Home sales in Toronto last year were disproportionately concentrated in the first half of the year, leading to some double-digit price hikes. Buyers rushed to beat anticipated mortgage rate hikes and, according to Royal LePage, many held a widespread misconception that the harmonized sales tax (HST), introduced in July, would be applied to the purchase price of a resale home.
The pace of sales slowed in the latter part of the year and year-over-year price rises were more moderate.
According to the Royal Le-Page House Price Survey and Market Survey Forecast, the average price of a standard two-storey home in Toronto rose 5.6% year-over-year to $594,321. The survey, covering the fourth quarter of 2010, notes that the price of a standard condominium rose 3.8% to $331,525 and the price for a detached bungalow increased 3.1% year-over-year reaching $481,733.
Looking ahead to this year's market, Royal LePage suggests there will be more modest growth in sales and prices.
"Much of that pent-up demand and the irrational exuberance [of the first half of 2010] has been sated," says Phil Soper, president and chief executive of Royal LePage Real Estate Services. "However, we continue to have the artificially low mortgage rates, which will likely cause people to want to get into the market in the earlier part of the year [ahead of expected mortgage rate rises]."
Mr. Soper says that lack of available homes for sale also pushed up prices and made the first half of last year very much a sellers' market.
"There'll be fewer homes sold [in 2011] in Toronto," Mr. Soper says. "Not a lot fewer, but we're projecting 5% fewer. It should be a less frenetic market overall...."
A broker in downtown Toronto says that while there may be more homes available for sale, buyers will still have to compete for that great home in a prime location.
"Ultimately, for the most desirable property in the best areas in central Toronto we are technically in a sellers' market, although we've seen some moderation," says Kevin Somers, broker and area manager with Royal LePage real estate services in Toronto. "For example, a prime property in Forest Hill or Rosedale or even Yonge and Eglinton might have drawn 10 offers in the spring market, but might have only had five or six or even four in the fall."
The expectation is that the Toronto housing market will become more balanced in 2011 but, Mr. Somers says, is unlikely to heavily favour buyers.
"The frenzied nature of the search is not as intense as it was. Buyers are taking a little bit longer to make up their minds and are doing a little bit more diligence," Mr. Somers says. "I would exercise a cautionary note for people to not get too excited about a dramatic shift in the balance in the market between buyers and sellers. It has been a very seller-driven market and a lot of buyers are very eager for change that has manifested itself in a lot of the country. But it might be a fair bit slower to have that happen here in central Toronto. As a result, they could run the risk of missing the boat relative to affordability and the right product for them."
Read more: http://www.nationalpost.com/related/topics/2011+more+stable+survey/4113301/story.html#ixzz1BbRxquQ4
Thursday, January 20, 2011
Monday, January 17, 2011
Federal Government Changes Mortgage Financing Rules
Federal Government Changes Mortgage Financing Rules
January 17, 2011 -- The federal government has announced changes to mortgage financing rules for government-backed (insured) mortgages (less than 20 per cent down payment), which will affect maximum amortization periods, mortgage refinancing, and home equity lines of credit.
Details
The changes announced by the federal government include:
* Reducing maximum amortization period to 30 years, from 35 years.
* Lower the maximum amount Canadians can borrow in refinancing their mortgages to 85 percent, from 90 percent, of the value of their homes.
* Withdraw government insurance backing on lines of credit secured by homes, such as home equity lines of credit. This change would apply to Home Equity Lines of Credit that do not amortize over time (i.e. borrowers are not required to make regular payments on the principal amount of the loan). However, with established scheduled principal and interest payments, a loan will continue to be eligible for government-backed insurance, provided it meets the underwriting standards set by the mortgage insurer.
The changes to amortization periods and refinancing rules will come into force on March 18, 2011. The withdrawal of government insurance backing on home equity lines of credit will come into force on April 18, 2011. Exceptions would be allowed after the new measures come into force where they are needed to satisfy a binding purchase and sale, financing or refinancing agreement entered into before the corresponding coming into force dates.
January 17, 2011 -- The federal government has announced changes to mortgage financing rules for government-backed (insured) mortgages (less than 20 per cent down payment), which will affect maximum amortization periods, mortgage refinancing, and home equity lines of credit.
Details
The changes announced by the federal government include:
* Reducing maximum amortization period to 30 years, from 35 years.
* Lower the maximum amount Canadians can borrow in refinancing their mortgages to 85 percent, from 90 percent, of the value of their homes.
