Toronto Real Estate and Neighbourhoods Blog | Move Smartly

Five Questions For....Pascal Gauthier, TD Bank Senior Economist on the Real Estate Market in Canada and Toronto

John Pasalis in Toronto Real Estate News, Mortgages and Finance

Editor's Note: "Five Questions For" is a periodic series in which Move Smartly bloggers get answers to the questions we'd all like to ask about real estate.

TD Economics made headlines a few weeks ago when they released a report forecasting a 10% decline in Canadian home prices.  

I invited TD Bank Senior Economist Pascal Gauthier to answer five questions about the report they recently published and about Toronto's real estate market overall:

John Pasalis: Hi Pascal, thank you for taking some time to answer a few questions about the recent TD Economics report on Canada's real estate market.  Your colleague Grant Bishop calls for a roughly 10% decline in average home prices in Canada.  When do you see this happening?  Do you expect a quick decline in prices or is this going to carry into 2011?

Pascal Gauthier, TD Economics: The -10% mentioned by my colleague Grant is a peak-to-trough figure, rather than an annual average. Some of that adjustment is already under way on a (seasonally-adjusted) month-to-month basis, with average prices down about 3.5% since May. We think we are roughly a third of the way through the price adjustment, implying roughly another 9 months of trend decline – bottoming sometime in the first half of next year, likely Q2 on a quarterly basis.

John Pasalis: In May 2010, TD Economics released a report forecasting a roughly 5% total decline in home prices by the end of 2011.  What economic factors have changed over the past three months to account for the significant change in TD's forecast?

Pascal Gauthier: The May report referred to a -2.7% annual average national price change in 2011. As of August, this had been revised down slightly to -3.0% (see our latest housing tables, page 2)

John Pasalis: The strong recovery in the housing market in 2009 caught virtually everyone by surprise. What impact, if any, do you feel behavioral variables such as consumer perceptions and confidence have on the real estate market and how do you as an economist account for such variables?

Toronto Condo Listings Up 72% in Second Quarter

John Pasalis in Toronto Real Estate News

Below is the Toronto Real Estate Board's condo market commentary written by their Senior Manager of Market Analysis, Jason Mercer.

Active Listings Growth for Condo Apartments Outpacing Listings for Low-Rise Home Types

Following very tight market conditions in the first quarter of 2010, the resale home market became better supplied between the beginning of April and the end of June. The number of active listings climbed strongly in the second quarter compared to the same period last year. Leading the growth in listings was the condominium apartment segment. In the central districts in particular, active listings for condominium apartments grew by 79 per cent year-over-year in the second quarter – a much stronger growth rate relative to the 25 per cent increase for all other home types.

 

The active listings trend for condominium apartments follows the trends for annual median price growth and new condominium apartment completions in the GTA. With the exception of a brief downward blip in the third quarter of 2009, new condominium apartment completions have remained strong over the past year. This suggests that many new units, which are owned by investors or buyers whose housing needs have changed since their preconstruction purchase, continue to be listed in the GTA resale market. This is especially the case within the City of Toronto where almost 80 per cent of GTA condominium apartment construction is taking place. Strong price growth has also attracted more listings into the market, as some owners look to convert substantial “paper” returns into actual “dollar” returns. Of course, with a surge in active listings over the past few months, buyers have benefitted from more choice and the annual growth rate for the median price has moderated to a certain degree.

 

Toronto Real Estate Sales and New Listings Continue to Slide Mid August

John Pasalis in Toronto Real Estate News

The Toronto Real Estate Board reported 2,732 sales during the first two weeks of August, a 29% decrease over the same period last year.  New listings were down 8% over last year to 4,770.

"Throughout the better part of the last year, the number of monthly sales was well above the expected long-term trend. Accordingly, it makes sense that the number of transactions has dipped over the past few months in comparison to last year’s record results,” said Toronto Real Estate Board President Bill Johnston.

