Wednesday, May 16, 2012
Wednesday, February 15, 2012
Too Many Condo Developments in Toronto???
Here is an interesting take on the condo developments in Toronto...According to Bloomberg. Bubble territory? 3 times as many developments as New York City... Worth reading...
here is the article:
In four years, this site that’s now used as a parking lot and police impound near the shores of Lake Ontario will be home to Ten York, a 75-story glass building that would be the country’s third-tallest condo tower.
Toronto has more skyscrapers and high-rises under construction than any North American city -- almost three times as many as New York -- stoking debate on whether the condominium market in Canada’s largest city is headed for a U.S.-style correction as prices rise and household borrowing hits a record. Canadian lenders including Toronto-Dominion Bank last week raised mortgage rates to cool off the housing market.
“Condo construction has always been rather prone to boom and bust cycles, and this one seems particularly strong,” said Sheryl King, an economist with Bank of America Merrill Lynch in Toronto. “Builders seem to overestimate how much demand is going to be out there, and that’s when you tend to see some abrupt pull-back.”
Canada’s housing market is about 10 percent overvalued, with inflated prices primarily in Vancouver, Montreal and Toronto, King said in a telephone interview. “We would call it a bubble,” she said.
The country’s financial authorities have become increasingly vocal about the housing market. The heads of Bank of Montreal and Royal Bank of Canada (RY); the country’s banking regulator, and Bank of Canada Governor Mark Carney have all expressed concerns about the condo markets in recent months as cranes and construction crews swamp Toronto.
Toronto has 148 high-rises and skyscrapers being built, compared with 59 tall buildings for No. 2-ranked New York City, and 22 in Chicago, according to Emporis, a Hamburg-based building data company.
“The number of units under construction is quite high, start levels have trended up, and the number of units coming to completion is growing,” said Shaun Hildebrand, a senior market analyst for the Greater Toronto Area with Canada Mortgage & Housing Corp. “Supply at all ends of the development process is growing quite quickly.”
A record 27,504 condo units in the City of Toronto were under construction at the end of last year, according to Canadian Mortgage & Housing annual data, adding to the city’s total of 199,000 units.
“If builders stopped building today, there’s five years worth of supply that is about to be delivered, relative to what normal population growth is,” Bank of America’s King said.
“They’re being bought because the interest rate is very low,” Andrew said in a telephone interview. “They’re financed to the hilt, so they’re very sensitive to the refinance risk when the loans come up.”
Banks are also cutting their funding costs by selling covered bonds, a form of corporate bond backed by assets such as home loans. Bank of Montreal and Bank of Nova Scotia sold $4.5 billion of the securities last month, after a record $25 billion of sales in 2011. Relative yields on the covered bonds fell to 130 basis points on Feb. 9, down from 170 at the start of the year, according to Bank of America Merrill Lynch data.
The Bank of Canada has held its benchmark lending rate at 1 percent since September 2010 and will probably maintain that level until the second quarter of 2013, according to median forecasts from economists compiled by Bloomberg. Carney has said “excesses may exist in certain areas” of Canada’s housing market.
Investors are underestimating the potential impact of the surge in condo supply coming onto the market in the next 12 to 24 months, according to King. That could drive down resale prices and rents, even with low interest rates and a stable mortgage funding market.
“Investors are a concern given rental rates no longer fully cover costs and unit price increases going forward will not likely provide sufficient return,” the Office of the Superintendent of Financial Institutions said in a June draft report obtained last month by Bloomberg News through an Access to Information request.
“The stability of Canada has moved it to the forefront of investor preference, in some cases ahead of the U.S.,” states a draft analysis of Toronto’s condo market.
Investors represent a “significant portion” of Toronto’s condo market, with 20 percent to 30 percent or higher for some projects, the report said.
High-rise homes reached a record 62 percent of all new home sales last year as condos outsold traditional detached homes three to one, RealNet said in a Jan. 20 report with the Building Industry and Land Development Association. That’s up from 25 percent of the market in 2000.
Toronto is home to about 2.5 million people -- more than double that including its suburbs -- and accounts for about 11 percent of Canada’s economic output, according to the City of Toronto. The city is home to Canada’s five-biggest banks, two of the three largest Canadian insurers as well as some of the country’s largest pension funds, asset managers and financial- services firms.
