In Toronto: The detached home market is cooling but the condo sales slump appears to be over with sales reaching pre-pandemic levels.
Elsewhere: The CMHC sends another SOS regarding rising housing prices, the housing market remains a tale of two Americas, and why the international property bonanza hasn't hit Italy.
John Pasalis, president of Realosophy, joins BNN Bloomberg to discuss the April numbers from the Toronto Regional Real Estate Board. He says that there is less anxiety in the low-rise market, and buyers are starting to be more patient.
Seventy-six per cent of the new condos launched in the first three months of 2021 were sold by the end of the quarter, the highest level since 2017, according to Urbanation, a market research firm that tracks GTA development. The average selling price in the first three months of this year in the Toronto region was $1,261 per sq. ft. — an 8.8 per cent or approximately $100 per sq. ft. year-over-year increase.
Toronto housing stalls in April as prices slip from record high (BNN Bloomberg)
"It makes sense that we had a pullback in market activity compared to March. We’ve experienced a torrid pace of home sales since the summer of 2020 while seeing little in the way of population growth. We may be starting to exhaust the pool of potential buyers within the existing GTA population. Over the long term, sustained growth in sales requires sustained growth in population,” said TRREB President Lisa Patel in a release.
The condo apartment market struggled during the early months of the pandemic as people fled the city, but it's been hot as of late. The average selling price rose to $691,791 in April compared to $676,052 in March.
In its outlook, CMHC repeated that the virus has exacerbated inequities between wealthy, highly paid workers, who are often homeowners, and low-wage earners, who are predominantly renters. A larger share of well-paid workers kept their jobs and were able to save more money, and they were also able to take advantage of the low borrowing costs. The pandemic restrictions halted most activity in industries such as entertainment and travel that hit lower-wage earners harder.
“There are things putting pressure on housing that need to be stopped,” Singh said in a wide-ranging interview from his apartment in Ottawa. They include the way Canada is used internationally and domestically as “a safe place to drop your money into the housing market, to treat it like a commodity or a stock.” Money laundering, Singh added, is “directly contributing to the rising cost of housing.” But the Liberals, he said, have failed to properly staff the department that is supposed to crack down on the movement of dirty money. The NDP leader wants Ottawa to subsidize more housing construction. And he’s not opposed to rent controls.
Throughout this entire period, Canadian home prices soared to such levels that even the IMF became concerned. At first, Canada denied there was a problem and lectured millennials to save more and stop buying avocado toast. Then, they conceded there might be a problem, but said anyone concerned with foreign influence in the market was xenophobic. Finally, this month, MP Adam Vaughan, parliamentary secretary for housing, admitted Canada built a housing market that’s better for foreign investors than local buyers. However, after a year that saw house prices skyrocket by 30 to 40 per cent, he wouldn’t tolerate a drop of even 10 per cent.
The 60-year-old Mr. Parsons filed a complaint with the province’s real estate regulator, saying the sale was unprofessional and unethical. “How is this legal? They list an amount and I try to buy it. They don’t show an auction in their listing,” he said in his filing with the Real Estate Council of Ontario (RECO.) “The buyer is deceived about the price and if they want to continue, must bid and wait and see if it was high enough.”
Federal Judge Strikes Down Moratorium on Evicting Renters (NY Times - Paywall)
The Justice Department immediately filed an appeal, and requested an emergency stay on the order pending a decision by the higher court. Late Wednesday night, Judge Friedrich agreed to put her ruling on hold until May 12 to give landlords time to file legal papers opposing a longer delay, while making clear that the move was not a reflection of the “merits” of the government’s request. It remains unclear how wide an impact the decision will have on renters. It does not necessarily bind state housing court judges, who rule on eviction orders, and two other federal courts have upheld the moratorium, adding to the confusion about its fate.
Take Chappaqua, New York, which is 35 miles north of midtown Manhattan and a hamlet where Bill and Hillary Clinton live. Two years ago, homes priced at more than $2 million would sit on the market for a long time, says Usha Subramaniam, a real estate broker with Compass. In 2019, two homes sold for more than $2 million. Last year, in the middle of the pandemic, that number jumped to 17. This year, 17 homes in that price range had sold or were in contract by April.
The hot real estate market and hot stock market may be evoking memories of bubbles for some. Even Treasury Secretary Janet Yellen said this week that interest rates might have to rise from the current near-zero level to prevent overheating. And even uttering “2006,” Tirapattur writes, carries a lot of baggage when it comes to housing, as that was the trigger that imploded the economy 15 years ago.
Italy: The land the property bonanza forgot (The Globe - Paywall)
Just don’t expect to make money on your Italian investment. The dire economic and demographic forces working against the country suggest that property turnaround anytime soon seems unlikely even though Italian banks now offer mortgages at rates of 1 per cent, or less. Italy has been in near-permanent recession since the 2008-09 financial crisis and its GDP shrank by 9 per cent 2020, after it became the first country in the world to go into full lockdown.
She is running for mayor, representing the Liberal Democrats, and housing is one of her top priorities. She has come up with a pitch that hopes to take advantage of the pandemic: turning empty office space into affordable homes. "This is a once-in-a-generational opportunity to finally fix our housing crisis," said the 33-year-old, who was a member of the European Parliament until her position was abolished post-Brexit
Top Photo Credit: iStock/Getty
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May 8, 2021This Week In Real Estate |