Canada's housing market saw another so-called payback sales drop in February, when the national average home price slumped by five per cent from a year ago, after a surge in sales late last year from homebuyers looking to purchase ahead of this year's new mortgage rules.
The latest monthly figures from the Canadian Real Estate Association showed that sales volume was down 16.9 per cent in February compared with a year ago, and down 6.5 per cent compared with January. February's home sales decline marked the second consecutive month-over-month decline and the lowest reading in nearly five years, the national association said. “The drop off in sales activity following the record-breaking peak late last year confirms that many homebuyers moved purchase decisions forward late last year before tighter mortgage rules took effect in January,” said Gregory Klump, CREA’s chief economist in a statement Thursday. The federal banking regulator's tougher rules, which took effect Jan. 1, now require a stress test to be applied even to borrowers with more than 20 per cent down payment. To qualify for federally regulated mortgages, borrowers must be able to afford interest rates that are two percentage points above the contracted rate or the Bank of Canada's five-year benchmark rate, whichever is higher. The stricter residential mortgage lending regulations introduced by the Office of the Superintendent of Financial Institutions were aimed at reducing risk in the market amid high housing prices. CREA's latest monthly statistics show that home sales were down in February in almost three quarters of all local housing markets tracked by the national association. The widespread pattern was yet another indication that recent regulatory changes, and not local market conditions, were behind softer sales activity in early 2018, said RBC economist Josh Nye. "The roller coaster ride that was Canada’s housing market in 2017 has continued this year with resales posting another sizeable decline in February," he said in a research note. The number of homes sold nationally hit a record high in December. But homebuying activity has also since been dampened by the Bank of Canada's move in January to hike interest rates to 1.25 per cent. The quarter-point increase was the central bank's third since last summer, after hikes in July and September. "While the give-back related to the pull-forward in activity experienced late last year, as buyers rushed to close deals prior to the updated B20 rules, appears to have been largely complete in January, the softness in sales nonetheless persisted this month," said TD economists Michael Dolega and Rishi Sondhi in a research note. "We believe that much of it has to do with lingering uncertainty, with additional regulations introduced in the B.C. budget adding further tensions, along with B20 impacts and rising rates." In February, the B.C. government unveiled additional measures in its budget to tackle the housing market, including raising its foreign buyers tax and expanding it to areas outside of Vancouver, while bringing in a new levy on speculators. The national average house price for homes sold in February 2018 was just over $494,000, down five per cent from a year earlier. But excluding Toronto and Vancouver, the country's most active and most expensive markets, the national average price was just under $382,000, up 3.3 per cent from $369,728 a year ago. The number of newly listed homes in February increased by 8.1 per cent, following a plunge of more than 20 per cent in the month prior. However, new listings across the country in February were still 6.4 per cent below the 10-year monthly average and 14.6 per cent below the peak reached in December 2017. New home listings in February were also below the levels recorded every month last year except January 2017. TD's Dolega and Sondhi point to these listings as some of the "modestly encouraging details" in the latest CREA report. "New listings also perked up a little during the month, suggesting rising confidence on the part of sellers after recent B-20-related volatility," they wrote. The TD economists expect sales activity to stabilize sometime in mid-2018. "We look for prices to drop, on average, this year, though balanced-market conditions across much of the country should mitigate the magnitude of the decline," they wrote. "We expect conditions to improve next year, with price growth returning to the market alongside a rise in transaction activity." The federal government is looking at a real estate developer’s proposal to build 50,000 units of affordable housing primarily in Toronto and Vancouver a plan valued at as much as $14-billion that could become a big part of Ottawa’s national housing strategy.
