How housing policy is impacting one hot market

The Hamilton market is showing some signs being impacted by Ontario’s Fair Housing Plan, according to recently released statistics.

There were 1,638 residential home listings in August, up 6% year-over-year from 2016’s mark of 1,546. Those listings are 4.2% higher than the 10-year average. Sales, meanwhile, were down 18.2% with a total of 1,086 last month.

That didn’t stop price growth, though, with the median residential home selling for $485,450 – up 14% year-over-year from $426,000.

All of these stats together point to a balanced market, according to the Realtors Association of Hamilton-Burlington.

“The tendency toward a more balanced market that we have seen over the last few months has continued into August,” RAHB CEO George O’Neill said. “The sales to new listings ratio is at just over 65 per cent, which is still in the low end of a seller’s market, but much closer to balance than earlier this year.”

The median freehold home price jumped 13.2% year-over-year and the median condo home price increased 20.9%.

“The median and average prices continued to rise,” O’Neill said. “There had been speculation that with more listings on the market and fewer sales, prices would decrease as a result. That is not the experience in our market area – at least not so far.”

The average days on market increased to 33 days from 27 days for freehold homes and to 29 days from 27 days for condos.

Source: RAHB

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Qualifying rate to increase?

This is when one association is predicting the qualifying rate might jump.

A potential Bank of Canada benchmark rate increase has been the talk of the industry for the past few weeks, with many invested parties speculating on when the government will make the move.

For its part, the British Columbia Real Estate Association is predicting the Bank will hold off until 2018.

“While the likelihood of the Bank raising its target rate by the end of 2017 has certainly increased, we still expect the Bank to hold off until early 2018, particularly if oil prices remain low and inflation fails to pick up,” Cameron Muir, BCREA chief economist, wrote in his latest Mortgage Rate Forecast Report.

As a result, the association is also predicting the five-year qualifying rate will jump from 4.64%, as it stands today, to 4.74% in Q1 2018.

The average five-year mortgage rate, meanwhile — which sits around 2.61% — will jump to 2.79% by the end of Q3 2017, and then to 2.9% in Q4 and 3.05% in Q1 2018.

The qualifying rate is expected to hit 4.84% by Q4 2018 and the average five-year mortgage rate is predicted to reach 3.35%.

That’s the not-so-good news for those who plan to delaying buying a home until then. However, the rate increases will be the result of overall economic recovery.

“The Canadian economy has finally returned to good health following the rapid and dramatic decline of oil prices in late 2014 and the consequences of wildfires in Alberta last year. Since the third quarter of 2016, the Canadian economy has expanded at an average rate of 3.5 per cent, well above the Bank of Canada’s estimate of 1.7 per cent sustainable long-run growth,” Muir wrote. “After posting nearly 4 per cent growth in the first quarter of this year, we expect that real GDP growth will slow slightly to around 2.4 per cent in the second quarter with the economy ultimately growing 2.5 per cent this year and 2 per cent in 2018.

“If the economy continues to accelerate, and growth in real GDP is higher than currently expected by the Bank, slack in the economy could be eliminated by as early as the end of this year, which could push up the timetable for monetary tightening.”

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Industry weighs in on foreign buyer stats

Ontario-based associations discuss the recent released foreign buyer stats and whether or not any action is needed to control its influence.

Should Toronto implement a similar foreign buyer tax?

The Ontario Real Estate Association (OREA) doesn’t think so.

“A foreign buyer tax penalizes the international MBA student who will one day start her own business in our province, or the pediatric nurse aspiring to work at Sick Kids,” Tim Hudak, OREA CEO said in a release. “The lesson here is that we need sustainable, long-term solutions that get to the root of the affordability problem, and it starts with increasing housing supply.”

OREA referenced a study by the Toronto Real Estate Board, released Tuesday, that found a mere 4.9% of GTA transactions in 2016 involved foreign purchasers.

“As the foreign buyer conversation unfolded, TREB held steadfast to the view that the provincial and municipal governments should comprehensively and patiently review the issue of foreign purchasers of real estate in Ontario before making any policy decisions and should seek out actual empirical evidence on the level of foreign buying activity in the GTA,” the board said in its Market Year in Review. “In this regard, TREB decided to take the lead on data collection and commission its own study.”

TREB commissioned Ipsos, a third party research firm, to survey agents about the level of foreign purchasing activity throughout the GTA.

The survey collected over 3,500 responses.

As previously mentioned, the survey found an estimated 4.9% of foreign transactions in the GTA – with levels as high as 6% in York and Halton regions and as low as 1% in Durham.

In Toronto, the share of foreign buyers was 5%.

According to the survey responses, 40% of foreign buyers purchased a home as a principal residence; 15% purchased for a family member; 25% purchased as a rental investment; 4% purchased as a non-primary residence; and 3% purchased with the intent of keeping it vacant.

“These results were in line with recent CMHC findings related to the condominium apartment market. In the fall of 2016, CMHC estimated that 2.3 per cent of condominium apartments in the GTA were foreign-owned. In newer condominium apartment buildings, the share of foreign ownership was slightly higher at 3.9 per cent,” TREB said.

