TREB President's message - New mortgage rules have affected home sales

December 14, 2012
A moderate number of resale home transactions took place throughout the Greater Toronto Area (GTA) in November, with 5,793 homes changing hands. This represented a 16 per cent decrease from 6,908 sales in November 2011.
In Toronto 2,308 transactions took place last month compared to 2,952 sales a year ago - a decline of nearly 28 per cent. Meanwhile 3,485 homes changed hands in the 905 Regions, a decrease of more than 13 per cent from 3,956 sales in November 2011.
A key factor that has influenced the dip in sales experienced in recent months relates to the changes in mortgage lending guidelines that came into effect in July. The changes reduced the maximum amortization period from 30 years to 25 years and set a purchase price ceiling for government backed insured mortgages at one million dollars. These regulations have resulted in some households putting their decision to purchase on hold while they save up more money for a down payment and/or experience an increase in their income. Adding to this situation in the City of Toronto is the additional upfront Land Transfer Tax, which takes money from home buyers that could otherwise be used to offset the high costs of home ownership.
While sales decreased year-over-year in November, a modest overall price increase was reported, with the average price of a GTA home reaching $485,328. This represented an increase of 1.6 per cent compared to a year ago.
The 905 Region, with an average price of $463,779, showed a price increase of four per cent compared to a half-percent decrease in the City of Toronto average home price, which was $517,866.
The pace of average price growth in November was slower than what was experienced for much of 2012, especially in the low-rise segment of the market. This was largely due to the fact that the mix of single detached homes sold in the City of Toronto this past November changed relative to last year. Specifically, the share of homes that sold for over one million dollars was down considerably.
While the mix of home types sold may have changed, market conditions remained tight for low-rise home types. This is evident when we consider the MLS® Home Price Index (HPI) for the GTA. The MLS® HPI tracks the price change for benchmark homes – in other words: a home with the same attributes over time. When we look at price through this lens, we find that the benchmark price for major home types was up by 4.6 per cent in the GTA as a whole and 3.9 per cent for the City of Toronto.
News on the employment front was positive in November, as the Toronto seasonally adjusted unemployment rate decreased to 8.2 per cent, from 8.6 per cent the previous month. Interest rates remain largely unchanged, with a five year fixed mortgage rate of just over three per cent continuing to be available.
At this time of year I am often asked whether it is prudent to list one’s home for sale over the holidays, and there are in fact, many benefits to doing so. Consider that those viewing homes at this time of year are more likely to be serious buyers. As well, homes often look their best when they are decorated for the holidays, and a favourable emotional response to a property often prompts an offer.
I encourage you to talk to a Greater Toronto REALTOR® about the many other factors you should consider before choosing to make your next move and in the meantime, be sure to visit www.TorontoRealEstateBoard.com for all of the latest updates on the market.
Ann Hannah is President of the Toronto Real Estate Board, a professional association that represents 35,000 REALTORS® in the Greater Toronto Area.

Article can be read here: http://communications3.torontomls.net/media_centre/star_column/index.htm

November 2012 Real Estate Market update

Newmarket Real Estate Data

Average Price
November 2012
Average Price: $439,470
Active Listing: 182
Sales/Month: 100
Sales/Active Listings: 54.95%
Sales/Year (to-date): 1,425





Volume of Sales

November 2011
Average Price: $427,706
Active Listings: 109

Sales/Month: 106
Sales/Active Listings: 97.24%
Sales/Year (to-date): 1,336






Prices are still historically high, but the concern is going to be whether the market will bear the high prices with stricter lending policies put in place by the federal government.

If there are more Buyers than Sellers, the market is good for Sellers and prices increase. But if Buyers are having a tougher time qualifying for financing, the Buyer pool becomes smaller than the Seller pool and simple economic, supply and demand law, will dictate that prices should decrease.

So, long and the short of it is this: The government is trying to curb consumer debt by making lending policies stricter, which should also put the brakes on housing prices continue to soar. I'm not saying the market is going to crash, especially since we are located in a great geographical location and have amazing services at our finger tips (thus creating an outside demand for our area), but Sellers need to understand that they might not sell their home for more than their neighbour did this year... the market is changing!

Let me know your thoughts!
Darcy Toombs

December 2011 Market Stats - Annual Recap

House prices overvalued by 14 per cent in Canada: CIBC - Yourhome.ca

House prices overvalued by 14 per cent in Canada: CIBC - Yourhome.ca
Click on the link above to read the Article in today's Toronto Star.

As this graph shows, March was the best month for sales volume in 4 years.

The supply levels are significantly higher now than in the spring, which is causing the market to balance out a bit more than we witnessed in the winter months. If supply outweighs demand, prices drop.

The sales-listings ratio is actually down from february, which isn't that uncommon, but a big contrast to what happened the same time last year.

Becuase of the large unbalance of demand outweighing demand over the winter months, average prices skyrocketed over those of the past 4 years.