The average price for August mid-month transactions was $412,934 – up eight per cent compared to the average of $383,796 recorded during the first 14 days of August 2009.

 

John Pasalis is the Broker Owner of Realosophy Realty Inc in Toronto. Realosophy focuses on researching Toronto neighbourhoods to help their clients make smarter real estate decisions. Email John
 

New Condo Sales in Q2 Decline from Q1; Resale Condo Prices Rise Less Than 1%

Realosophy in Toronto Real Estate News, Toronto Condos and Lofts

From Urbanation's Q2-2010 market overview and press release of August 3rd:

New condominium sales of 4,991 in Q2/10 represent a decline of eight per cent from the 5,415 sold in Q1/10, and for the first time since 1994, second quarter sales declined from the first quarter. Despite the quarter-over-quarter decrease, sales during the past four quarters were near record highs.

“21,318 new condominiums sold. That’s slightly fewer than the dizzy heights achieved during late 2007/early 2008,” said Ben Myers, Urbanation Editor and Executive Vice President.

“When we consider the rapid sales pace of the six months prior to Q2/10, the new sales market is softening,” Myers said. “Expect a slightly slower sales pace for the remaining two quarters of 2010. An annual sales volume of 16,000 to 17,000 appears to be sustainable for the Toronto CMA.”

At the end of Q2/10, the 12,638 unsold units in the CMA were being offered at $529 psf, a 12 per cent annual increase. In the former City of Toronto, unsold units averaged $639 psf.

As the new market shows signs of slowing, the existing condominium market remains very strong. The resale market set a quarterly record of 5,076 sales in Q2/10 – besting the previous high of 4,854 set in Q3/09.

Property Brothers on W Network Looking for Home Buyers to Share Their Story

Toronto Real Estate News

Editor's Note - the following message is from Cineflix Productions who asked us to share this message with Move Smartly readers. Please contact Sue Skinner, Casting Director, directly if you are interested or have any questions: smsconcepts@rogers.com

*****

Cineflix Productions is casting a brand new series for W Network, 'PROPERTY BROTHERS', which assists people who are buying fixer-upper properties and want to renovate it into their dream home.

Interested applicants need to buy & close on their new property between August & September 2010.

PROPERTY BROTHERS is looking for outgoing and outspoken couples who live in Toronto & surrounding areas who would love to share their house buying and renovation journey.

Property Brothers is a home realty/renovation show that uses groundbreaking virtual reality graphics to help buyers see the potential in an outdated, fixer-upper. The show follows home buyers as they work with the Scott brothers, Drew, a real estate agent, and Jonathan, a contractor.
 
If you are interested or would like more info, please contact SMS Concepts Casting Director, Sue Skinner at smsconcepts@rogers.com or check out cineflix.com!

Which Toronto Neighbourhoods are Safest in a Slowing Housing Market?

John in Toronto Real Estate News, Toronto Neighbourhoods

The slowdown in Toronto's real estate market continued in May with sales actually dropping by 1% over the same month last year.  

New listings were up 38% to 18,940 and the average price for a home in the GTA was up 13% to $446,593.

But not all neighbourhoods are moving in the same direction.

In last week's post (Is Toronto's Housing Market a Bubble?) I talked about the risks of using national real estate statistics and forecasts to assess what's happening in Toronto's real estate market.  I showed how real estate prices appreciate and depreciate at very different rates across cities and made the case for putting more emphasis on local real estate statistics over national statistics.

We can take this same basic idea and extend it to Toronto's real estate market.  It's important to look at the overall statistics for Toronto's real estate market to  get a general sense for where the market is heading, but city wide statistics don't tell you what's going on in a particular neighbourhood. 

While prices are down 1% and inventory is up 38% on average across the GTA, that doesn't mean every neighbourhood is experiencing a similar surge in supply and decline in demand.

 

The above chart shows the percentage change in the number of active listings and sales from May 2009 to May 2010 by City of Toronto MLS districts.  

