2014 TREB Summary – The Stats You Won’t See Anywhere Else!

In an effort to assist our realtors and clients gain further insight into the Toronto real estate market, we have accumulated a database of TREB results on a monthly basis for the past 10 years (sales, avg price, new listings & active listings).  The attached document provides our data based commentary on the year that was and projections/thoughts heading into 2015.

Should you have any questions, comments, or suggestions regarding the attached, please contact a member of the team or send an email to info@thelangteam.ca

[The Lang Team – 2014 TREB Stats/Commentary.pdf]

“Oh where, oh where did out listings go” – Our take on the Nov 2014 TREB Stats

Inventory – Did winter come early? The “Demand Band” and its impact on pricing; Low rise…high price gains;

Building upon the monthly TREB Market Watch Reports, we have compiled a database of the past 10 years of TREB results to offer our opinion and supporting data for the November questions and statements listed above.  While real estate agents and clients are on the front line of this dynamic market, we are fortunate to have strong relationships with both and hope to add a unique perspective on the results and trends within the Toronto market.

Please find attached the November results edition of our TREB Monthly Results Commentary.  Should you have any questions, comments, or suggestions regarding the attached, please contact a member of the team or send an email to info@thelangteam.ca

[The Lang Team – Nov 2014 – TREB Monthly Results Commentary]

New homebuyer stats are in – CAAMP’ releases its Annual State of the Residential Mortgage Market in Canada Report

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First-time homebuyers on average make a 21 per cent down payment on the purchase of their new home; since the 1990s, about 40 per cent of this has come from personal savings, suggesting Canadians wait to be financially stable before purchasing. But recently, as home prices have risen, 17 per cent of the down-payment has come from family gifts, a higher number than in previous years. These are just some of the facts found in the Annual State of the Residential Mortgage Market in Canada, the latest consumer survey report released by the Canadian Association of Accredited Mortgage Professionals (CAAMP).

The report probes into how Canadians are managing their mortgage debt. In this low interest rate environment, they continue to aggressively pay down their mortgages even though most expecting to renew in the near future are likely going to find interest rates unchanged or lower than their current rates.

Questions related to why people do not own a home produced interesting results: the majority of people 18-34 indicated they were waiting for prices to fall and savings to increase. At the other end of the age spectrum, more than two-thirds of those over 55 said they were renting because it was a better option for them.

Highlights

  • About 425,000 live in homes that they purchased during 2014 (up to the time of the survey).  The average price was just over $400,000, for a total value of $173 billion.

  • About 125,000 Canadian homeowners fully repaid their mortgages during 2014 (up to the date of the survey). A further 50,000 to 75,000 expect to fully repay their mortgage before the end of 2014. In combination, about 190,000 mortgages will have been fully repaid during the year.

  • About 900,000 current mortgage holders made lump sum payments in the past year, totaling $16 billion.

  • Among the 190,000 to 200,000 Canadians who have repaid (or are expected to repay) their mortgages during 2014, lump sum payments total about $5 billion.

  • About 900,000 mortgage holders voluntarily increased their regular payments during the past year, by amounts that equate to more than $3 billion per year.

  • The average mortgage interest rate is 3.24 per cent, identical to what we saw in the spring survey and down from the average 3.5 per cent found in the fall 2013 survey.

  • On average, Canadian home equity amounts to 74 per cent of the value of their homes; more than 85 per cent have 25 per cent or higher.

  • About 11 per cent of homeowners took equity out of their homes, using the money for debt consolidation and repayment, renovations, investments, purchases, including education, and “other”.

“Overall, the CAAMP fall report paints a picture of homeowners whether just starting out on their ownership journey or long time mortgage holders, as remarkably confident,” said Jim Murphy, AMP, President and CEO of CAAMP. “They wait until they are financially stable before buying, and they take advantage of low interest rates to aggressively reduce their mortgage debt. Home ownership continues to be an important anchor for the Canadian economy.”

A tale of two resale markets

CAAMP’s research tabulated by Chief Economist Will Dunning indicates that a drop in resale activity in slow growth regions east of Ontario has led to statistically significant job losses. Dunning has been tracking the impact of the federal government’s tightening on mortgage lending since the summer of 2012.  “Broadly speaking, resale activity has improved by 50 per cent from where it was in 2012,” Dunning said. “However, resale activity lags in slow growth regions and that in turn undermines job creation in parts of the country which rely on the housing industry to generate employment.”

Our take on the Oct 2014 Toronto Real Estate Board Stats

Where’s the inventory?  Are new listings keeping up with demand?  Can prices continue to climb?

Building upon the monthly TREB Market Watch Reports, we have compiled a database of the past 10 years of TREB results to offer our opinion and supporting data for the October questions and statements listed above.  While real estate agents and clients are on the front line of this dynamic market, we are fortunate to have strong relationships with both and hope to add a unique perspective on the results and trends within the Toronto market.

Please find attached the October results edition of our TREB Monthly Results Commentary.  Should you have any questions, comments, or suggestions regarding the attached, please contact a member of the team or send an email to info@thelangteam.ca

[The Lang Team – Oct 2014 – TREB Monthly Results Commentary]

List of Canada’s Top 100 Neighbourhoods to Invest for 2015 Officially Released

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Alberta is now vying with Ontario for the best and, indeed, the largest number of real estate investment opportunities this country has to offer, according to the annual Top 100 Neighbourhoods report from Canadian Real Estate Wealth Magazine.