Realtors and others in the industry say the record condo units under construction will be easily absorbed by 100,000 immigrants streaming into the city each year, wealthy foreign investors looking for a haven to park their money and young urbanites demanding to work near the financial industry that is the backbone of the city’s economy.
Tridel, Toronto’s biggest condo developer, is already fielding calls for the 783 units of Ten York and plans to start selling in April, more than a year before the C$295 million project begins construction.
“There’s a tremendous amount of interest,” said Jim Ritchie, senior vice president of sales and marketing for Tridel. “We have thousands of names of people who want to buy here.”
Developers sell most units of a project before building begins, and many investors buy the condos to either resell or rent out when the construction is finished. Rental units accounted for 24 percent of all condos in Toronto last year, up from 21 percent in 2010, according to CMHC.
Toronto’s rising prices for townhouses and single-family homes are driving more homebuyers into condos. In January, the average price for a detached home in Toronto was C$743,993, up 15 percent from the same month in 2011, according to Toronto Real Estate Board. The average price for a condo was C$343,835, up 5 percent.
U.S. housing prices plunged by a third between the peak of July 2006 and November 2011, according to S&P/Case-Shiller Composite-20 Home Price Index (SPCS20). By comparison, Canadian housing prices rose 32 percent in the same period, according to the Teranet-National Bank National Composite House Price Index.
“We’ve seen the same level of increase in the market year- over-year in terms of index pricing in 10 of the last 15 years,” Myers said. “If we didn’t have an explosion of the bubble in those years, I’m not sure what would cause it to happen now.”
The housing gains have sparked worries that CMHC, Canada’s federal mortgage agency that insures some mortgages, is becoming overexposed to a potential slump, leaving taxpayers at risk.
Canadian Mortgage & Housing said Jan. 31 that it’s rationing mortgage insurance for lenders as the housing agency approaches the C$600 billion legal limit for backstopping the loans. Lenders have increased their demand for insurance of their mortgages amid “liquidity needs” since the 2007 financial crisis, CMHC said.
Lenders are becoming “increasingly liberal” with mortgages that don’t require borrowers to verify income, OSFI said in the documents obtained by Bloomberg News.
Finance Minister Jim Flaherty said that he’s concerned about loosening of standards by some Canadian financial institutions on those types of mortgages, and steps are being taken to “correct” the practice.
“Banks are leaning against it in the condo market right now and leaning against it in the unsecured lending market and just a general leaning against borrowing,” Clark said. He said the changes may lead to a “successful soft landing” for the housing market.
The government has already taken measures to restrain the housing market, including reducing amortizations and requiring stricter criteria for mortgage qualifications. Housing price gains have slowed in the past three months.
Still, housing markets in Vancouver and Toronto have become “severely unaffordable,” according to a January report by Demographia, a public policy firm.
Fallout from Toronto’s construction boom may not surface immediately, according to Queen’s University’s Andrew.
“It’s going to be three-and-a-half to four years from now when these loans are all coming up and you’ve got a number of people who say they can’t afford to refinance it, so they’ll just sell,” Andrew said. “They’ll find out that 40 units in the building all went on the market in the same month, and now they’ve got a big problem.”
To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net
To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; David Scheer at dscheer@bloomberg.net
Link to this article: http://www.bloomberg.com/news/2012-02-13/toronto-bubble-risk-topping-new-york-in-market-for-condominiums-mortgages.html
here is the article:
Toronto Bubble Risk Tops New York in Condos: Mortgages
A sliver of land wedged between Toronto’s elevated expressway and an off-ramp that pumps traffic into downtown may become the epicenter for a Canadian housing bubble.In four years, this site that’s now used as a parking lot and police impound near the shores of Lake Ontario will be home to Ten York, a 75-story glass building that would be the country’s third-tallest condo tower.
Toronto has more skyscrapers and high-rises under construction than any North American city -- almost three times as many as New York -- stoking debate on whether the condominium market in Canada’s largest city is headed for a U.S.-style correction as prices rise and household borrowing hits a record. Canadian lenders including Toronto-Dominion Bank last week raised mortgage rates to cool off the housing market.
“Condo construction has always been rather prone to boom and bust cycles, and this one seems particularly strong,” said Sheryl King, an economist with Bank of America Merrill Lynch in Toronto. “Builders seem to overestimate how much demand is going to be out there, and that’s when you tend to see some abrupt pull-back.”