Is Toronto's Housing Market a Bubble?

John in Toronto Real Estate News

For the average home buyer, making sense of Toronto’s real estate market is not easy.   We often read conflicting media reports about the market because economists rarely agree on where things are heading.  One week we’ll read about a report forecasting a significant downturn in Canada’s real estate market, the next week we’ll read a more balanced outlook forecasting modest price appreciation.

This leaves most buyers confused when trying to answer two equally important questions:

1. Is Toronto in the middle of a real estate bubble?
2. Is this the right time to buy a house?

Today I’ll do my best to tackle the first question by giving our readers some tips on how to make sense of Toronto’s real estate market.

Think Local

Most media reports talk about Canada’s real estate market as a whole.  The problem with a national forecast of the the real estate market is that it tells us very little about what's going on in Toronto.  House prices can appreciate and depreciate at very different rates across different cities.

We can see this in action by looking at a chart of house prices over the past ten years for 20 different US cities.

The cities with the most rapid appreciation in prices experienced the biggest drop in prices while cities with a moderate appreciation generally experienced a more modest decline in prices.

Do your best to find reports that are focused on Toronto's real estate market and put less emphasis on national forecasts.

Toronto Real Estate Listings Up 48% Mid May

John in Toronto Real Estate News

Earlier this month I wrote a post titled A Turning Point in Toronto's Real Estate Market where I highlighted the shift we are seeing in the market with new listings increasing at a much faster rate than the increase in sales.  This change in our market is moving us further away from the Seller's market we've been in over the past year and is moving us much closer to a more balanced market.

We can see this trend continuing in the mid May sales figures published by the Toronto Real Estate Board.  The number of new listings coming on the market during the first half of May increased by 48% to 10,059 over the same time last year.  Sales on the other hand increased by 7% to 4,887.

Many buyers are already seeing this shift as fewer houses are actually getting multiple offers and of the houses that are getting multiple offers, we are seeing fewer buyers at the table.

The days of having 20 buyers compete for a single house appear to be behind us.

John Pasalis is the Broker owner of Realosophy Realty Inc in Toronto. Realosophy focuses on researching Toronto neighbourhoods to help their clients make smarter real estate decisions. Email John

A Turning Point for Toronto's Real Estate Market

John in Toronto Real Estate News

For the first time since 2008 the growth in new listings coming on the market in April exceeded the growth in sales.  A significant turning point for Toronto's real estate market.

Since the housing market rebounded in early 2009 Toronto has seen a significant shortage of listings and strong demand from buyers.  This imbalance between supply and demand has been driving up prices over the past year and is the key factor behind the multiple offers we are seeing on most houses.

Last month there were 20,683 new properties listed for sale, a 59% increase over the same month last year.  The blue line in the chart below shows the monthly volume of new listings for 2010.

There were 10,898 sales in the Greater Toronto area in April, a 34% increase over last year.

New Toronto Condominium Unit Sales Highest Ever in Q1

Realosophy in Toronto Real Estate News, Toronto Condos and Lofts

From Urbanation's Q1-2010 market overview and press release today:

Urbanation Editor and Executive Vice President Ben Myers said, “Q1-2010’s 5,415 new condominium sales in the Toronto Census Metropolitan Area (CMA) were down slightly from Q4-2009’s 6,295 new unit sales, however, Q1’s total of new units sold is still the highest-ever number of first quarter new unit sales in the history of the CMA.

“This year’s Q1 new unit sales were nearly six times higher than the recession impacted Q1-2009’s new unit sales, an astounding increase of 491 per cent year-over-year,” he added.

Average price per square foot (PSF) for all new units sold in the CMA was up only modestly, from $418 in Q1-2009, to $443 in Q1-2010. The unsold units in the market are being offered at $509 PSF on average in the CMA.

Nearly 4,000 condominium units started construction in Q1-2010, equaling the total during the previous nine months, a very encouraging sign for the health of the Toronto market.