According to a proposal submitted to Ottawa, the project would be led by the Creative Housing Society, an independent non-profit group to be based in Toronto. Creative Housing was established last fall by Ian Gillespie, a prominent Vancouver real estate developer whose firm, Westbank, is active in Toronto and Vancouver. The founding partners of Creative Housing, according to the proposal, would be Westbank, Canadian Mortgage and Housing Corp. (CMHC), Allied Properties REIT and an investor such as a pension fund. The project would be open to other investors. The plan is to leverage public money with private-sector investments. CMHC on Tuesday said Creative Housing is one of several organizations that the Crown corporation is consulting. CMHC wants “innovative” ideas and collaborations, it said, but it did not comment on the status of the proposals. Westbank declined comment. Creative Housing, if it proceeds, would be a part of the national housing strategy announced by Prime Minister Justin Trudeau last November. At the time, plans were vague, but it was billed as a $40-billion investment over a decade. In the federal budget two weeks ago, Ottawa allocated $1.35-billion of new money to CMHC for “building more rental housing for Canadian families.” The first chunk of money is $447-million for the 2018-19 fiscal year, which begins April 1. “Beginning in April, 2018, several initiatives will be launched as part of the National Housing Strategy,” CMHC spokeswoman Audrey-Anne Coulombe said in an e-mail on Tuesday. “More information on those initiatives will be available soon.” A primary focus for affordable housing is Toronto and Vancouver, where real estate has become extremely expensive for the average person. Creative Housing’s goal is to build 50,000 units, mostly rental. They would be designed for median-income households, workers such as teachers and bus drivers. The median household income in Vancouver and Toronto is a little less than $80,000 a year, according to Statistics Canada. In the Creative Housing proposal, CMHC would be the primary lender. Institutional investors in the private sector, such as pension funds and insurers, would provide most of the equity capital. Westbank and Allied would also contribute some equity. Land owned by cities, provinces and the federal government would be used as building sites. Adam Vaughan, a Liberal MP in Toronto who is parliamentary secretary for housing and urban affairs, said the challenge to build affordable housing is complex and will require a variety of partnerships. Creative Housing is one idea, but it is not yet a formal application, Mr. Vaughan said, as Ottawa has asked for more information. “It’s a very ambitious program, but it’s a little short on details,” he said. Jennifer Keesmaat is expected to be in a leadership role at Creative Housing. Ms. Keesmaat was chief planner for the City of Toronto from 2012 through 2017. She could not be reached for comment on Tuesday. Before the February budget, Finance Minister Bill Morneau suggested a plan was in the works. On Twitter in late January, he posted a picture with Ms. Keesmaat and thanked her for meeting to discuss “creative housing.” “Canada is back on the housing file,” Mr. Morneau tweeted. On Tuesday, questions to Mr. Morneau were passed on to CMHC. Ms. Keesmaat has also spoken out on affordable housing recently. “Vancouver and Toronto need affordable rental housing - and lots of it quickly,” Ms. Keesmaat wrote on Twitter last week. She said “something exciting” was coming soon. In any plan, CMHC will play a key role. Its rental construction financing initiative was launched a year ago, to provide $2.5-billion in low-cost loans to support the construction of new rental housing. In the February budget, the government boosted CMHC’s lending capacity for rental construction by 50 per cent to $3.75-billion over the next three years. Average home prices in the Toronto region climbed more than 4 per cent last month as buyers began to absorb the impact of tougher new mortgage qualification rules introduced in January.Data from the Toronto Real Estate Board showed home prices rose 4.2 per cent in February compared to January to an average of $767,818, marking the strongest month-over-month price gain since September.
Detached home prices rose 3.1 per cent across the Greater Toronto Area in February compared to the prior month, averaging $1,000,736, while condo prices climbed 4.4 per cent over January to an average of $529,782. Despite the increases, average prices were down 12.4 per cent in February compared to the same month last year, when sales were booming prior to a price correction that began in May last year, TREB said. TREB said 5,175 homes sold in February across the GTA , a 35-per-cent drop compared to the record 7,955 sales in February last year, but an increase of almost 29 per cent compared to 4,019 homes sold in January this year. There were 10,520 new listings of homes for sale in February, an increase of 7.3 per cent from the same month last year, and a jump of 23 per cent from January. Despite the increase, however, TREB said the level of new listings still remained below the February average for the previous 10 years. Jason Mercer, TREB's director of market analysis, said he expects sales to pick up further as the year progresses. "As we move further into the spring and summer months, growth in sales and selling prices is expected to pick up relative to last year," he said in a statement, predicting price growth will come in the comparatively more affordable townhouse and condominium markets. "That being said, listings supply will likely remain below average in many neighbourhoods in the GTA, which, over the long-term, could further hamper affordability," Mr. Mercer said. TREB president Tim Syrianos said his association anticipated sales would be slow in the opening months of 2018 compared to historic highs in early 2017. He said prospective buyers "are still coming to terms with the psychological impact" of housing reforms introduced last April by the Ontario government, which included a new foreign buyer's tax, as well as new mortgage qualification rules introduced Jan. 1 that require buyers to prove they can still afford their mortgages even if interest rates rise. While sale prices are lower than they were at their peak a year ago, TREB said they are still up 12 per cent compared to the average sale price in February, 2016, "which represents an annualized increase well above the rate of inflation for the past two years." Scott Ingram, a Century 21 real estate agent in Toronto, said most home owners in Toronto have made money on their property despite last year's downturn, calculating fewer than 9,500 buyers who purchased homes in the City of Toronto last year may still be unhappy because the benchmark price in January was at least $10,000 below the price they paid last year. He said they represent about 1.3 per cent of all homeowners in Toronto. In a new analysis for his blog, Mr. Ingram said the benchmark prices for detached houses, semi-detached houses and townhouses in the City of Toronto in January were still below the peak levels they hit last year, but said prices for all housing types are higher than they were two years ago. The benchmark condominium price has increased compared to all months last year, so buyers in that category are not under water. Even buyers who may feel "burned" by purchasing at the peak last year will be fine in the long run, Mr. Ingram said, as long as they do not plan to flip their home quickly. For those who bought at the peak and planned to flip quickly, Mr. Ingram said the experience is a lesson that "real estate isn't a guaranteed investment vehicle." The Toronto region’s soft housing market has caught up with luxury buyers in the first part of the year, with sales of $3 million-plus properties down as much as 60 per cent from the fevered activity of early 2017, according to a Re/MAX report released on Tuesday.