* Withdraw government insurance backing on lines of credit secured by homes, such as home equity lines of credit. This change would apply to Home Equity Lines of Credit that do not amortize over time (i.e. borrowers are not required to make regular payments on the principal amount of the loan). However, with established scheduled principal and interest payments, a loan will continue to be eligible for government-backed insurance, provided it meets the underwriting standards set by the mortgage insurer.
The changes to amortization periods and refinancing rules will come into force on March 18, 2011. The withdrawal of government insurance backing on home equity lines of credit will come into force on April 18, 2011. Exceptions would be allowed after the new measures come into force where they are needed to satisfy a binding purchase and sale, financing or refinancing agreement entered into before the corresponding coming into force dates.
Saturday, January 15, 2011
December 2010 Market Watch Report
Third Best Year for Existing Home Sales
January 6, 2011 -- Greater Toronto REALTORS® reported 4,395 existing home sales for the month of December, bringing the 2010 total to 86,170 – down by one per cent compared to 2009.
"Market conditions were anything but uniform in 2010. We went from super-charged sales activity during the first four months of the year, to a marked drop-off in transactions in the summer and then in the fall saw sales climb back to levels that are sustainable over the longer term," said TREB President Bill Johnston.
"New Federal Government-mandated mortgage lending guidelines, higher borrowing costs and misconceptions about the HST caused a pause in home buying in the summer. As it became clear that the HST was not applicable to the sale price of an existing home and buyers realized that home ownership remained affordable, market conditions improved," continued Johnston.
The average home selling price in 2010 was $431,463 – up nine per cent in comparison to the 2009 average selling price of $395,460. In December, the average annual rate of price growth was five per cent.
"At the outset of 2010, we were experiencing annual rates of price growth at or near 20 per cent. This was the result of extremely tight market conditions coupled with the fact that we were comparing prices to the trough of the recession at the beginning of 2009," said Jason Mercer, TREB's Senior Manager of Market Analysis.
"Balanced market conditions in the second half of 2010 resulted in more moderate home price appreciation," continued Mercer. "Expect the average selling price to grow at or below five per cent in 2011. With this type of growth, mortgage carrying costs for the average priced home in the GTA will remain affordable for a household earning an average income."
Median Price
In December, the median price was $355,000, from the $349,000 recorded during December of 2009.
January 6, 2011 -- Greater Toronto REALTORS® reported 4,395 existing home sales for the month of December, bringing the 2010 total to 86,170 – down by one per cent compared to 2009.
"Market conditions were anything but uniform in 2010. We went from super-charged sales activity during the first four months of the year, to a marked drop-off in transactions in the summer and then in the fall saw sales climb back to levels that are sustainable over the longer term," said TREB President Bill Johnston.
"New Federal Government-mandated mortgage lending guidelines, higher borrowing costs and misconceptions about the HST caused a pause in home buying in the summer. As it became clear that the HST was not applicable to the sale price of an existing home and buyers realized that home ownership remained affordable, market conditions improved," continued Johnston.
The average home selling price in 2010 was $431,463 – up nine per cent in comparison to the 2009 average selling price of $395,460. In December, the average annual rate of price growth was five per cent.
"At the outset of 2010, we were experiencing annual rates of price growth at or near 20 per cent. This was the result of extremely tight market conditions coupled with the fact that we were comparing prices to the trough of the recession at the beginning of 2009," said Jason Mercer, TREB's Senior Manager of Market Analysis.
"Balanced market conditions in the second half of 2010 resulted in more moderate home price appreciation," continued Mercer. "Expect the average selling price to grow at or below five per cent in 2011. With this type of growth, mortgage carrying costs for the average priced home in the GTA will remain affordable for a household earning an average income."
Median Price
In December, the median price was $355,000, from the $349,000 recorded during December of 2009.
What's ahead for homes in 2011?
The year 2010 ended happily. It was one of the best years on record for home sales in the GTA, but market conditions were anything but uniform.
The Toronto Real Estate Board (TREB) reported 4,395 transactions in December 2010 -- down from December 2009's level of 5,541. The average selling price for these sales was $433,946 -- up 5% compared with December 2009. The December results capped off the third-best year on record for TREB, with total sales amounting to 86,170, just slightly off 2009's 87,308. The average selling price for 2010 as a whole increased by 9% to $431,463.
The outset of 2010 was characterized by extremely fast-paced home sales, with double-digit annual rates of growth for the first four months of the year. Because market conditions were tight, with sales accounting for a high percentage of listings, the average selling price grew at an annual rate of between 10% and 20% between January and May.
