February 2008 Market Report

2008-03-05T16:42:00Z

GTA Resale Housing Down but Healthy

March 5, 2008 -- Toronto Real Estate Board Members recorded 6,015 resale home transactions last month, down 11 per cent in the Greater Toronto Area overall , 14 per cent in the City of Toronto and 9 per cent in the 905 suburbs compared to February 2007.

“To get an accurate perspective of current market conditions, a number of factors have to be considered,”. “With 18,018 properties available for sale, inventory has decreased seven per cent from last February.

“This indicates that despite moderate sales, there is not an over-supply of homes on the market. Generally, properties that are listed are selling fairly quickly and with a list to sale price ratio of 99 per cent, for the most part, sellers are realizing their asking price.”

Despite the decrease in the number of sales from this time last year, there was positive news with respect to prices in February. At $382,048 in the Greater Toronto Area and $424,235 in the City of Toronto, the average price increased four and two per cent respectively compared to February 2007. As well, the time on market in February was 30 days compared to 35 days a year ago.

Despite the overall decline, some GTA neighbourhoods experienced strong sales in February.

In Ajax (E14) sales were up 11 per cent compared to mid-February 2007, based mainly on an increase in detached home sales.

In Pickering (E13) sales rose 28 per cent overall compared to a year ago due to a strong increase in condo townhouse and condo-apartment transactions.

“All economic indicators are in place for an active year in the GTA, and as the weather improves sales are expected to increase as well.”

Canada not linked to US real estate market troubles

2008-01-11T15:05:00Z

Canada not linked to US real estate market troubles
The melt-down of the U.S. real estate market has left many homebuyers wondering if and how it may affect the housing market in Canada. But market analysts say the problems in the U.S. will have little impact on Canadian real estate.

For example, according to a recent House Price Survey report released by a leading Real Estate Company, Canada's resale housing market remained on solid ground during the third quarter as high consumer confidence, strong employment rates and stable interest rates led to robust buyer demand and a rise in house prices. “Much like the Canadian dollar, the Canadian housing market is charting its own course, quite independent from the United States and its currency and housing climate,” said Phil Soper, president and chief executive. “The strength of the Canadian dollar, and the fact that the country is adjusting well to its value, will continue to keep interest rates at their existing low-to-moderate levels, boding well for buyers looking to enter the market.”

Statistics Canada also recently reported that the home ownership rate stands at its highest on record. “With the combination of the cost of borrowing money remaining relatively low, the availability of longer mortgage amortization periods, and the fact that Canada's population continues to grow, it is no surprise that more and more people are entering the real estate market,” the report states.

Fundamental differences
The Emerging Trends in Real Estate Report 2008, recently released by U.S.-based Urban Land Institute and PricewaterhouseCoopers, suggests the real estate market will remain upbeat in Canada over the coming year. The report is based on interviews with real estate executives in both Canada and the U.S. Some of the reasons why Canada is not expected to experience the same downturn as the U.S. in its real estate markets according to the report include:

Canada benefits from a simpler economy and a more conservative investment environment than the United States, avoiding the consequences of lax underwriting and speculative building.
In Canada, institution-dominated markets appear to be avoiding "transaction mania," but real estate values have reached record highs and a strong economy has accelerated tenant demand for space.
Canadian federal surpluses have given consumers more confidence which has led to increased spending on homes, retail goods and business expansion.
Canada is naturally rich in areas such as energy and resources and benefits from huge global demand, which fuels both the economy and demand for all forms of real estate.
Housing prices continue to skyrocket toward new highs without overdoing mortgage financing.
Canadian metropolitan areas boast below 5% vacancies, and rents have room to push higher. Rental apartments are doing well in major cities with high immigration flows.
Canada's economy continues to be healthy and the soaring dollar brings benefits to importers and any company looking to make capital purchases, which are almost always priced in U.S. dollars.

No sub-prime lending market
Finally, another big difference between the U.S. and Canada has to do with mortgage loans. Unlike the U.S., the Canadian housing market has not been artificially driven by bad lending practices. In the U.S. lenders with liquid assets or investment money were making loans to almost anyone who asked. When U.S. housing prices started to slide and interest rates began to rise, many borrowers ended up in trouble and defaulted which in turn, initiated the credit crunch. However, by June 2007, only 5 per cent of mortgages in Canada were sub-prime as compared to more than 21 per cent of U.S. mortgages. As well, all mortgages in Canada are insured which is not the case in the U.S.

Canada's long-term fundamentals are solid. Canada has a growing population, our energy and commodities are in high demand, and job creation is strong. All of these attributes seem to have created a buffer shielding Canada from some of the problems in the U.S. real estate market.

Canadian Real Estate Market

February 2008 Market Report

Canada not linked to US real estate market troubles