's report doesn't find many signs that it's about to burst.

Instead, the combination of low inventory, a quickly growing population in Southern Ontario, and the likelihood that interest rates will remain low all suggest that the Toronto real estate market could pick up even more steam.

Now that's a truly scary thought.

 
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Toronto-based Brad Lamb plans ‘five or six’ new towers in Edmonton; buying two more sites in Calgary
Posted on Thu, 23 Feb 2017, 08:05:38 PM  in Home buying tips,  Home selling tips, etc.
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What are your thoughts on the Globe & Mail Article below?

 

Toronto-based Brad Lamb plans ‘five or six’ new towers in Edmonton; buying two more sites in Calgary

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‘Trapped Wealth’ Drives Toronto’s Speculative Real Estate Dilemma
Posted on Tue, 21 Feb 2017, 10:50:37 AM  in Home buying tips,  Home selling tips, etc.
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What are you thoughts?   

 

https://www.bloomberg.com/news/articles/2017-02-21/toronto-s-speculative-real-estate-dilemma-canada-economy-watch

 

Toronto’s housing boom is unrelenting.

Prices in Canada’s largest city surged more than 20 percent over the past year, the fastest pace in three decades, data released last week show. Some of the city’s neighboring towns are posting even bigger gains.

It’s become a matter of considerable alarm. Stability is one concern: if the market tumbles, so will Canada’s economy. Pricier real estate also drives away less-affluent, younger people and boosts the cost of doing business, eroding competitiveness.

“I don’t think anybody is cheering,” said Doug Porter, the Toronto-based chief economist of Bank of Montreal, who used the dreaded “bubble” word last week to describe the market. “I don’t see who benefits other than real estate agents. It’s trapped wealth.”

So, what’s driving the boom? The housing industry -- builders and brokers -- claim lack of supply is the main culprit. Others, Porter included, see demand as the problem. Lately, evidence is mounting that speculation is behind the jump.

Supply Constraints

Builders say they are being held back by everything from regulations to prohibitive taxes and land restrictions. Ontario’s greenbelt region around Toronto is one example.

This is no doubt true for one segment of the market: single-detached homes. Just over one-quarter of the 176,000 homes built in Toronto over the past five years were single-detached. That’s well down from the 1990s, when they accounted for almost half of all construction.

 
Theo Argitis/Bloomberg

Unabated Demand

Supply constraints don’t explain the price gains for condominiums, which have seen a flood of new completions. The average sale price of a condo is up 15 percent year-over-year. That’s after builders completed more than 54,000 apartment units over the past two years, easily a record supply for Toronto.

Canada’s recent census results, released this month, also provide some evidence against the shortage argument. Occupied private dwellings have risen by 7.2 percent in Toronto over the past five years, faster than population growth.

The census, however, doesn’t say what type of homes are being built. Plus, there is also the recent puzzle of disappearing listings.

Listings Ratio

New listings in Toronto fell 17 percent in January from a month earlier, the biggest one-month decline since 2002. Sales as a share of new listings rose above 90 percent, smashing the record.

Is this a sign of a bubble? Are sellers holding off putting their homes on the market to see where prices settle? Has supply become so tight that potential sellers are pulling out of the market altogether since they have nowhere to move to?

“The market is thinning out basically, you know what that means,” said David Madani, an economist at Capital Economics in Toronto, said in a telephone interview.

First-Timers

So, if home sellers are not driving demand, is it first-time home buyers?

It’s tough to argue yes. The federal government has been tightening mortgage rules for a decade, and took some significant steps in October. But the moves -- which particularly hit first-time buyers -- have done little to curtail the recent run-up.

“If it’s not sellers, if its not first-time buyers, then who is buying?” said Robert Hogue, an economist at Royal Bank of Canada. “We can’t say for sure, but by deduction it’s got to be probably investors are buying quite a bit.”

Policy Response

If speculators are the cause of Toronto’s stratospheric home-price gains, it makes it difficult for the federal government to intervene, since its primary tool is mortgage insurance rules that don’t apply as much to investors. 

One possibility may be to clamp down on the country’s unregulated private mortgage industry -- so-called shadow banking. There may also be other avenues, such as curbing foreign investment. But Prime Minister Justin Trudeau’s government hasn’t shown much interest in such a move, partly because it would affect the national market, not just Toronto.

In fact, the only place where government steps to rein in prices seems to have worked has been in British Columbia, which introduced a 15 percent tax on foreign buyers in August. Vancouver home prices are down 3.7 percent over the past six months. Still, that’s a paltry retreat in a market that long ago ceased to be affordable for most Canadians.

The British Columbia experience shows that while stability of the market may be an achievable goal, affordability is a more daunting challenge.

