REAL ESTATE

Balanced conditions set to return to most Canadian housing markets in 2012

2012-01-30T08:34:00.001-08:00

Balanced conditions set to return to most Canadian housing markets in 2012,

while residential values expected to once again set new records, says RE/MAX

Canadian residential real estate defied conventional logic and outperformed expectations in 2011, posting another solid year of housing activity virtually across the board. The trend is expected to carry forward into 2012 as Canadians continue to demonstrate their faith in homeownership, despite concerns over the European debt crisis and its impact on the global economy, according to a report released by RE/MAX.

The RE/MAX Housing Market Outlook 2012 examined trends and developments in 26 major markets across the country. Eighty-eight per cent (23/26) anticipated average price increases by year-end 2011—with percentage hikes ranging from one to 16 per cent. The forecast for 2012 shows the upward trend moderating, but still ahead of 2011 figures. Overall home sales are expected to remain on par or ahead of last year’s levels in 85 per cent (22/26) of markets in 2011—including Saskatoon with a year-over-year percentage increase of 13 per cent and an eight per cent uptick in Calgary, Winnipeg, Hamilton-Burlington and Sudbury. Almost half of Canadian markets will match the 2011 performance, while the remainder should post increases ranging from one to five per cent next year.

By year-end 2011, an estimated 460,000 homes are expected to change hands, up three per cent from the 447,010 units reported in 2010. Sales are expected to climb one per cent to 464,500 units in 2012. The value of a Canadian home is set to climb to $363,000 this year—an increase of seven per cent over the $339,030 posted one year ago. By year-end 2012, the average price in Canada is forecast to appreciate two per cent to $371,000.

The Canadian housing market has demonstrated tremendous resilience in recent years, but 2011 stands out. Instead of responding to economic concerns both here and abroad with a retreat in sales and prices, residential real estate markets actually experienced an upswing in the volatile third and final quarters. While clearly not impervious to the impact, Canadian consumers are intent on making their moves now, in advance of higher housing values and rising interest rates down the road.

Improvement in both provincial and local economies, especially during the second half of 2012, should serve to further stimulate home-buying activity. Calgary, Saskatoon, and Halifax-Dartmouth will likely lead the country in unit sales in 2012, each with a projected increase of five per cent. Regina, Greater Toronto, Saint John, Moncton, and St. John’s anticipate a three per cent increase in home sales next year.

The economic underpinnings support ongoing demand, particularly as job creation efforts continue and unemployment rates edge down further. Nationally, we remain on an upward track, and the confidence consumers have demonstrated in housing over the past decade will prove well founded once again next year. The rising belief in homeownership is key, especially among Generation X and Y—some of whom are making their moves sooner. Boomers and retirees are changing, too. They’re healthier and more active, with longer life expectancy. Overall, we’re seeing an extension of the homeownership cycle, and it’s great news for housing.

-more-

RE/MAX Housing Market Outlook 2012….2

While tighter supply levels contributed to steady price appreciation in most major markets across Canada this year, an increase in inventory more in line with years previous should ease upward pressure on average price in the year ahead. The highest appreciation is expected in Regina, where values are forecast to increase eight per cent, followed by Greater Toronto, Halifax-Dartmouth, and St, John’s—each posting a five per cent gain. Overall, 81 per cent of the markets examined are forecast to set new records for average price next year. Noteworthy milestones include Greater Vancouver, which will break the $800,000 threshold, as well as Regina and Kitchener-Waterloo, which will reach the $300,000 mark.

While prices will remain on the upswing, buyers will benefit from greater selection moving forward. Stability or modest growth will characterize sales activity while GDP moves forward at a more muted pace in 2012. Whether markets will meet or potentially exceed projections will hinge largely on consumer confidence. An unexpected call for interest rate hikes could also serve to bolster sales.

Other highlights include:

· Population growth and immigration are major factors expected to prop-up housing demand and household formation in the coming years. Since 2000, Canada’s population has experienced double-digit growth of 11 per cent. By 2031, over 42 million people are expected to call Canada home.

