Market More Balanced in June – Market Watch, July 2010
July 6, 2010 — Greater Toronto REALTORS® reported 8,442 sales through the Multiple Listing Service® (MLS®) in June. This represented a 23 per cent decrease compared to the record 10,955 sales reported in June 2009. Sales for the second quarter of 2010 amounted to 28,810 – up one per cent annually. Year-to-date sales through June were up 23 per cent to 50,455 compared to the first six months of 2009.
“We experienced a record number of existing home sales during the first half of 2010, but these sales were weighted more towards the beginning of the year,” said Toronto Real Estate Board President Bill Johnston. “The pace of home sales has moderated from record levels over the past two months with the prospect of higher mortgage rates.”
The average price for June transactions was $435,034 – up eight per cent compared to the average of $403,972 recorded for June 2009.
“With more homes to choose from in the second quarter, many home buyers have been making less-aggressive offers. This has resulted in less upward pressure on the average selling price,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “The annual rate of average price growth in the second half of 2010 will be in the single digits.”
Median Price
In June, the median price was $367,750, from the $345,000 recorded during June of 2009.
Download full PDF: Market Watch – July 2010.
Changes in the MLS system? – Q & A for Real Esate Consumers
The recent public debate over proposed amendments and the upcoming Competition Tribunal review have created some level of uncertainty and confusion in the marketplace. To that effect, we have prepared this communication, which includes key messages and answers to questions We hope it proves helpful to you in addressing some of the concerns or misunderstandings with respect to the proposed amendments and upcoming Competition Tribunal review.
1. REALTORS® are committed to delivering the utmost value to their clients.
• Working with a REALTOR® provides Canadian buyers and sellers with access to real estate insight, marketing expertise, expert counsel and industry search tools such as the MLS system.
• REALTORS® are bound by obligation to uphold CREA’s Code of Ethics and Standards of Business Practice and have completed the necessary entry requirements to join and maintain their membership under CREA.
• REALTORS® have experience and expertise in this field and can be a source of great advice — help clarify and interpret information gathered online and through various other sources, help navigate through complexities of real estate transactions and ensure consumers make the right decisions.
2. The MLS system is a proprietary, member-to-member platform that is monitored and managed by the Canadian Real Estate Association and regional real estate Boards.
- Access to the MLS platform is earned by REALTORS® – REALTORS® must meet educational requirements and abide by the highest ethical standards of conduct in the industry.
• The MLS platform offers consumer protection through a set of listing and usage criteria and rules, unlike a variety of publicly operated platforms, which are not bound by the same rules (Kijiji, Craigslist, etc).
• The MLS consumer portal, www.realtor.ca, is only one facet of this member-to-member system, which provides REALTORS® with a variety of business tools that they use to deliver client services.
3. The MLS consumer portal, www.realtor.ca is the most visited real estate site in Canada. Together with www.royallepage.ca, these are the trusted sources of online real estate information for Canadian consumers.
• The MLS’ robust platform allows users to access the most listings Canada – tens of thousands – in a user-friendly online environment
• The MLS database is multi-purpose offering a wide variety of services to REALTORS® and contains both member-only and publicly accessible information.
4. Consumer protection and trust are the hallmarks of our business
• The real estate market in Canada is highly competitive, and includes a wide variety of companies with diverse and innovative business models and price structures that are available to all consumers.
• As in the past, there are other channels through which buyers and sellers can participate in the market, including online and do-it-yourself options.
Frequently Asked Questions addressing client queries
Are recently passed MLS® amendments good for consumers? What’s in it for me?
No change. The recently passed MLS® amendments clarify the existing rules to address concerns of the Competition Bureau. Prior to these amendments, customers had access to thousands of REALTORS® who could post on MLS® and offered a variety of fee structures. Ultimately, the agreement between a REALTOR®and his/her client has not changed.
Can I post my own home on the MLS® system?
No. The MLS®system is a proprietary, member-to-member platform that is monitored and managed by the Canadian Real Estate Association.
- Access to the MLS® platform is earned by REALTORS® – REALTORS® must meet educational requirements and abide by the highest ethical standards of conduct in the industry.
• The MLS® platform offers consumer protection through a set of listing and usage criteria and rules, unlike a variety of publicly operated platforms which are not bound by the same rules (Kijiji, Craigslist, etc).
• The MLS consumer portal, www.realtor.ca, is only one facet of this member-to-member system, which provides REALTORS® with a variety of business tools that they use to deliver client services.
Can I just pay a REALTOR® to post my listing on the MLS® System?
