Good morning everyone;
I hope this communication finds you doing well and feeling great. I’m crossing my fingers that next week we have warmer temps and sunny skies.
In the Market (see full report)
GTA REALTORS® RELEASE MONTHLY RESALE HOUSING FIGURES TORONTO, April 5, 2016 – Toronto Real Estate Board President Mark McLean announced record TREB MLS® home sales for the first quarter of 2016 following a strong result for March transactions. There were 10,326 sales in March and 22,575 sales in the first quarter. The year-over-year growth rate for sales was 15.8 per cent for Q1 2016 and 16.2 per cent for March 2016. For the TREB market area as a whole, double-digit year over-year rates of sales growth were experienced for all major home types during the first quarter.
The positive annual growth in sales was not mirrored on the listings front. The number of new listings entered into TREB’s MLS® System during March and the first quarter were down compared to the same periods in 2015.
“At the beginning of 2016, TREB’s outlook for the year pointed to a strong possibility of a second consecutive record year for home sales. This outlook was based, in part, on upbeat consumer survey results pointing to robust home buying intentions. It is clear that these upbeat intentions have translated into record first quarter results,” said Mr. McLean.
The MLS® Home Price Index Composite Benchmark for March 2016 was up by 11.6 per cent compared to March 2015. The average selling price for all home types combined was up 12.1 per cent year-over-year in March and 13.6 per cent in the first quarter.
“Demand was clearly not an issue in the first three months of 2016, regardless of the housing market segment being considered. The supply of listings, however, continued to aggravate many would-be home buyers. We could have experienced even stronger sales growth were it not for the constrained supply of listings, especially in the low-rise market segments. The resulting strong competition between buyers has underpinned the double digit rates of price growth experienced so far this year,” said Jason Mercer, TREB’s Director of Market Analysis.
Average Detached Price in the 416 Area – $1,174,358
Number of homes for sale in Toronto, Vancouver plummets
Huffington Post Canada – Daniel Tencer April 7th 2016
This is pretty much the last thing new home buyers in Toronto and Vancouver needed to hear.
Canada’s two hottest housing markets are experiencing a shortage of homes coming onto the market, National Bank Financial notes in a new report. The supply of homes listed for sale in those two cities has dropped to the lowest levels seen in 12 years.
Listings in Vancouver’s market have dropped more than 40 per cent in the past year. In Toronto, listings have slipped 3.7 per cent in the same period, and down some 50 per cent from the peak in 2008.
“The combination of high demand and low supply of course puts pressure on prices,” National Bank economist Marc Pinnsoneault wrote, adding that these two cities are responsible for the growth in average house prices in Canada. This could all ‘end badly’ — but when?
No one has a clear explanation why fewer Canadians are putting their homes up for sale, especially in this high-price environment. This author’s own speculation: aging baby boomers are retiring, and the retired largely stay put.
But whatever the reason for the run-up, many economists say such steep increases can result in a crisis in the market if it goes on long enough. Affordability is deteriorating; mortgage rates are at rock-bottom and can, for the most part, only rise from here.
“Odds are that if this kind of price growth (especially Vancouver) continues, it will end badly — but that still looks to be sometime down the road,” Bank of Montreal senior economist Robert Kavcic wrote in a client note Wednesday.
Kavcic offered five scenarios that could topple the housing markets in Canada’s hottest cities — and shot them all down as unlikely in the short term.
Here’s Kavcic’s list of what could cause things to “end badly” in the housing market — but won’t, for now:
- An economic slowdown/jobless rate spike: Not likely anytime soon, with growth in B.C. and Ontario leading the country.
- Higher interest rates: Umm, no. Note that 5-year GoCs are trading back below 70 bps. [Translation: The markets expect interest rates to stay low for a long time.]
- More supply: Condo supply is coming to market in these cities, but detached supply, as we’ve argued for years now, is drum tight and not changing.
- Affordability: The concern is that rising prices don’t slow activity, but rather beget even higher prices. The Vancouver condo market might be heading down this road now.
- Policy measures: That’s a no. At least not the variety (i.e., marginal changes to down payment requirements) most recently introduced by Ottawa.
I personally have these types of conversations with clients and friends all the time and bee stating the same for a few years now! Other demand pressures coming from buyers upsizing from their first condo purchase, new waves of immigration from Europe and Eastern Europe and even Latin America where economies have been hit hard.
Lack of Inventory is also due to sellers being worried to sell and having to find something to buy and giving their profits back to purchase another property.
Related Story – This week – Bidding war in the east end.
I have been working with a lovely couple now for several months now trying to find a nice home in the Danforth and surrounding areas. This past week we came across a nice detached home that was dated but livable. It had much upside potential . My clients liked it quite a bit and we decided to present an offer on offer night. Based on a recent comparable sale (a nearby slightly superior home on the same street sold for 810k 5 months earlier asking 749k) I told my clients that the home we were bidding on was worth about 840-850k but would likely sell for 900k because of market conditions. My clients stepped up with an offer of 925k! We were competing against
4 other offers and the final sale price was $961,000! On paper not worth it! Having said that, it is now the new bench mark for similar homes. My clients were disappointed but not overly upset as the sale price was not justified.
I think the biggest disappointment would be felt by the seller of the comparable home down the street who sold a superior home for 151k less only 5 months earlier! YIKE
Marijuana Medicinal Dispensaries
Currently in my commercial lease inventory I have 3 properties available for lease. I receive about 3-5 calls per week by different realtors asking if the landlord would be ok with a marijuana dispensary. Most landlords are not ok with it. Mostly due to image and stigma, dispensaries are not yet widely accepted. There can be some real concerns such as insurance costs and security as well. I feel that within the next 1-3 years that dispensaries will be popping up in all areas of the city. Currently I may be leasing a space out near a downtown hospital (which makes perfect sense) for use by a dispensary. Interesting stuff.
Have a fantastic weekend and amazing week!