· Investment will also continue in Canada’s major centres, with income-producing properties at the top of the most wanted list. Low vacancy rates and stock market volatility reinvigorated this segment of the market in 2011 and the very same factors are forecast to influence sales moving forward.

· Condominiums are expected to gain an increasing share of the marketplace, particularly in Western Canada and Ontario. A focus on higher density urban growth is impacting purchasing patterns and introducing new, affordable options—critical to the attainability of homeownership as prices continue to move upward.

· Housing stock in major Canadian centres will improve as municipalities focus on redevelopment and revitalization.

RE/MAX Housing Market Outlook 2012…3

Balanced conditions set to return to most Canadian housing markets in 2012

2012-01-30T08:34:00.000-08:00

Balanced conditions set to return to most Canadian housing markets in 2012,

while residential values expected to once again set new records, says RE/MAX

-more-

RE/MAX Housing Market Outlook 2012….2

Other highlights include:

· Housing stock in major Canadian centres will improve as municipalities focus on redevelopment and revitalization.

RE/MAX Housing Market Outlook 2012…3

First-time buyers are contributing to strong upward momentum in residential housing markets across the country

2011-04-05T14:11:00.001-07:00

Driven by the threat of higher interest rates down the road, first-time buyers are contributing to strong upward momentum in residential housing markets across the country, according to a report released by RE/MAX.

The RE/MAX First-Time Buyers Report, highlighting trends and developments in nineteen major Canadian centres, found that low interest rates and balanced market conditions have provided significant impetus in 2011, particularly at lower price points. Just over 30 per cent of markets are reporting sales in excess of 2010 levels as a result, while almost 70 per cent have experienced an upswing in average price. Leading the country in terms of percentage increases in the number of homes sold are Western Canadian markets, including Saskatoon (up close to 15 per cent), Greater Vancouver (up close to 12 per cent), and Winnipeg (up just over 11 per cent). With an average price hike of close to 20 per cent year-to-date (February), Greater Vancouver continues to show unprecedented strength, followed by Hamilton-Burlington (eight per cent), Quebec City (seven per cent), Winnipeg (close to seven per cent), Greater Toronto (five per cent), and Greater Montreal (five per cent).

Despite homeownership rates approaching 70 per cent, there is clearly room for growth as entry-level buyers make their moves from coast-to-coast, undeterred by higher housing values and changes to lending criteria. Many purchasers intent on realizing homeownership are scaling back on expectations or are willing to sacrifice location, quality and/or size to make their dream a reality – not unlike generations before them.

Inventory levels, while tight in several larger centres, are more balanced overall, giving first-time buyers a good selection of housing product from which to choose. Not surprisingly, condominium apartments and town homes have become the first step for many entry-level purchasers, especially in Greater Vancouver, Victoria, Kelowna, Edmonton, Calgary, London-St. Thomas, Hamilton-Burlington, Greater Toronto, the Island of Montreal, and Halifax-Dartmouth where average prices have risen unabated in recent years.

With the Canadian economy on firmer footing overall, residential real estate is well-positioned moving into the traditionally busy spring market. Consumer confidence is climbing in conjunction with economic performance, and concerns over a secondary recession fade with each passing day. The mood is cautiously optimistic, as first-time buyers enter the market.

Changes to recent financing criteria have not created the anticipated run up in activity in most markets. From a financial standpoint, most rookie home buyers remain quite prudent. Those making the leap are not doing it lightly, buying within their means. While this most recent round of policy tightening will likely have a negligible effect on demand, the message is getting across.

Affordability remains a growing concern in most markets, and—aside from first-time purchasers—no one is more in tune with that than housing planners and developers. In fact, the growing demand for reasonably-priced product is creating a shift in the country’s housing mix. That trend is expected to gain traction in coming years, as builders look to create greater options for those seeking to realize homeownership. In recent years, builders have helped ease the move to homeownership by concentrating on intensification—condominium buildings with smaller suites and small-lot subdivisions offering detached, compact homes at a fraction of the cost of a traditional single-family home. On the flip side, the affordability factor is also breathing new life into tired older neighbourhoods, and that, in turn, is contributing to rising values.