“The sea-change in Canadian real estate is coming, if it’s not, in fact, already here,” says Canadian Real Estate Wealth Senior Editor Vernon Jones, who headed three months of research to formulate the list. “Investors in real estate may be wise to follow the economic development patterns of this country in deciding where to park their real estate investment dollars for maximum growth.”

Canada’s leading magazine for real estate investors leveraged data from The Teranet – National Bank House Price Index™ and industry analysis to form definitive rankings on price appreciation, yield and rental values. The results, hitting newsstands today in the magazine’s October/November issue – pinpoint the exact locations and property types investors should consider for both short- and long-term growth.

While Ontario continued to claim the largest number of neighbourhoods on the list, Alberta has grown in importance to claim second spot.

Geographic Distribution:

34% Ontario

23% Alberta

18% BC

13% Quebec

5% Manitoba

4% Nova Scotia

3% Newfoundland

Moving up out of “starter homes” getting much more difficult for Canadians

While, on average, Canadian house prices have climbed five per cent in 2014, a new report finds that price increases in mid- and high-priced homes are far outpacing those of lower-priced ones, which is making it increasingly more difficult for many Canadians to move up out of their starter homes.

“The value of bigger and pricier properties is rising notably faster than less expensive properties—widening the gap between starter home and dream house,” says Benjamin Tal, Deputy Chief Economist at CIBC. “Regardless of what your starting point is, and by how much your property has appreciated, the desired move up target is getting further and further out of reach.”

He notes that, historically, most Canadians followed a well-known narrative. “You graduate from school, land your first job, get married, buy your first house, start a family, and after a number of years, move up to a larger house to accommodate your growing family.”

“However, there are many indications that this cycle that dominated the Canadian housing market for decades, is breaking,” he points out.

The report shows that, in Toronto, the price of homes in the $300,000 to $500,000 range rose, on average, about 28 per cent between the first quarter of 2010 and the first quarter of 2014. However, homes priced between $800,000 and $1.2 million jumped over 40 per cent and homes priced between $1.2 million and $1.6 million shot up better than 50 per cent in the same period.

That means the family that paid $500,000 for a house in 2010 has seen their home value climb to about $640,000, a tidy $140,000 increase in value. The problem is the $800,000 home they want to move into has jumped by more than $300,000 to $1.12 million. It’s a similar situation in other urban centres, including Ottawa, Calgary and Edmonton, where the move up category has risen notably faster than the start-up category.

In Vancouver, with the highest prices in the country, that gulf is even wider. Homes that sold for $500,000 to $800,00 have increased by only a few percentage points whereas homes prices at $1.1 million and higher have jumped by close to 18 per cent. The gap between these homes has grown by close to $200,000 in the last four years.

Mr. Tal notes that while, on the surface, the volume of house resale activity in Canada looks stable – with unit sales fluctuating between 35,000 and 40,000 units per month since 2010 – it is anything but. “This apparent stability masks a more complex story,” he says. “Sales of units at the low-to-mid price range fell notably since 2010. Sales rose modestly for the mid-to-high price range, and advanced rapidly for units in the upper end of the market.

“This picture of soft sales at the low-to-mid price range of the single-detached market has affordability written all over it. Tightening mortgage regulations in general, and the reduction in amortizations from 40 years to 25 years for high-ratio mortgages in particular, alongside rising prices worked to price out many first-time homebuyers that dominate activity in this price range.”

He found that the homeownership rate among Canadians aged 25-35 (first-time homebuyers) has fallen from 55 per cent in 2012 to the current 50 per cent. For those over the age of 35, the homeownership rate remained stable.

There is also a big difference between markets with sales and price increases increasingly being driven by activity in the country’s large and pricy cities. Conversely, we’ve seen prices fall in Saint John, Québec City and Victoria in the last year and overall more than one-fifth of sales are now in cities that see prices rising by less than the current rate of inflation.

Homeowners in many of Canada’s larger cities that can’t afford a larger home – or won’t get into bidding wars – are increasingly recognizing they will be in their first home for longer than expected. “With limited move up options, it’s no surprise then that many Canadians choose to renovate their existing homes,” says Mr. Tal.

“Over the past five years, spending on home renovations as a share of total residential investment averaged close to 46 per cent—by far the largest share on record. Renovation activity will remain robust and, in fact, might accelerate in the coming years.”

Mr. Tal says that while home values will be tested when interest rates rise, the asymmetrical nature of the market, the stabilizing role played by the condo market in major urban centres – which is providing a cheaper alternative to single-detached units – and the significant constraints on land availability may all work to limit the damage.

The complete CIBC World Markets report is available at:

http://research.cibcwm.com/economic_public/download/if_2014-0908.pdf

Soft Landing Still Likely for Canadian Condo Market

“The report findings align with our view that the condo market is stabilizing and that demographics and affordability continue to drive demand” said Stuart Levings, Chief Operating Officer of Genworth Canada. “As a result of our prudent underwriting standards, our portfolio quality in this market remains strong and we see value in partnering with our customers to meet the evolving needs of young urbanites.

Despite modest price gains over the next two years in all eight cities studied in the report, increases in average household incomes will help to keep mortgage costs affordable. Continued growth in immigration, affordability pressures in major cities, and aging baby-boomers looking to downsize are all factors that support continued demand for condominiums in urban centres.

“Our research has long shown that the strong underlying economic factors in Canada would help most condominium markets achieve a ‘soft landing’” said Robin Wiebe, Senior Economist at the Centre for Municipal Studies at The Conference Board of Canada and co-author of the report. “Despite fluctuating sales and listing trends, markets are expected to be balanced across the country, with a slight lean towards the buyer in Ottawa, Montreal and Quebec City.”