As in the past, you can find a REALTOR® who will agree to do that. However, we believe that the assistance of a knowledgeable and experienced REALTOR® can help you make more informed and better purchasing or selling decisions on what is often the largest financial transaction consumers will make in their lifetime.
• REALTORS® have much experience and expertise in this field and can be a source of great advice. They help clarify and interpret information gathered online and through various other sources
• Help consumers negotiate and obtain the best price for their homes
• Help consumers navigate through this complex process
• Provides reassurance to consumers that they are dealing with ethical and experienced professionals (REALTORS® meet strict CREA and local boards requirements)
• Offer consumers recourse in the event of unlawful behaviour (insurance, licensing, etc)
If the rules are going to change, should I wait to sell my house?
No. Buying or selling a home is very much a personal decision based on a consumer’s needs and timeline. There are a number of factors that determine the best timing and your REALTOR® is there to help you and advise you through this process.
Furthermore, it is not possible to predict the outcome of the Tribunal review. We will not even know the outcome until the end of the year at the earliest. At that time, it could also be appealed, extending the process further. There are many other market factors that clients would be best advised to discuss with their REALTORS® before making any purchasing or selling decision. These factors include seasonality, anticipation of future interest rates, market conditions, etc.
• REALTORS® understand their clients’ needs and use their expertise to help determine the right time to buy or sell a home.
Are fees charged by REALTORS® going to be affected by current or potential changes to MLS® Rules?
No. As always, fees are negotiated between the REALTOR®and the client. Changes to the MLS® Rules do not relate to fees.
Toronto Real Estate Board Market Charts
A graphic representation of market statistics with three year comparison.
HST vs Real Estate Explained…
Here is an update regarding HST and its impact on real estate that I thought may interest you.
The government is following the lead of Quebec, New Brunswick, Nova Scotia and Newfoundland and Labrador by harmonizing the 5 per cent GST and the 8 per cent PST into one blended tax – the HST or harmonized sales tax – that will add 13 per cent to a wide range of items and services that weren’t covered by the provincial levy in the past.
The Harmonized sales tax looms on the housing horizon. This tax is coming into effect on July 1st 2010. The HST will apply to new homes and to all home closing costs, thereby increasing the cost of everything.
The effect of this harmonized HST tax on real estate transactions is as follows:
1. Rents on leases are exempt.
2. Resale homes are exempt.
3. The new tax will apply to ‘new housing’ – there will be a rebate of 75% of the provincial component for new homes priced under $400,000.The rebate would be reduced for new homes priced between $400,000 to $500,000 range, and would not be available for homes priced at more than $500,000. On all new housing over $500,000, the full HST tax of 13% will apply.
4.Sales of used owner-occupied homes are usually exempt. In most cases, the GST/HST does not apply to the sale of an owner occupied home since the owner is not a builder. Only homes sold by builders are taxable.
5. Newly build AND resale home sales, there will be an increase in ‘professional service’ costs – real estate commissions will increase with the current GST tax going from 5% to an HST tax at 13%. Also increased will be the costs of: home inspection, mortgage insurance premiums, legal costs, title insurance, landscaping and house cleaning services, cost of labour for installations or repairs, additions, renovations, driveways, fences and swimming pools!
CANADA’S REAL ESTATE MARKET EXPECTED TO CONTINUE STRONG GAINS INTO THE FIRST HALF OF 2010
Demand and supply finding balance in the second half of the year
TORONTO, January 7, 2010 – Canada’s residential real estate market is forecast to remain unusually strong through the first half of 2010 as economic conditions across the country improve and the stimulus impact of low interest rates continues to stoke demand, according to today’s Royal LePage House Price Survey and Market Survey Forecast. As confidence in the recovery builds in early 2010, increases in average house price levels and overall market activity are expected to continue. The gradual erosion of affordability driven by higher house prices and the expected late-year modest upward movement of interest rates, together with an improvement in listings supply as confidence improves, are expected to bring the market back into balance in the second half of the year, when home price increases are expected to moderate.
“The Canadian real estate market enters 2010 with considerable momentum from a unusually strong finish to the previous year, said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “The stimulus effect of low borrowing costs has contributed to a sharp rise in demand that has driven activity levels to new highs. This demand, coupled with a typical seasonal undersupply of homes for sale, should cause home prices to continue to appreciate significantly during the early months of the year. Improving supply as the year unfolds and easing demand as the cost of home ownership rises should moderate home price increases in the second half of 2010.”