As prices escalate, first-time buyers are indeed spending more—some out of necessity, but others are simply in a position to do so. Unlike in years past—a greater percentage of today’s first-time buyer pool is comprised of dual-income, college or university-educated couples with solid earnings. They’re spending close to average price or slightly more to secure—in most cases—a better location or a home that will grow with them. Yet, the fact remains that those on a tighter budget can get in for considerably less, with reasonable choices in every major market across the country. While some may feel discouraged by eroding affordability levels, the underlying confidence in the concept of homeownership is rising.

While market conditions are one thing that influences first-time buyers, few things trump the fundamental belief in homeownership. Today’s entry-level buyers are steadfast in their mindset. They know they have to live somewhere, but they simply don’t want to pay someone else’s mortgage. Savvy or practical, they remain a driving force. The bottom line is that the demand for entry-level product will remain steady. The role of starter homes in the marketplace is becoming ever more vital.

KW Realtors® Post Solid Home Sales in March

2011-04-05T14:07:00.000-07:00

KITCHENER-WATERLOO, ON (April 5, 2011) –Sales of residential properties via the Multiple Listing System (MLS®) of the Kitchener-Waterloo Association of REALTORS® (KWAR) ran slightly above the five-year average for the first quarter.

During the first quarter of 2011, there were a total of 1474 home sales, 10.4 percent below last year’s record for the same period.

“Residential real estate sales in the area continue to perform well,” says George Patton, President of KWAR. “We’ve not set any records yet this year, but a stable market is a good market.”

Home sales for the month of March totalled 608 units, 15.4 percent lower than the same month a year ago —also a record breaking period. Of those sales, there were 385 single detached homes, 116 condominium units, 61 semi-detached and 40 freehold townhouses.

Patton says he is paying attention to see what effect the recent mortgage rate increases by several of Canada’s big banks will mean for the typically busy spring real estate market. “By historical standards, mortgage rates are still pretty low,” he said. “With the economy continuing to strengthen, the housing market should stay balanced.”

While the most popular price range selling in March of last year was in the $225,000 to $250,000 category, making up 16.7% of the residential market, this month’s sales activity shifted to the higher price ranges, with nearly 15% of sales occurring in the $300,000 to $350,000 price range.

This has pushed the average sales price for all residential properties in the month of March up 5.4% to $298,671 compared with the same month a year ago. However, on a year-to-date basis, the average sale price has increased more gradually with a one percent increase to $290,148 relative to last year.

The KWAR cautions that average sale price information can be useful in establishing long term trends, but should not be used as an indicator that specific properties have increased or decreased in value. Those requiring specific information on property values should contact a REALTOR®.

How to Profit from Real Estate Investing

2010-12-20T07:04:00.000-08:00

Buying a revenue property.

You need to be able to get a conventional mortgage, or find a partner that can.

Put up a down payment or again find a partner that can do this.

This partner is called a Joint Venture partner, or JV for short.

Before looking for property you need to have some sort of buying criteria. As you get better at this you can change it from a buying criteria to an exit strategy. The difference between the two is with an exit strategy once you know all the options of buying and selling you will be able to buy any house on the market and with the proper exit strategy you will make money. Where is a buying criteria will help you filter through the good and not so good deals.

The buying criteria.

When looking at a property for rental income you need to know all that will be required to buy the property and to hold onto it afterwards. You need to have a mortgage company, real estate agent (me), lawyer, accountant, banker, plumber, electrician, and property manager. These people will become your team. Now you need to know how much can you buy? Do you have a down payment? Can you get approved for a mortgage? Most people can get approved for a mortgage on 1-3 rental houses. After that you will need to find joint venture partners to help you build your real estate empire.

So you have found a property. Is it selling for the right price? I can help wit that with powerful CCIM software. Can you find renters for this kind of property? And then rent it out for the price you need to at least break even. I can help with all too !

