If you have received this email in error, please let me know. Over the holidays my laptop had crashed and I’m putting back the pieces – including my weekly communication distribution list of all those that expressed consent to receive them.
Happy New year to all of you. As we begin to settle into 2016 much has already occurred in the first couple of weeks.
- Both the Canadian dollar and oil are trading at a 13 year lows.
- The Stock Market is posting losses day after day
- The Bank of Canada is considering a Prime Interest Rate Reduction.
- Toronto currently ranks 7th in job creation (up from 26th)
- The Toronto Real Estate Boards reports a record year in sales volume and pricing for GTA and predicts another record breaking year for 2016
- Volumes to go up to 105,000 Sales from 101,000 (2015) sales and average price of GTA home to increase to $655,000 (from $646,000)
NEW HOUSING REPORT – See the attached – “Year in review” The good stuff starts on page 16.
for the Toronto Real Estate Board’s inaugural Market Year in Review & Outlook Report.
This groundbreaking report is packed with useful information, including:
- Never before seen results from a TREB-commissioned Ipsos Reid survey of recent and intending home buyers. Imagine knowing how much buyers put down on their house or what types of homes respondents plan to purchase in 2016. Now you can!
- An overview of the real estate market in 2015 and a look ahead at what to expect in 2016 – will the market see another record year? Will federal government changes to mortgage lending rules affect sales?
- An exploration of what makes the GGH liveable and what we can do to improve its liveability and global competitiveness, with feedback from stakeholders in all levels of government as well as the wider public, non-profit and private sectors.
- The latest information on the new home market, including what it’s like to build within the current land use policy framework with insight from BILD and RealNet
TREB Market Year in Review & Outlook Report Released – Jan 18th 2016
- An overview of the real estate market in 2015 and a look ahead at what to expect in 2016.
- An exploration of what makes the GGH liveable and what we can do to improve its liveability and global competitiveness and a cohesive approach to future development of the region, with feedback from leaders in all levels of government as well as the non-profit and the private sectors.
- The latest information on the new home market, including what it’s like to build within the current land use policy framework, with insight from BILD and RealNet.
In short, this report provides a sense of not only where the real estate market currently stands and where it is heading, but also how the real estate industry is inextricably linked to the broader prosperity of our economic and political community.
Bank of Canada Prime Rate By: Dana Flavelle Economy, Published on Fri Jan 15 2016
A growing number of economists predict the Bank of Canada will cut interest rates next week in response to the deepening economic hit from slumping oil prices.
The move should lead to lower borrowing costs for consumers and business, which could boost spending and also put further downward pressure on a falling Canadian dollar relative to the U.S. dollar, which could help boost exports.
However, economists also cautioned that after eight years of record low rates, a further cut could have mixed results potentially further boosting house prices in overheated markets like Toronto and Vancouver, while only modestly helping drive exports. Canadian consumers are already carrying record levels of debt, they note.
The Bank of Montreal and Canadian Imperial Bank of Commerce are the latest to join a chorus of forecasters predicting a quarter-point cut in the central bank rate on Jan. 20.
That would take the Bank of Canada’s trendsetting rate back down to a record low 0.25 per cent and mark the third time in a year the bank has cut rates to prop up the economy.
“We now suspect that the balance of factors leans toward a third 25-basis point rate trim at Wednesday’s decision,” BMO chief economist Doug Porter and senior economist Benjamin Reitzes predicted in a research note Thursday.
Crude oil prices fell below $30 (U.S.) a barrel on Wednesday, down 70 per cent from their peak in June 2014, the key reason for their change in position, they said. Crude oil regained some lost ground Thursday, closing at $31.16 for West Texas Intermediate.
“We see the odds having tilted in recent days, and are now ever so slightly on the side of seeing a rate cut in January, or April at the latest,” CIBC chief economist Avery Shenfeld said in a note Thursday.
The plunging price of crude oil, Canada’s second largest export, has wiped out billions in economic value, pushed Alberta into recession, and taken Canada’s dollar below 70 cents U.S., a 13-year low. The Canadian dollar slipped further Thursday to close at 69.63 cents U.S., down .08 of a cent on the day.
Toronto Dominion Bank chief economist Beata Caranci first raised the possibility of a rate cut in a note Wednesday, citing the Bank of Canada’s quarterly Business Outlook Survey, which showed business investment and hiring intentions at their lowest level since the Great Recession of 2008/09.
Hot Canadian housing market a ‘global anomaly? by Justin da Rosa | 13 Jan 2016
Last year marked the 19th in a row for consecutive price appreciation in Hogtown. Prices have also increased 214% since 1996, according to one real estate firm.