Canada’s housing market is about 10 percent overvalued, with inflated prices primarily in Vancouver, Montreal and Toronto, King said in a telephone interview. “We would call it a bubble,” she said.
Mortgage Lending Expands
Rising home prices have led to a 53 percent increase in residential mortgage credit in the past five years, or an average rate of 8.9 percent a year. The volume of outstanding mortgages rose to C$1.08 trillion ($1.08 trillion) as of August, according to the Canadian Association of Accredited Mortgage Professionals. Defaults remain low, at 0.42 percent, according to data from Canada Mortgage & Housing Corp., a government-run housing agency.The country’s financial authorities have become increasingly vocal about the housing market. The heads of Bank of Montreal and Royal Bank of Canada (RY); the country’s banking regulator, and Bank of Canada Governor Mark Carney have all expressed concerns about the condo markets in recent months as cranes and construction crews swamp Toronto.
Toronto has 148 high-rises and skyscrapers being built, compared with 59 tall buildings for No. 2-ranked New York City, and 22 in Chicago, according to Emporis, a Hamburg-based building data company.
Trump Toronto
Most of the work is for housing, with 105 residential high- rises proposed or under construction, according to a database by SkyscraperPage.com. Fourteen are slated to finish this year, including two hotel-condos. Trump International Hotel & Tower Toronto, Canada’s tallest residential building, opened Jan. 31, adding 118 luxury residences to the city’s inventory.“The number of units under construction is quite high, start levels have trended up, and the number of units coming to completion is growing,” said Shaun Hildebrand, a senior market analyst for the Greater Toronto Area with Canada Mortgage & Housing Corp. “Supply at all ends of the development process is growing quite quickly.”
A record 27,504 condo units in the City of Toronto were under construction at the end of last year, according to Canadian Mortgage & Housing annual data, adding to the city’s total of 199,000 units.
“If builders stopped building today, there’s five years worth of supply that is about to be delivered, relative to what normal population growth is,” Bank of America’s King said.
Rates to Rise
Investors are piling into Toronto’s condo market because of cheap borrowing costs and that may become risky when interest rates rise, said John Andrew, a real estate professor at Queen’s University in Kingston, Ontario.“They’re being bought because the interest rate is very low,” Andrew said in a telephone interview. “They’re financed to the hilt, so they’re very sensitive to the refinance risk when the loans come up.”
Banks are also cutting their funding costs by selling covered bonds, a form of corporate bond backed by assets such as home loans. Bank of Montreal and Bank of Nova Scotia sold $4.5 billion of the securities last month, after a record $25 billion of sales in 2011. Relative yields on the covered bonds fell to 130 basis points on Feb. 9, down from 170 at the start of the year, according to Bank of America Merrill Lynch data.
The Bank of Canada has held its benchmark lending rate at 1 percent since September 2010 and will probably maintain that level until the second quarter of 2013, according to median forecasts from economists compiled by Bloomberg. Carney has said “excesses may exist in certain areas” of Canada’s housing market.
Market Overshoot
“The elevated levels of ‘multiples’ inventories, the ample pipeline of developments underway, and heavy investor demand (much of it foreign) reinforces the possibility of an overshoot in the condo market in some major cities,” Carney said in a June 15 speech in Vancouver.Investors are underestimating the potential impact of the surge in condo supply coming onto the market in the next 12 to 24 months, according to King. That could drive down resale prices and rents, even with low interest rates and a stable mortgage funding market.
“Investors are a concern given rental rates no longer fully cover costs and unit price increases going forward will not likely provide sufficient return,” the Office of the Superintendent of Financial Institutions said in a June draft report obtained last month by Bloomberg News through an Access to Information request.
Foreign Buyers
Foreign buyers are also affecting housing, according to OSFI. The bank regulator has been monitoring the impact of foreign investment on the housing markets in Toronto and Vancouver, the documents obtained by Bloomberg show. Authorities in China, Hong Kong and Australia have recently taken measures to cool off their residential real-estate markets, the documents note.“The stability of Canada has moved it to the forefront of investor preference, in some cases ahead of the U.S.,” states a draft analysis of Toronto’s condo market.
Investors represent a “significant portion” of Toronto’s condo market, with 20 percent to 30 percent or higher for some projects, the report said.
High-rise homes reached a record 62 percent of all new home sales last year as condos outsold traditional detached homes three to one, RealNet said in a Jan. 20 report with the Building Industry and Land Development Association. That’s up from 25 percent of the market in 2000.