If you find a property that is selling for $100,000 and you put down $20,000 the mortgage would be about $521 per month. So don't think that if a renter pays you $550 per month you are making any money. You need to calculate in taxes, general maintenance, and vacancy. Check in your area for these rates. But lets use 5% vacancy and 5% maintenance, and $75 per month for taxes. Now you are at $648 per month just to break even! What about condo fees? Is there any? If so you better fit those in. Now with the above example can you find a renter at this price? How about higher, and where is the market for this area going? Check into development of the area. I always feel that once you have about 10% of the houses in the neighborhood being torn down and new houses going in you are pretty safe.

Once you have your buying criteria then you can do this multiply times. As you can no longer buy for yourself you will need JV partners. Each partner will want about 50% of the profits. Unless you are really good at what you do, then you can get JV's for closer to 35% of the profits. This is because their risk is going way down.

In future articles I will explain other ways of buying real estate.

2010-01-21T06:29:00.001-08:00

Commercial Real Estate in 2010

2010-01-21T06:22:00.000-08:00

Commercial Real Estate in 2010: Weak Fundamentals and Constrained Liquidity

Other Forecasts for the New Year Show Continued Weakness but Some Moderation

Print this article

By Mark Heschmey

January 6, 2010

The outlooks for the New Year have begun coming in and a review of year-end forecasts for 2010 show that many commercial real estate industry watchers remain fearful of weak fundamentals and constrained liquidity. Yet, they also reveal some optimism in some sectors, such as homebuilding and lodging.

We've compiled a few of the outlooks here, organized from more-doom-and-gloom to brightening outlooks, which is how most of them view how 2010 will play out: starting out rough but improving the further along we get.

"The commercial real estate industry is a disaster waiting to happen," said Andy Bogdanoff, founder and chairman of Scottsdale-based Remington Financial Group, a capital services company told a meeting of industry representatives recently. "With U.S. banks in a deep and continuing liquidity crisis and with $1.2 trillion in commercial debt due to mature by 2013, thousands of real estate owners and developers across the country will soon find themselves between a rock and a hard place when their loans mature,"

"Even if bank liquidity weren't an issue, estimates are that two-thirds of the securitized loans and half of the whole loans due to mature between 2010 and 2013 would not qualify for refinancing due to today's more stringent banking standards," Bogdanoff said.

Bogdanoff added that the unprecedented high cost of funds, coupled with a 40% decline in real estate values since 2007, further compound the problem.

"With property values less than the original debt, thousands of owners and developers may have no choice but to sell their properties at a loss or face bankruptcy when their loans mature. If the problem isn't solved soon, the result could be a disaster for the commercial real estate industry and the U.S. economy as a whole."

That view was supported by others who predict a hard slog toward economic recovery in 2010 as businesses weighed down by debt hit rough patches and credit markets shun them. Nearly half (49%) the respondents to the Turnaround Management Association's distressed industries forecast think durable economic improvement is unlikely until at least the second half of 2010. About three out of 10 think the worst is over, but nearly 20% suggest the economy has yet to hit rock bottom.

Three out of four respondents said they think the commercial real estate industry will fare the worst in 2010 as debt matures and lenders remain reluctant to refinance.

"Capital markets, the life blood of real estate, remain stressed," said Anthony S. Graziano, chairman of Integra Realty Resources, Inc. "Deal flow has dwindled to a crawl due to limitations on new financing and requirements for larger equity positions. Refinancing has become difficult as credit markets continue to tighten with strict lending standards, and real estate lending competes with the government's liquidation of local and regional banks. Yet this year's report does contain signs of life in each sector."

"We expect that 2010 will continue to provide mixed signals with regard to the recovering economy and real estate markets," said Jeffrey Rogers, president of Integra. "Values are down 43% from their peak in October 2007, and the Integra Commercial Property Index predicts a further decline of 5% in the next six months. Transactions volumes should recover somewhat from their lows in 2008 and 2009 due to the return of some liquidity in the credit markets. However, volumes will be significantly less than their 2006-2007 highs. Two economic pitfalls to watch will be consumer credit and oil prices. There is significant danger that consumer credit delinquencies and defaults could rise drastically in 2010."

REITs: Improved Liquidity but Weak Fundamentals

Despite improved liquidity profiles and access to the unsecured debt market, weak property operating fundamentals across the U.S. equity REIT sector and the uncertainty as to the exact timing of a full economic recovery remain areas of concern for U.S. equity REITs in 2010, according to Fitch Ratings in its 2010 Outlook report.