“If policy success is measured by affordability, not sure we’re quite there yet,” Hogue said.

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Is The Toronto Market in a bubble ready to pop?
Posted on Fri, 17 Feb 2017, 07:50:49 PM  in Bubble
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“The Toronto market—and the many cities around it—are in a bubble,”  

 

What are your thoughts?  

 

Here is what   from http://www.moneysense.ca is saying...   

 

 

If you live in Toronto you realize you’re in the center of the Canadian real estate universe these days. While the last few months have seen Vancouver housing sales decrease and prices stabilize, Toronto’s real estate market has been catching fire. And of course, economists and bond rating agencies have noticed, too.

Just this week Douglas Porter, chief economist at BMO Capital Markets wrote in a commentary, “The Toronto market—and the many cities around it—are in a bubble,”  meaning prices are becoming dangerously detached from good financial and economic fundamentals, mainly because people in Toronto believe there is so much demand that it will cause prices to keep rising strongly, thus encouraging more people to buy—and adding fuel to the growing bubble.

The facts appear strong. Prices in Greater Toronto have risen 22.6% in January from a year ago. And while price increases across Canada are expected to slow this year because of tighter restrictions from new federal home financing rules that aim to make it harder to get a mortgage, BMO’s Porter believes that Toronto and any city that is within commuting distance is in a dangerously overheated housing market.

 

But to temper the “bubble” prediction, you need only to read the FitchRatings 2017 Global Housing and Mortgage Outlook, which also came out this week. Here’s what it says about Vancouver, Toronto and the Canadian housing market in general:

  • That despite the continued rise in prices in overvalued markets such as Vancouver and Toronto, and their view that current home prices are unsustainable in the long run, they say “there is a heightened risk of a price correction in over-valued markets.” So a correction, yes. Housing bubble? Not quite.
  • FitchRatings expects mortgage rates to remain low for the first half of 2017. Any increase in rates should be modest, even if the U.S. Fed continues to raise rates. Inflation should remain a solid 2%.
  • Regarding mortgages, Fitch notes that while it’s too soon to determine the impact of new mortgage rules put in place last year, “We expect that it will result in fewer loans being made available to marginal borrowers, which could reduce loan growth. That said, we expect loan volumes to remain near historical highs as long as interest rates remain low, employment is stable, borrowers are able to qualify under the stricter mortgage rules, and the desire/demand for home ownership remains high.”
  • Forecasts for real GDP growth remain solid with an average annual 1.2% growth rate expected for 2016, and 1.9%  forecast for 2017 and 2018. The overall macro evaluation? Stable.

The bottom line: Housing price increases in 2016 exceeded Fitch forecasts, mainly because low interest rates outweighed home purchase affordability constraints. Even where prices are now out of line with income—mainly Vancouver and Toronto—”continued low rates and economic growth mean we expect more moderate rises rather than price declines.” And while Fitch sees the risk of a price fall in some overvalued markets, they certainly don’t see a bubble bursting.

So for Toronto, consolidation of prices and a more stable market with slight-to-no average annual increase in prices is what’s expected by Fitch. As to who will be right—Douglas Porter of BMO, or FitchRatings economists, well, we’ll have to wait until year end to see, won’t we?

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Updates from @sellhomes4less Twitter feed - Follow us today for up to date info!
Friday, 23 March 2012, 12:05:50 AM
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Real Estate Investors Trampled By Mortgage Lender Retreat http://t.co/WWLakAo1 #canadianrealestatemagazine #revolutioniscoming

www.canadianrealestatemagazine .ca

Key lender decisions are quickly drying up borrowing opportunities for real estate investors -- no matter how successful their track records or attractive their properties.
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The GTA Real Estate Market According To @sellhomes4less
Wednesday, 21 March 2012, 10:52:46 PM
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Reminder to all prospective home buyers - GET YOUR PREAPPROVALS DONE ASAP! 2.99% fixed rate to be pulled soon, get it locked for 3-4 mo's!

Highly unlikely that fixed rates will go any lower & Scotia bank has already pulled the promotion. Depends on when you want to buy - if you're looking to purchase in the next 3-4 months then it'll be worth it - or even if you're looking to refinance.

Keep in mind though, the next 2-3 months will be very active in the RE market as buyers will try to take advantage of these rates and purchase & close a property soon - with possible bidding wars and an overall increase in property values.

Weigh your options carefully and do what's financially best for you!

Source: Homes4Less Facebook Group

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Updates from @sellhomes4less Twitter feed - Follow us today for up to date info!
Wednesday, 21 March 2012, 10:52:28 AM
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Info on lending (mortgage) guidelines and update suggestions http://natpo.st/GESORo #byebyecheaploans #mortgage #revolutioniscoming

Source: @sellhomes4less

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