In contrast to the difficult months during the worst of the recession, house prices appreciated during the later part of 2009, with fourth quarter price averages surpassing averages from the fourth quarter 2008. The average price of detached bungalows rose to $315,055 (up 6.0%), the price of standard two-storey homes rose to $353,026 (up 5.2%), and the price of a standard condominium rose to $205, 756 (up 6.4%). The first two quarters of 2009 saw significant year-over-year price declines across the housing types surveyed and the third quarter provided the first signs saw a strong rebound in Canadian home values.
Regions that saw the strongest declines during the recession are now showing marked gains. Those regions include Toronto and the Lower Mainland, B.C. Vancouver in particular experienced a robust quarter, with home prices rising across all housing types surveyed.
“No other sector of the economy has been as highly affected by economic stimulus as housing,” commented Soper. “As consumer confidence has improved, Canadians have shown a lingering reluctance to acquire depreciating assets such as consumer durables, but have embraced the opportunity to invest in real property. Predictably, the regions benefiting most from this renewed interest in home ownership are those with lower average house prices and strong economic confidence, such as Winnipeg and parts of Atlantic Canada.”
Soper added, “Our forecast is built upon an expectation that interest rates will ease upward before the year’s end, which should have a dampening effect on demand, allowing it to come into balance with the supply of resale homes on the market. Further, we expect to see an increasing number of homes listed for sale as the year progresses – as Canadians regain confidence in the economy, they should be more willing to enter into a large financial transaction such as the sale of a home.”
REGIONAL MARKET SUMMARIES
Halifax saw varied gains across all surveyed housing types in comparison to fourth quarter 2008. Notably, more affordable homes posted the highest price increases due to the influx of workers returning from Western Canada.
Montreal saw strong gains this quarter as year-over-year price levels rose across all three housing types surveyed. Recent increases in demand have resulted in lower than normal inventory levels. Inventory levels are expected in increase in 2010. Continued demand is expected to result in moderate price levels.
House price levels in Ottawa are moderately higher this quarter compared to fourth quarter 2008 across all housing types surveyed. Fourth quarter sales activity did not slow as expected, and the demand has resulted in higher incidences of sellers receiving multiple offers, an unusual occurrence in end of year activity for this region. While inventory levels are low and there is competition among home buyers, this may abate as the government eases economic stimulus in 2010.
The Toronto market saw year-over-year price increases across the housing types surveyed in the fourth quarter. Of particular interest is the increase in sales of higher-priced units, which were hit hard by the recession over the previous 12 months. There was a surge of first-time buyers active in the market last year, depleting the inventory of entry-level units. They are expected to be joined by move-up, executive, and luxury buyers in the coming year, resulting in additional price appreciation.
Winnipeg saw some of Canada’s largest home price increases this quarter. More than one third of homes sold in the region went for above their asking price driven largely by first time buyer activity. This strong growth is expected to continue well into 2010.
Inventory levels in Regina are low, as much as thirty per cent lower than expected for this time of year; this situation should be corrected in the spring of 2010. House prices should continue to increase into 2010, driven by labour force growth in the construction industry.
Price levels in Calgary remain constant as the market is correcting from the record growth seen in the middle of the previous decade. Inventory levels are one quarter the levels seen in 2008, and the reduction in choice has delayed purchases. Activity and price levels are expected to increase modestly in 2010.
House price levels in Edmonton are also still correcting from the 2005 to 2007 boom. Low inventory levels have provided some price support, and activity is expected to increase in the spring of 2010.
Vancouver saw significant gains in price levels, with average increases of approximately ten per cent across the housing types surveyed. Inventory levels are beginning to decrease, and there has been an increase in sales involving multiple offers. Sales activity may drop off due to the city’s focus on the Olympics in the first quarter, but the market is expected to be robust for the remainder of the year.
Royal LePage’s quarterly House Price Survey (Q4 2009) shows the annual change of prices for key housing segments in select national markets. Click here to view the chart (.PDF).
The Royal LePage Survey of Canadian House Prices is the largest, most comprehensive study of its kind in Canada, with information on seven types of housing in over 250 neighbourhoods from coast to coast. This release references an abbreviated version of the survey, which highlights house price trends for the three most common types of housing in Canada in 80 communities across the country. A complete database of past and present surveys is available on the Royal LePage Web site at www.royallepage.ca. Current figures will be updated following the complete tabulation of the data for the fourth quarter. A printable version of the fourth quarter 2009 survey will be available online on February 5th, 2010.
Housing values in the Royal LePage Survey are Royal LePage opinions of fair market value in each location, based on local data and market knowledge provided by Royal LePage residential real estate experts. Historical data is available for some areas back to the early 1970s.
PDF Downloads:
TREB Market Watch – January 2009
The Toronto Real Estate Board’s review of the GTA market place – January 2009