In addition to weakening market fundamentals, U.S. equity REITs continue to have above-average leverage in comparison to historical levels. Substantial amounts of follow-on common equity were raised during 2009 across the sector, the proceeds of which were used to repay outstanding indebtedness. However, Fitch remains concerned that future deleveraging actions are less likely in 2010, given the dilutive nature of most follow-on common stock offerings.

Fitch said that the recovering U.S. economy is still subject to economic shocks and expects the pace of expansion will likely be weaker than previous recoveries.

"If liquidity and access to capital remain strong, expect more rating affirmations and fewer downgrades and downward Outlook revisions that characterized 2009," said Steven Marks, managing director and U.S. REIT group head for Fitch. "Conversely, less access to capital and increased use of secured debt will put a strain on liquidity," which Marks added will lead to a more circumspect view of the sector.

Despite weakened fundamentals, Fitch maintains a stable outlook for multifamily REITs in 2010 due to limited supply and continued access to low-cost financing from Fannie Mae and Freddie Mac.

Health care REITs' stable outlook is largely driven by demographic trends that continue to benefit the health care sector, portfolio diversity and limited supply.

Meanwhile, the prospect of further store closures and weak leasing activity will continue to weigh on retail REITs (negative outlook). Overall retail sales in 2010 will be flat to up modestly from 2009 levels, translating to soft consumer demand due to high unemployment levels, continued challenges to consumer credit and ongoing U.S. household deleveraging.

Unemployment remains a more pivotal factor in the health of office REITs (negative outlook). While the economic recovery is underway, office REIT fundamentals will not improve until unemployment begins to decline.

Above-average leverage and a slow economic recovery, which has reduced overall productivity and the need for space, are the key drivers behind the negative outlook for industrial REITs.

Lodging: Still Bad but Looking Better

The pace of recovery of the U.S. lodging industry has accelerated from previous expectations, according to PKF Hospitality Research in Atlanta. Improving industry data for such key indicators as occupancy, RevPAR and demand suggest that the recovery will arrive a full quarter earlier than the firm expected in September 2009.

"Make no mistake about it, 2010 will continue to be a tough year for U.S. hotel owners and operators," said R. Mark Woodworth, president of PKF Hospitality Research. "We are forecasting that, on average, properties will continue to suffer year-over-year declines in revenue and profits from an already dismal 2009. However, given the deceleration of room rate discounting that we observed during the third quarter of 2009, we believe the severity of the losses incurred in 2009 and 2010 will be less than previously forecast. In addition, year-over-year growth in important measurements, such as occupancy, RevPAR and demand, will be realized a full quarter earlier than we were thinking three months ago."

"While our forecast for ADR movement in the third quarter was a bit pessimistic, we recognize the change in pricing trends and have applied it to our thinking regarding the future. Accordingly, this year's annual ADR forecast has been reduced to a decline of 8.8% and our 2010 ADR forecast is now a minus 1.5%. These compare to declines of 10.4% and 3.1% that we forecast last quarter," Woodworth said.

PKF-HR is also now forecasting lodging demand to post a quarterly year-over-year increase during the first quarter of 2010, thus ending eight consecutive quarters of declines. On an annual basis, PKF-HR is now forecasting lodging demand to rise 1.9% in 2010, up from the 1.6% increase forecast back in September.

Homebuilding: Four-Year Downturn Coming to an End?

With various macroeconomic housing and related statistics bottoming about mid-year 2009 and subsequently moving forward in fits and starts, a four-year downturn has evidently come to an end for U.S. homebuilders, according to Fitch Ratings in its outlook report for the sector.

While Fitch maintains a Negative Outlook for U.S. homebuilding in 2010, the expected conclusion of the national housing credit has positively influenced housing data over the last few months. Pending home sales, existing home sales, single-family housing starts and single-family new home sales have been generally showing improvement after bottoming out earlier this year. The same holds true for new home inventories, home pricing and consumer and builder sentiment.