Jason Mercer, TREB's senior manager of market analysis, sheds light on 2010's super-charged start:
"The first four to five months of 2010 were a continuation of the strong housing market recovery that began in the second half of 2009. Low interest rates coupled with consumer confidence saw homebuyers coming off the sidelines," Mr. Mercer says. "It is also important to remember that at the beginning of 2010, we were comparing a strong recovery period to a period of recession at the beginning of 2009."
The situation changed markedly in the late spring and summer of 2010. Home sales were lower compared with 2009. The average selling price continued to grow, but at a slower pace. On a seasonally adjusted basis, sales dipped to their lowest level of the year in July. Mr. Mercer suggests a number of factors contributed to the changing market conditions.
"New stricter federally mandated mortgage lending guidelines and higher borrowing costs, especially for short term and variable mortgage products prompted some households to put their home-buying plans on hold," Mr. Mercer says. "Added to this were misconceptions about the application of the HST to resale housing. Initially, many would-be homebuyers incorrectly thought the HST would be applicable to the purchase price of a resale home. This, of course, was not the case.
"As we moved through the fall toward Christmas, market conditions improved once again in the GTA. Homebuyers began to understand the misconceptions around the HST and also realized that borrowing costs remained very low. The result was that home ownership remained affordable for the average household in the GTA," Mr. Mercer says.
We ended off 2010 on a positive note, with a high level of sales from a historic perspective and average price growth progressing at a more sustainable clip. As I think about what to expect in 2011, it is important to note that most commentators' outlooks for the economy and the housing market remain more positive than negative. As always, I'm sure we'll experience some unforeseen challenges, but, on balance, it feels as if the GTA market remains on solid footing.
- Bill Johnston is president of the Toronto Real Estate Board, a professional association that represents 30,000 realtors in the GTA.
Read more: http://www.nationalpost.com/related/topics/What+ahead+homes+2011/4113296/story.html#ixzz1B7EINf8v
The Toronto Real Estate Board (TREB) reported 4,395 transactions in December 2010 -- down from December 2009's level of 5,541. The average selling price for these sales was $433,946 -- up 5% compared with December 2009. The December results capped off the third-best year on record for TREB, with total sales amounting to 86,170, just slightly off 2009's 87,308. The average selling price for 2010 as a whole increased by 9% to $431,463.
The outset of 2010 was characterized by extremely fast-paced home sales, with double-digit annual rates of growth for the first four months of the year. Because market conditions were tight, with sales accounting for a high percentage of listings, the average selling price grew at an annual rate of between 10% and 20% between January and May.
Jason Mercer, TREB's senior manager of market analysis, sheds light on 2010's super-charged start:
"The first four to five months of 2010 were a continuation of the strong housing market recovery that began in the second half of 2009. Low interest rates coupled with consumer confidence saw homebuyers coming off the sidelines," Mr. Mercer says. "It is also important to remember that at the beginning of 2010, we were comparing a strong recovery period to a period of recession at the beginning of 2009."
The situation changed markedly in the late spring and summer of 2010. Home sales were lower compared with 2009. The average selling price continued to grow, but at a slower pace. On a seasonally adjusted basis, sales dipped to their lowest level of the year in July. Mr. Mercer suggests a number of factors contributed to the changing market conditions.
"New stricter federally mandated mortgage lending guidelines and higher borrowing costs, especially for short term and variable mortgage products prompted some households to put their home-buying plans on hold," Mr. Mercer says. "Added to this were misconceptions about the application of the HST to resale housing. Initially, many would-be homebuyers incorrectly thought the HST would be applicable to the purchase price of a resale home. This, of course, was not the case.
"As we moved through the fall toward Christmas, market conditions improved once again in the GTA. Homebuyers began to understand the misconceptions around the HST and also realized that borrowing costs remained very low. The result was that home ownership remained affordable for the average household in the GTA," Mr. Mercer says.
We ended off 2010 on a positive note, with a high level of sales from a historic perspective and average price growth progressing at a more sustainable clip. As I think about what to expect in 2011, it is important to note that most commentators' outlooks for the economy and the housing market remain more positive than negative. As always, I'm sure we'll experience some unforeseen challenges, but, on balance, it feels as if the GTA market remains on solid footing.
- Bill Johnston is president of the Toronto Real Estate Board, a professional association that represents 30,000 realtors in the GTA.
Read more: http://www.nationalpost.com/related/topics/What+ahead+homes+2011/4113296/story.html#ixzz1B7EINf8v
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