Good morning everyone;
I hope this communication finds you well.
In the news…
Zoocasa will be no more As of June 22nd Zoocasa will cease to operate!
Online real estate brokerage Zoocasa will cease to exist as of June 22.
The website, a wholly owned subsidiary of Rogers Communications, began as a listings website before expanding in 2013 into linking up buyers and sellers with realtors.
Zoocasa-recommended realtors would sometimes offer customers sales commissions a few percentage points lower than the industry standard, which is about 2.5 per cent for both the buyer and seller.
Earlier this year, the Toronto-based company ran afoul of the local real estate board by mailing clients a list of sale prices for nearby homes every day. Previously, it was much harder to get that sort of proprietary information about how much houses sold for — not just listed for — which encouraged would-be buyers and sellers to work with a realtor directly.
The Toronto Real Estate Board took issue with that practice, citing concerns with customer privacy, and sent warning letters out in February to Zoocasa and a number of other online services that were sending out similar data. Some ignored the threat and kept mailing out the data. But Zoocasa complied with TREB’s request.
It then registered as a licensed brokerage, giving it access to MLS information that it included on a relaunched website and sent to clients. TREB asked the company to stop sending out sales info when Zoocasa agreed to get its licence at the start of March.
A spokesperson with Rogers told CBC News “the business overall is shutting down — so we will be closing down the website and the mobile app and the operations of the business as of June 22nd, 2015.”
“We made this decision to no longer continue our investment as Zoocasa as the business is no longer a fit with our (Rogers) overall plan for the company at large and our core areas of focus.”
John Andrews, a professor of real estate at Queen’s University, said Zoocasa was the most likely of alternative agencies to succeed and its demise points to the dominance of the MLS system.
“I’m not really surprised by the [shutdown.] The MLS system really had a very strong market share and the various alternatives to listing don’t necessarily provide the whole host of agent services to their markets,” he told CBC News.
Selling or buying a home through a service such as Zoocasa can take a lot of legwork and relies on the homeowner or buyer knowing their local market, Andrews added.
“The fees they were charging were really very low, so unless they were able to penetrate that MLS market to a great extent, their revenue was pretty limited,” he said.
GREATER TORONTO REALTORS® REPORT MONTHLY RESALE MARKET FIGURES TORONTO, June 3, 2015 [Download the report]
– Toronto Real Estate Board President Paul Etherington announced 11,706 sales reported by Greater Toronto REALTORS® in May 2015. This result was up by 6.3 per cent in comparison to 11,013 sales reported in May 2014. For the TREB market area as a whole, sales were up for all major housing types.
However, in the City of Toronto, where the supply of low-rise listings has been constrained, sales were down for detached homes. “During my tenure as TREB President over the past year, it is clear to me that ownership housing remains top of mind as a quality long-term investment for GTA households. This is why, despite a shortage of listings in some market segments, we experienced a record number of sales reported through TREB’s MLS® System for the month of May,” said Mr. Etherington.
Record May transactions, coupled with a dip in the number of homes available for sale, resulted in strong price growth. The MLS® Home Price Index (HPI) Composite Benchmark was up by 8.9 per cent year over year in May. The MLS® HPI uses benchmark homes to estimate price growth. This allows for an “apples to apples” comparison of price growth that is not affected by changes in the mix of sales activity. The average selling price for all home types combined in May 2015 was up by 11 per cent annually to $649,599. The higher annual rate of average price growth compared to the MLS® HPI Composite Benchmark points to the fact that the proportion of high-end home sales continued to be greater compared to 2014.
“Tight market conditions, especially for singles, semis and town homes in the GTA, have resulted in strong price growth regardless of the price metric being considered. With no relief so far on the listings front, expect similar rates of price growth as we move through the remainder of 2015. At this point, a number of months where listings growth outstrips sales growth would be required to satisfy pent-up demand,” said Jason Mercer, TREB’s Director of Market Analysis.
GREATER TORONTO REALTORS® REPORT COMMERCIAL MARKET FIGURES TORONTO, June 3, 2015
Toronto Real Estate Board President Paul Etherington announced that TREB Commercial Network Members reported 377,052 square feet of space leased on a per square foot net basis with pricing disclosed in May 2015.
This result was down from 629,864 total square feet leased in May 2014. The industrial market segment accounted for 80 per cent of total square footage leased.
While the amount of space leased was down on a year-over-year basis in May, average per square foot net lease rates were up for the industrial and commercial/retail segments. The average office lease rate was down compared to 2014. “Commercial leasing activity is often volatile on a month-to-month basis, with one large deal, or the absence thereof, making all the difference to the aggregate results.
However, the fact that the average industrial lease rate was up in May compared to last year suggests that the demand for space in this important market segment remains strong,” said Mr. Etherington. The total number of combined industrial, commercial/retail and office properties sold in May 2015 amounted to 52 – down from 61 transactions reported during the same month in 2014. The average industrial sale price on a per square foot basis was down slightly year-over-year.