Nevertheless, Fitch anticipates that the early stages of this expansion may be more muted than the average.

During the first 12-15 months off the bottom, the recovery may appear jaw-toothed as substantial foreclosures now in the pipeline present as distressed sales and as meaningful new foreclosures arise from Alt-A and option ARM resets. High unemployment rates and the probable tightening of certain FHA loan standards (higher minimum credit scores for new borrowers and greater upfront cash requirements) will be notable headwinds early in the upcycle.

"The continuation and expansion of the national housing credit should partially help offset expected seasonal declines during the winter months through the spring of 2010," said Robert Curran, managing director and lead U.S. homebuilding analyst for Fitch. "The federal government's continuing efforts to moderate foreclosures may also show some success in 2010."

"With operational and financial pressures moderating to some extent, most public homebuilders have to operate successfully within this still challenging environment or wither away," said Curran.

Companies have to at least maintain current cost profiles or continue to downsize to the point where they can remain/be profitable (excluding nonrecurring real estate charges). That means possible further moderate cuts in staffing and other overhead, as well as other cost reductions.

Fitch expects the economy to return to positive growth next year, primarily reflecting the impact of the fiscal stimulus package, but also some likely stabilization in housing investment and a weakening inventory overhang.

2010-01-12T21:56:00.001-08:00

2009-12-03T09:35:00.001-08:00

Housing performance expected to accelerate in 2010, as economic stability returns to Canadian markets, says RE/MAX

Mississauga, ON (December 3, 2009) - In the midst of one of the most tumultuous economic periods in recent history, residential real estate has proven to be a safe harbour, with sales and average price expected to post gains in most major Canadian cities in 2009, according to a report released today by RE/MAX.

The RE/MAX Housing Market Outlook for 2010 examined residential real estate trends in 23 markets. The report found that sales are forecast to recover in almost all major centres by year-end 2009, led by an anticipated 45 per cent increase in Greater Vancouver. Two markets -- Ottawa and Quebec City -- are expected to hit historic highs in the number of homes sold. Average price should post new records in 65 per cent of markets surveyed this year. As economic performance ramps up across the country, so too will residential real estate. Eighty-three per cent of markets (19/23) are expecting sales to increase over 2009 levels while housing values are forecast to escalate in 91 per cent (21/23) of Canadian centres in 2010. The remaining markets will match 2009 levels.

Approximately 465,000 homes are expected to change hands nationally in 2009, a seven per cent increase over one year ago. Canadian housing values are forecast to close the year at $318,000, up five per cent from $303,594 in 2008. By year-end 2010, the number of homes sold is predicted to climb another two per cent to 475,000 units. The average price of a home is also expected to experience an uptick, rising two per cent to $325,000 - the highest level in Canadian history.

"2009 was without question the year of the house," says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. "Real estate not only defied industry and analysts' predictions in 2009 -- it's performance went well beyond the realm of expectation by boosting consumer confidence levels and ultimately kick starting the national economic engine. While low interest rates were a principle factor driving home buying activity, no one can discount the value that Canadians place in owning a home."

MARKET OUTLOOK 2009

2008-12-03T06:09:00.000-08:00

LISTINGS UP, SALES DOWN, HOME VALUES REMAIN STEADY

2008-11-27T10:11:00.000-08:00

KITCHENER, ON (November 5, 2008) – The number of residential sales for the cities of Kitchener -
Waterloo dipped to pre 2005 values for the month of October. There was a 21.6 percent decrease from September of 2008 and a 14 percent decrease from October of 2007. However, there was a 14.5 percent increase in the number of new residential listings and a 14 percent increase in all property types over October 2007.

“This activity is not surprising,” reports Karen Shartun, President of the Kitchener-Waterloo real Estate Board, “the last three years have simply been exceptional, and the market activity is slowly but surely working towards more balanced numbers. While the sales are down, the volume of new listings is up along with the average sale price, all of which contributes to a healthy market.”

The average sale price for single family-detached residential properties in the Kitchener-Waterloo area increased 12.1 percent, and freehold townhouses saw an increase of 4.7 percent from October of 2007.