“The overall strength and stability of Toronto’s housing market is a global anomaly,” Ken McLachlan, broker-owner of RE/MAX Hallmark Ltd., said in a release. “Very few large residential housing markets can compete with the GTA’s performance over the past two decades.” Indeed.
The average price for a Toronto home in 1996 was $198,150; the average price for a home in Ontario’s capital is now $622,217, according to the Toronto Real Estate Board. That’s a 6.21% increase when compounded over 19 years.
Population played a major role in price growth, according to the brokerage. 6,055,724 people called Toronto home in 2014, up from 4,263,757 in 1996.
“The low interest rate environment has also influenced home buying activity in the GTA,” the agency said. “While the average residential mortgage-lending rate for a five-year term hovered at approximately eight per cent in 1996, the same product can be had for under three per cent in today’s competitive market.”
For his part, McLachlan is bullish Toronto’s future.
“Moving forward, there is no reason to expect the upward trend to end,” McLachlan said. “In light of recent volatility in the stock market and overall economic uncertainty, we anticipate an upswing in home buying activity as investors look to tangible assets like bricks and mortar to ride out the storm.
“The strength of the US dollar will also contribute, serving as an impetus for greater investment in the Greater Toronto Area throughout 2016.”
A few of the major lenders have also increased rates (I.E – Not discount them as much from the posted rate as they have been). Both fixed and variable mortgages are slightly higher by about 0.25%.
There are many factors that drive mortgage rates. The last move made by the banks has to do with simple profitability. As the mortgage margins shrink, the banks have a tougher time generating the same or more profit from lending. Even though the Bank of Canada Prime rate may decrease this week we will not likely see it translate to lower fixed rate mortgages. The latest moves by the bank could have been made in anticipation of a lower prime rate. If the prime rate goes down they can still “pocket” the difference with less discount
Luxury Market Spiked in 2015
Toronto, Vancouver luxury real estate sales soared in 2015 – by Josephine Nolan January 2016 (Condo.ca)
Three of Canada’s four major residential real estate markets—Toronto, Vancouver and Montreal—saw growth in their luxury segments in 2015. The fourth, Calgary, declined. In fact, the fastest growing segment of the market in Toronto last year was homes priced at $4 million and higher. Demand for luxury real estate, according to Sotheby’s International Realty Canada, is “very high,” with inventory insufficient to meet the demand. That has led to bidding wars, pushing prices even higher.
How high is high? In Toronto, sales of detached homes in the $4 million-plus category were up 67 per cent over one year ago. Sales of homes at $1–$2 million were up 40 per cent, and in the $2–$4 million range sales jumped 42 per cent. Altogether, 11,112 properties over $1 million were sold in the GTA, an increase of 48 per cent over the previous year. Toronto, which had a record-breaking year for real estate sales overall, also led the country in the luxury segment, which accounted for more than 10 per cent of all home sales in Toronto in 2015 . The Toronto luxury home market is characterized. according to Sotheby’s, by limited inventory, consumer confidence, pre-emptive and multiple offers, and sales above list price.
That includes condominiums, of course. Sales of condos above $1 million, were up 37 per cent year over year, with 541 units sold in that price range. Most of those sales, 453 in all, were in the $1–$2 million range. Seventy-nine condos sold for between $2 million and $4 million. What’s more, a large number (28 per cent) of those high-end condos sold at more than the list price. Condo sales at the highest level, over $4 million, more than doubled, from four units in 2014 to nine units in 2015.
Construction Blog # 14
The mild December did indeed work in our favour. The exterior of the home is basically complete. There are always odds ends that need to be tended to but they will have to wait till the spring.
I’m glad that the masons are finally done/gone! I had to hold back $5000 from final payment as the work was not 100% complete and also that some work needed to be redone/repaired. The masons tested my patience and resilience quite a bit.
Currently there is no heat in the house as the gas line will not be installed for several months. It can take the gas company up to 6 months to put in the service (it used to be 2 weeks). We can get propane heat but it’s costly and dangerous to work indoors with it. A properly licensed operator has to be on site all time, so I expect work to really slow down right now. On very cold days it’s not very feasible to have anyone working there. Having said that, the plumbing has commenced and I’m dealing with personal friends/contacts with the inside of the home. I’m getting quotes for stair cases this week as well. I suggested a fireman’s pole, but it was vetoed.
Over the next 10 days I plan to “clean up” the construction site myself and kind of put things in order.
I know many more issues will arise but I hope that they won’t be as frustrating to deal with. Par for the course.
Have a wonderful (warm) week, Anthony