YOu can see the large disparity of available homes for sale over the course of 2009 from the above graph which I believe helped fuel the demand as the signs of economic recovery appeared.

Canadian Real Estate Prices

All this talk of recession has a lot of people thinking about what their property may be worth in today's economy. To shed some light on things, I present you with the Canadian Real Estate Accosication's (CREA) National statistics on the housing market, presented by way of average prices from across the country. It might surprise you that some provinces have seen average price increases from a year ago.

The National Average price in April 2009 was $306,366, while in 2008 it was $316,438. Although this doesn't look overly great to start with, the national average price drop is largely due to the falling prices in cities that were considered overinflated, such as Calgary, Vancouver and Victoria.

Other notables that saw a decline in the average price were Edmonton, down nearly $29,000; and Toronto, down over $13,000. Surprisingly though, Hamilton, Ontario (Steel Town), which is located 30 minutes West of Toronto witnessed an average increase of nearly $3,000. It's hard to read into the macroeconomics of it, but that increase in price could likely be due to a few factors, such as the revitalization of the city as well as the New GoTrain line that now services Toronto Commuters.

But it's not bad news for the rest of the country. Provinces such as, Saskatchewan, Manitoba, Quebec, Nova Scotia, New Brunswick, PEI, and Newfoundland have all seen increases in the average sale prices. (See http://www.crea.ca/public/news_stats/statistics.htm for more details on each).

Overall, the Canadian Real Estate Market appears to be healthy, although making some adjustments in some markets, which we largely feel is due to the strong financial condition of our Big Five Banks. Please visit http://en.wikipedia.org/wiki/Big_Five_(banks) for more details on the Big Five.

Greater Toronto Resale Housing Sales Up in First Half of May

TORONTO, May 19, 2009 - Greater Toronto REALTORS® reported 4,561 transactions in the first half of May – an increase of three per cent compared to May 2008.

“Members reported a rise in buying activity this month,” said TREB President Maureen O’Neill. “Many home buyers who were undecided about purchasing a home during the winter months are now proceeding with confidence as a result of the GTA housing market's affordability.”

The average price for MLS® sales was in line with last year, down by less than one-half of one per cent at $399,811.

“More sales and fewer listings resulted in tighter market conditions which pushed the average selling price back up to last year's level,” according to Jason Mercer, TREB’s Senior Manager of Market Analysis. “Look for new listings to increase as home owners react to the positive news surrounding home sales and prices.”

Rate the Resale Value of your Reno

While some renovations may pay for themselves by increasing the value of your home, others could hinder a resale. Here’s what you need to know before you book that contractor.

There are lots of reasons for making home improvements, whether to customize a home to your needs, do repairs and maintenance or make a home more appealing for resale. But all not renos are equal when it comes to how they influence the value of your home. Here are some factors to consider.

If you plan to stay

If you plan to stay in your home for a while, and personal enjoyment or maintenance is your main priority, make your reno choices based on your needs and your budget. If you’re not expecting to move anytime soon, it’s best not to assume you’ll necessarily get your reno investment back, further down the road. After all, home improvements have a shelf life, and any renovation can become dated over time.

If you plan to sell

If you’re planning to sell in the next little while, and see your renovations as a way to add value to your home, you may want to take a different approach to your decisions. According to the Appraisal Institute of Canada’s 2004 Home Renovation Survey, the renovations that provide the highest payback potential are bathrooms and kitchens, with a potential investment return of 75% to 100%, and interior and exterior painting, with a potential return of 50% to 100%.

An eye for the buyer

Once you start renovating and decorating for the critical eye of buyers, you will have to consider their tastes as well as your own:

• Choose tasteful, neutral colours and materials that will appeal to the widest possible audience.

• Avoid cutting corners. The quality of workmanship and materials is also a factor in the return on investment.

• Ensure that the home feels consistent throughout. A luxurious new kitchen will look out of place if the rest of the home looks shabby.

• Try to imagine the type of buyer your home and neighbourhood will attract. A starter home for young couples, for example, might not benefit from a lavish bathroom, whereas an executive home might recoup the costs more easily.

Above all, remember that you may not get all your money back. Ask yourself if you’re willing to put up with the inconvenience and stress of a significant renovation like a kitchen or bathroom remodel.You might consider other, smaller improvements that can help your home show better. Replacing flooring, installing a new furnace or replacing windows and doors can also bring good payback potential.

Renos that could cost you

Adding value to a home isn’t simply a matter of adding on the cost of your renovations. The market you’re in, your neighbourhood and local demand will all influence how much the home is worth. Be cautious of over-renovating beyond the price range of these built-in limitations. Adding other features may end up costing you more when it comes to resale. Swimming pools and hot tubs, for example, offer poor returns in colder climates because buyers see in them additional work and cost. Other renos that may fetch lower returns include landscaping, interlocking and asphalt paving, fences and skylights.

- Article comes Courtesy of TD Canada Trust