The results suggest the influence of foreign buyers on the GTA market is minimal and that a similar foreign buyer tax to Vancouver’s is not necessary.

Click here to read the entire study.

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Major investor hotspot no longer seller’s market

Real estate association tries to find the positive in a downward trending market.

“BC home sales trend toward ten-year average,” the British Columbia Real Estate Association proclaimed in its latest sales report.

“Moderating consumer demand in the province’s largest population centres continues to trend home sales toward the ten-year average,” Cameron Muir, BCREA Chief Economist, said. “The seasonally adjusted annual rate of MLS® residential sales was approximately 89,000 units last month.
The ten-year average is 83,000 unit sales, while the 15-year average is 85,300 unit sales.”

But is that the big story?

For investors with interests in the province, not likely.

Sales were down 20.1% year-over-year in November, coming in at 6,419 total residential sales.

Prices also took a dip, falling 6.4% year-over-year to $625,871.

Vancouver, specifically, had a tough month. Unit sales fell 37.4% to 2,225 and the average price dropped 3.8% to $895,084.

According to the Canadian Real Estate Association, Vancouver is no longer a seller’s market

“A sales-to-new listings ratio between 40 and 60 percent is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively,” CREA said in its monthly stats release. “The ratio was above 60 percent in almost half of all local housing markets in November, the vast majority of which are located in British Columbia, in and around the Greater Toronto Area and across Southwestern Ontario.

“In Greater Vancouver, the ratio has moved out of sellers’ market territory and into the mid-50 percent range.”

Still, it’s not all bad news.

“Year-to-date, BC residential sales dollar volume increased 22.8 per cent to $74.5 billion, when compared with the same period in 2015,” BCREA said, again focusing on the positive. “Residential unit sales climbed by 12.1 per cent to 107,488 units, while the average MLS residential price was up 9.6 per cent to $692,745.”

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Trends in three major markets

As real estate market data trickles in ahead of CREA’s official release, we have a good sense of how three major markets have performed.

Toronto
The country’s largest city continues to be its hottest one in terms of real estate.

Sales increased 16.5% year-over-year in November, according to the Toronto Real Estate Board.

This despite inventory challenges.

“Home buying activity remained strong across all market segments in November. However, many would-be home buyers continued to be frustrated by the lack of listings, as annual sales growth once again outstripped growth in new listings,” Toronto Real Estate Board President Larry Cerqua said. “Seller’s market conditions translated into robust rates of price growth.”

Edmonton
Prices increased in the Big E by an average of 3.95% for single-family homes and 6.39% for duplexes and rowhouses.

“There is continued strength and price stability in Edmonton’s real estate market. Most average selling prices increased this month, partially due to sales of the several high-priced listings,” Steve Sedgwick, chair of the Realtors Association of Edmonton, said. “The all residential median selling price is down 2% and condominiums median selling prices was down over 8%.”

Calgary
Following a solid October, Calgary’s market returned to previously weak performance.

Year-over-year sales fell 3% and were 17% below long-term averages.

“November was the first full month with CMHC’s new lending rules in effect,” said CREB® chief economist Ann-Marie Lurie. “As suspected, the gains in last month’s sales were temporary. Stringent conditions for borrowers are converging with the current economic climate and weighing on demand.”

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CREA releases latest stats

The Canadian Real Estate Association says the number of home sales edged higher in September compared with August, ending a streak of month-over-month decreases.

Sales through the association’s Multiple Listing Service were up 0.8 per cent nationally last month compared with August.

Sales were up in the Toronto region were up, while they continued to fall in and around British Columbia’s Lower Mainland region, which includes Vancouver.

“The Finance Minister’s recent changes to regulations affecting mortgage lending has added to housing market uncertainty among buyers and sellers,” said CREA President Cliff Iverson. “For first-time home buyers, the stress test for those who need mortgage default insurance will cause them to rethink how much home they can afford to buy.”

CREA has concerns that first-time buyers will be priced out of certain markets.

“First-time home buyers, particularly in housing markets with a lack of affordable inventory of single family homes, may be priced out of the market by the new regulations that take effect on October 17th,” said Gregory Klump, CREA’s Chief Economist. “First-time home buyers support a cascade of other homes changing hands, making them the linchpin of the housing market. The federal government will no doubt want to monitor the effect of new regulations on the many varied housing markets across Canada and on the economy, particularly given the uncertain outlook for other private sector engines of economic growth.”

Compared with a year ago, the number of home sales was up 4.2 per cent from September 2015.

The national average price for a home sold in September was up 9.5 per cent compared with a year ago at $474,590.

Excluding the expensive Greater Vancouver and Greater Toronto regions, the average price was $358,884 last month.

With files from Canadian Press

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In-depth look at BC’s latest housing forecast

It’s home to Canada’s hottest housing market, which is poised to break sales records this year. But how does the future look for the B.C. real estate?