The average selling prices for commercial/retail and office properties were down by a greater amount, but this was largely due to a change in the mix of properties sold this year compared to last. “Both the sale and leasing markets for commercial properties are dependent on firms’ outlook for the economy.
While the positive impact of the lower Canadian dollar is promising for businesses in the Greater Toronto Area, uncertainty in the broader Canadian economic picture will likely feed through into some periodic volatility in results,” continued Mr. Paul Etherington.
18% of first-time homebuyers get help from parents, CAAMP says
Almost one out of every five first-time homebuyers in Canada got some sort of gift from parents or other family members towards the purchase price, a report from the Canadian Association of Accredited Mortgage Professionals says.
CAAMP is an organization that represents the mortgage industry in Canada, with more than 11,500 members across the country. In a biannual report on Tuesday, the group takes a closer look at some of the numbers underpinning the Canadian housing market.
Every year across Canada, some 620,000 Canadians buy a home, CAAMP says. First-time buyers are the largest chunk of that, at about 45 per cent, or 280,000 buyers a year.
As one might expect, the financial details of someone who is buying a home for the first time, and someone later in life who is buying a second or third, can be wildly different.
Across all buyers and types of housing, the average down payment was $119,000 this year, CAAMP says. That’s about one-third of the purchase price of an average home. But first-time buyers, in general, put less down — just over $67,000, on average, or 21 per cent of their purchase price.
Bank of mom and dad
A little under one out of five of them got some sort of financial gift from a parent or other family member, CAAMP says.
All in all, first-time buyers put down $18.8 billion in terms of down payments last year year. Or that total, $2.2 billion was a gift from parents, and an additional $1.1 billion came as a loan from family.
While not insignificant, both sources of funding pale in comparison to the main source of cash, which CAAMP says is the personal savings of the buyers in question. For first-timers, that made up $10 billion or more than half of the down payment.
Still, while it may only be a small amount of the total sticker price, a growing number of first-time buyers are hitting up the bank of mom and dad — as many as 18 per cent, CAAMP says. That’s figure is up from as recently as November, when CAAMP said only about 13 per cent of first-time buyers received cash gifts from families for downpayments.
That proportion drops significantly for second- and third-time buyers who have larger pools of savings to draw on, including the proceeds of previous home sales.
If there’s one trend across all buyers, however, it’s a preference for the prototypical single detached home. Up to 57 per cent of all home sales still come from that increasingly less prominent type of housing stock.
About 60,000 semi-detached and 60,000 row houses are sold every year, with the rest of the total, 120,000 or 19 per cent of all sales, taken up by condos.
Most pay less than expected
And despite apocryphal tales of rampant bidding wars, CAAMP says most buyers end up spending less on a home than they had originally allotted to do so. About 75 per cent of all buyers ended up spending less on a home than the maximum they had budgeted for it.
“On average, actual prices paid were 93 per cent of the target maximums,” CAAMP said, adding that “outcomes for first-time buyers were very similar to other buyers.”
The exceptions, of course, typically come in the two markets that most market watchers frequently single out for skewing the national average higher: Toronto and Vancouver.
CAAMP says “in those two markets, prices are increasing very rapidly, which is causing the national average resale price to increase. This distorted rate of price increase is masking what is more generally a weakened national housing market.”
Average mortgage rate: 3%
While many people were choosing to cash out their home equity and “downsize” into a smaller home, CAAMP says that almost two-thirds of second-home buyers ended up paying more than they sold their first home for and were “moving up” the home ladder as opposed to moving down. The average gap was $28,500.
Cheap lending continues to fuel all types of housing activity, with CAAMP calculating that the average Canadian mortgage is currently at three per cent. That’s very low by historical standards and clearly a factor in all segments of the market. When CAAMP polled home buyers what they thought was the main factor driving real estate, most said that “too many” people were buying homes solely because of low rates.
But CAAMP’s economist Will Dunning points out an implied dichotomy in that: most homebuyers think prices are getting out of control, but everybody seems to think it’s because of what other people are doing, not themselves.
“As we have commented in the past, this opinion is hard to square with their own behaviours and their assessments of their own circumstances,” Dunning said. “They appear to harshly judge the behaviour of anonymous strangers.”
– Competition among buyers continues to drive home prices even higher in Metro Vancouver, the Real Estate Board of Greater Vancouver notes in its review of the May market.
Residential property sales in Metro Vancouver were 23.4 per cent higher than in the same month last year, with 4,056 home sold in the board’s region, compared to the 3,286 sales recorded in May 2014.
The MLS Home Price Index composite benchmark price for all residential properties in Metro Vancouver rose 9.4 per cent from May 2014, to $684,400.
The benchmark price is the price of a home deemed representative of the area.
“We continue to see strong competition for homes that are priced right for today’s market,” Darcy McLeod, REBGV president, said in a release issued this morning.
Have an amazing weekend,