The average sale price for all residential properties was $261,948 with single family detached homes averaging $311,041. The average condominium sale price decreased 1.4 percent from September to $169,171. The average sale price for single family detached homes was carried by an increase in the number of sales in the $350,000 - $750,000 range.

The median sale price reveals a more moderate and sustainable increase of 5.9 percent for single family detached homes, and 0.9 percent increase for all residential activity over October 2007.
“Our market is healthy,” says Shartun “and whether the dip in sales is a reflection of pre-election jitters or stock market instability from south of the border, or an indicator of a return to a more balanced market, will be determined over the coming months.”

Housing market in the Greater Toronto Area

2008-11-19T00:43:00.000-08:00

Toronto Real Estate Board stats for October created some heated dialogue in the industry in recent weeks. While many believe that the dismal statistics reflect the recent volatility in financial markets, some are now asking if they also identify an emerging trend in the Greater Toronto Area.

The simple answer is no. Although there are some serious negative factors influencing the marketplace, one month does not make a market. We need several consecutive months of momentum – one way or another – before we can really determine the direction of the market.

Make no mistake. 2008 has presented our industry with challenges across the board. Unit sales are down 16 per cent from one year ago, hovering at approximately 70,000, while average price at $380,654 is up marginally over year–to–date figures for the same period in 2007. And the prognosis will get worse before it gets better, considering the new land transfer tax rate implemented in January, 2008 artificially inflated housing values during the fourth quarter of 2007. Average price hovered close to $400,000 in October, November, and December of last year – which will be the measuring stick in the months ahead.

Clearly, market conditions have shifted in favour of the buyer. There are more homes listed for sale than one year ago and houses are taking longer to sell. Our forecast for 2008 – released in October of 2007 – said as much. Sellers are adjusting to new market realities – albeit reluctantly – while buyers are taking it all in. Some are sitting on the fence, waiting for housing values to fall further or interest rates to decline a percentage point or two more. The courageous are jumping into the market, taking advantage of lower prices, greater selection, and less competition.

For those that are trading in the same market, it’s all relative. Sellers may get less than they thought for their homes, but they’ll also pay less on the other side of the transaction. With market conditions stabilizing, first–time buyers now have the luxury of time in making their housing decisions. They also have greater purchasing power than they had one year ago – and their dollar will go much farther.

Unlike other investment vehicles, residential real estate serves two purposes. It’s still considered an investment, but it is also a roof over your head. We know from past experience that housing appreciates at a rate of five per cent annually. It’s cyclical, so it may rise and fall, but the risk involved will never be as steep or as serious as in the stock market, where the value of your portfolio can drop 30 per cent overnight and some of your stocks can fall to 0. You also can’t live in your mutual fund.

Real estate in the Greater Toronto Area has faced many challenges over the years but continued to experience steady growth. In 2009, there are some announcements that are expected to have a positive impact on the housing market and they are as follows:

The Bank of Canada has indicted that lending rates may fall further in 2009.
Federal government intervention in the form of a $75 billion mortgage purchase from the CMHC will free up additional credit.
Measures will be introduced by both the Federal and Provincial government to bolster the economy. In Ontario, that could mean a bailout package for the ailing manufacturing sector.
A lower Canadian dollar – hovering at 85 cents American – may provide a much–needed boost to manufacturing.
Job employment rates continue to hold steady in the GTA, despite upward momentum at the provincial level. The unemployment rate was 6.8 per cent in October, down from 6.9 per cent in September.
Population in the GTA continues to grow through migration, with 60,000 plus households expected to form in 2009.

Last, but not least, we must remember that the Greater Toronto Area generates about 10 per cent of the country’s total wealth – that’s comparable to what New York, Chicago, Boston, and San Francisco make to the US economy. There’s no question that we are a world–class city – in a have–not province. We may be in for some challenges over the next six to nine month period, but we should see clear signs of recovery by late 2009. The good news is that lifecycle events will continue to occur, whether real estate is experiencing a bull or bear market.

Blog Virgin - Help!

2008-11-13T02:22:00.001-08:00

Wow this is neat! Not sure where to start??