“The BC economy is growing at a strong pace, with the resulting surge in employment inducing elevated consumer confidence,” the British Columbia Real Estate Association said in its latest housing forecast update. “Indicative of provincial economic performance, households are buying everything from apparel to real estate at above average levels.”

Housing market conditions vary in terms of expected performance, accord to CREA, with norther regions continuing to cater to buyers and the southern part of the province favouring sellers.

Overall, the province is expected to see 113,000 total homes sold this year before giving way to softer conditions in 2017, when 104,400 total home sales are forecast. That would represent a 7.8% total drop.

Starts, meanwhile, are expected to see an uptick of 31.1% this year – with 41,300 total homes expected to begin construction – before dropping 13.8% next year (35,600 expected starts).

The average price in British Columbia is expected to increase 11% year-over-year in 2016 to $706,900. Those gains aren’t expected to continue, with 2017’s average forecast expected to come in at $743,700 (+5.2%).

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Association announces executive appointments

The BC real estate has announced the appointment of Deanna Horn as its president.

“As BCREA President, I look forward to helping communicate the value of working with a Realtor, said Deanna Horn, an associate broker with RE/MAX Treeland Realty in Langley. “Realtors are dedicated professionals who play an important role in helping British Columbians realize the dream of home ownership.”

Horn joins President-Elect Jim Stewart of 560 Realty in Nanaimo; past president Scott Russell of Sutton Group Seafair Realty in Richmond; and Chief Executive Officer Robert Laing as officer of the association.

The association also announced directors Brenda Jackman, Gisela Janzen. As well as Public Director – Diane Dou.

“To demonstrate the profession’s commitment to improving Quality of Life in BC communities, BCREA supports policies that help ensure economic vitality, provide housing opportunities, preserve the environment, protect property owners and build better communities with good schools and safe neighbourhoods,” the association said in a release.

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Investors not as hard-hit as previously thought?

The final stats are in for one hard-hit market, and they show more optimism than some agents may have expected.

Sales stats for Edmonton — which were compiled by industry veteran Duane Ritter, an agent with RE/MAX, and shared with MortgageBrokerNews.ca – and they show two seemingly contradictory trends.

Sales were down, which should come as no surprise to agents, but prices were up year-over-year.
The average price for a single-family home in Edmonton was $437,569, a 1% year-over-year increase. The average price for a condo, meanwhile, was $252,511 – a 0.4% year-over-year increase.

Overall, the average price for all residential properties increased 1.5% year-over-year to $371,511.
“2015 was a steady year for real estate in Edmonton. Edmonton and the surrounding areas experienced a decline in sales due to economic uncertainty, but we saw a slight increase in price that demonstrated that the market remained relatively stable,” Geneva Tetreault, Edmonton chair for the Realtors Association, said. “This began to cool in the fall months as inventory remained higher than normal.”

According to Tetreault, buyers continue to take advantage of low interest rates.

The market also evolved over the course of the year.

“An influx of listing at the beginning of the year meant that buyers had a larger selection of homes and were able to take more time selecting properties than in previous years,” Tetreault said. “We continue to see a tight market in the popular $400,000 price range for single-family homes.”

Still, it was a tough year for Edmonton – especially considering the boom its enjoyed on the back of the oil industry.

For his part, Ritter has been in the industry for 32 years and has seen it all. He remains bullish on Edmonton’s future.

“I’ve seen three or four of the corrections and this one has a very different,” Ritter told REP. “There isn’t as much panic and there has been no push to lower prices.”

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Investor forecast for 2016

The Canadian Real Estate Association has updated its forecast for 2016, with two provinces expected to lead the way.

“Since CREA’s last forecast published in September, housing markets in British Columbia and Ontario have strengthened further,” CREA said in its updated housing forecast. “As a result, CREA has raised sales and average price forecasts for these provinces.”

National sales for the rest of the year have also been revised higher.

Home sales in Ontario are expected to rise by 9.3%, which would be higher if prices in the GTA were more affordable, CREA said.

“British Columbia is projected to post the largest annual increase in sales activity in 2015 (+21.4 per cent), while Alberta (-21.4 per cent), Saskatchewan (-10.8 per cent), and Nova Scotia (-5.1 per cent) will record annual sales declines,” CREA said. “Activity in Manitoba is forecast to rise by 2.3 per cent this year.”

One bit of bad news, however, is that the recently announced mortgage rule changes – which will impact homes costing more than $500,000 – will have a larger reach than intended.

“Recently announced changes to mortgage regulations that take effect early next year risk cooling housing markets beyond Greater Vancouver and the GTA, their intended targets,” CREA said. “In particular, the regulatory changes are also likely to reduce sales activity in Calgary once they take effect in early 2016.”

Despite this, home sales are expected to reach 498,600 next year.

“The national average price is forecast to edge higher by 1.4 per cent to $448,700 in 2016,” CREA said. “Price gains in 2016 are forecast to be strongest in Ontario (+2.9 per cent) due to an ongoing shortage of listings for single family homes coupled with strong demand for them in and around the GTA.”

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