Only 76 luxury homes, including condos, sold in the Toronto area in January and February this year, compared to 180 in the same period last year and 79 in 2016 — a better comparator than last year’s hyperactive property market, says the company. Among this year’s 68 sales of luxury houses, 45 were in the City of Toronto. Two toney neighbourhoods, Rosedale and the Kingsway, actually saw increases over last year, with 14 sales between them so far. The biggest decline was in York Region, where there were only eight sales, compared to 41 last year. While resale housing prices were down 12.4 per cent overall in February, luxury homes were actually selling for more this year. The average transaction in the $3 million-plus category was about $4.2 million, compared to $4.1 million last year. That’s encouraging, said Re/MAX vice-president and regional director Christopher Alexander. Brokers and agents are reporting more activity in the last two weeks, as anxiety over new mortgage stress test rules begins to subside, he said. “Demand is starting to rear its head again,” said Alexander, who acknowledged that industry insiders have an interest in painting an optimistic market scene. But, he said, his view is buoyed by demand for Toronto-area real estate and the Canadian economy. Outside of a major economic event leading to a drastic drop in employment or a massive interest rate rise, there is nothing to stop the Toronto-area market from growing again, he said. “The economy’s growing, (housing) inventory is low, demand is high, our GDP is high, Toronto is one of the most affordable global world cities. For condos, our price per square foot is $791, which is expensive. But if you compare it to Vancouver, which is at $1,200 a foot, and you go to Hong Kong, which is $3,200 a foot, New York, $1,600 a foot — we’re half the price of New York — I don’t see what’s going to stop us when you have such strong market fundamentals,” said Alexander. Luxury condos and townhouses continue to be hot sellers in high-end real estate feeding the downsizing market. Eight condos sold for $3 million or more in the first two months of this year, up from five last year, with limited supply helping push up prices, said Re/MAX. Demand for luxury condos is also evident in the rental market, where properties leasing for $4,000 to $6,000 a month are being snapped up within 30 days. Outside Toronto, the Oakville luxury market has also softened, but houses in the $3 million-and-up range were actually selling faster than in the past. And the 15 houses that sold in Oakville in the first two months of this year were more than double the number sold in the same period in 2016. “Oakville is still much more affordable than a lot of Toronto property, and you can still access the city pretty reasonably,” said Alexander. As of the report’s publication, there were 44 homes listed for more than $3 million in Oakville, 18 of them priced over $5 million. Luxury in the Hamilton-Burlington area — considered separate from the Toronto region by Re/MAX — starts at about $1 million. Sales of homes $1 million and up are also softer there this year, with 59 selling in at that price point in the first two months of 2018, compared to 133 last year. Re/MAX expects that the high price of Toronto real estate will continue to drive buyers west. It notes that prices in Burlington can be 20 to 30 per cent lower than those in Oakville, and less still than in the City of Toronto. The report also notes that Burlington is drawing buyers who want to demolish and rebuild on the lots occupied by backsplits, sidesplits and bungalows that often list in Burlington for between $700,000 and $900,000. More than 10 kilometres west of Vaughan's emerging Downtown at VMC subway station, a new office building will serve as the headquarters of the Labourers' International Union of North America (LiUNA) Local 183. Diamond Schmitt Architects has been selected to design the 295,000 ft² office building, set to rise six storeys at 8500 Huntington Road north of Langstaff Road.
The building will consist of a six-storey tower volume connected to a four-storey wing, and a 3,000-seat Assembly Hall built into a softscaped landform. In addition to the Assembly Hall, plans call for the building to contain offices, and services for union members that may include medical clinic facilities, a pharmacy, financial services, training classrooms, and recreational facilities. At ground level, a landscaped forecourt is designed to foster social interaction in a communal outdoor space. Clad in what Diamond Schmitt refers to as a "highly transparent glazing system", the building envelope and use of soft landscaping extending over the Assembly Hall are just two of the sustainability features being implemented, and targeted to achieve LEED Silver upon completion. The Assembly Hall's special design will contribute to stormwater retention and lessening the project's heat island impact. “The project creates an urban sense of place in a currently undifferentiated agricultural environment and, as the first building in a larger master plan, establishes a high standard for future developments,” reads a statement issued by Diamond Schmitt Principal David Dow. Construction of the building is expected to begin this fall, with a 2020 opening date being targeted. Typically, lenders require mortgage loan insurance for loans made to anyone that wishes to purchase a home with less than 20% of the purchase price. The Canadian Bank Act prohibits most federally regulated lending institutions from providing mortgages without mortgage loan insurance for amounts that exceed 80% of the value of the home or purchases with less than 20% down payment. Through your lender, CMHC Mortgage Loan Insurance enables you to finance up to 95% of the purchase price of a home. Use our mortgage calculator to help calculate the maximum house price you can likely afford, the maximum mortgage amount you can likely borrow, and your likely monthly mortgage payments (principal + interest). To learn more about the process of buying a home, see Home buying Step by Step. It can take the confusion out of the home buying process by helping you understand the various aspects to buying the home you really want. Use this checklist to size up the physical state of the condominium. Common Elements — Interior
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