Demand Won’t Fall
“In absence of another recession, we’re not expecting demand to fall,” Canadian Mortgage’s Hildebrand said. “We’re expecting it to hold steady so long as the economy holds steady.”Toronto is home to about 2.5 million people -- more than double that including its suburbs -- and accounts for about 11 percent of Canada’s economic output, according to the City of Toronto. The city is home to Canada’s five-biggest banks, two of the three largest Canadian insurers as well as some of the country’s largest pension funds, asset managers and financial- services firms.
Realtors and others in the industry say the record condo units under construction will be easily absorbed by 100,000 immigrants streaming into the city each year, wealthy foreign investors looking for a haven to park their money and young urbanites demanding to work near the financial industry that is the backbone of the city’s economy.
‘Good Place’
“There are reasons why people want to spend time in Toronto, and that’s part of what supports these real-estate markets,” said William Strange, RioCan Real Estate Investment Trust Professor of Real Estate and Urban Economics at Rotman School of Management in Toronto. “Toronto tends to be a pretty good place to do business and, with respect to Canada, it also tends to be a place where people want to live.”Tridel, Toronto’s biggest condo developer, is already fielding calls for the 783 units of Ten York and plans to start selling in April, more than a year before the C$295 million project begins construction.
“There’s a tremendous amount of interest,” said Jim Ritchie, senior vice president of sales and marketing for Tridel. “We have thousands of names of people who want to buy here.”
Developers sell most units of a project before building begins, and many investors buy the condos to either resell or rent out when the construction is finished. Rental units accounted for 24 percent of all condos in Toronto last year, up from 21 percent in 2010, according to CMHC.
Vacancy Rates
A total 8,250 condo apartment rental units were added to Toronto last year, CMHC said. The average vacancy rate for Toronto rental condos was 1.3 percent last year, down from 2 percent in 2010.Toronto’s rising prices for townhouses and single-family homes are driving more homebuyers into condos. In January, the average price for a detached home in Toronto was C$743,993, up 15 percent from the same month in 2011, according to Toronto Real Estate Board. The average price for a condo was C$343,835, up 5 percent.
U.S. housing prices plunged by a third between the peak of July 2006 and November 2011, according to S&P/Case-Shiller Composite-20 Home Price Index (SPCS20). By comparison, Canadian housing prices rose 32 percent in the same period, according to the Teranet-National Bank National Composite House Price Index.
No Bubble
Toronto isn’t facing a bubble because price increases have been steady, said Ben Myers, executive vice president of Urbanation, a Toronto-based real-estate research firm.“We’ve seen the same level of increase in the market year- over-year in terms of index pricing in 10 of the last 15 years,” Myers said. “If we didn’t have an explosion of the bubble in those years, I’m not sure what would cause it to happen now.”
The housing gains have sparked worries that CMHC, Canada’s federal mortgage agency that insures some mortgages, is becoming overexposed to a potential slump, leaving taxpayers at risk.
Canadian Mortgage & Housing said Jan. 31 that it’s rationing mortgage insurance for lenders as the housing agency approaches the C$600 billion legal limit for backstopping the loans. Lenders have increased their demand for insurance of their mortgages amid “liquidity needs” since the 2007 financial crisis, CMHC said.
Lenders are becoming “increasingly liberal” with mortgages that don’t require borrowers to verify income, OSFI said in the documents obtained by Bloomberg News.
Finance Minister Jim Flaherty said that he’s concerned about loosening of standards by some Canadian financial institutions on those types of mortgages, and steps are being taken to “correct” the practice.
Tightening Standards
Toronto-Dominion Bank (TD) Chief Executive Officer Edmund Clark said in a Feb. 8 interview at Bloomberg’s New York headquarters that banks are tightening lending on loans for condominiums. Toronto-Dominion, Royal Bank of Canada and Canadian Imperial Bank of Commerce scrapped their promotional 2.99 percent mortgage rates last week, less than a month after they were introduced.“Banks are leaning against it in the condo market right now and leaning against it in the unsecured lending market and just a general leaning against borrowing,” Clark said. He said the changes may lead to a “successful soft landing” for the housing market.
The government has already taken measures to restrain the housing market, including reducing amortizations and requiring stricter criteria for mortgage qualifications. Housing price gains have slowed in the past three months.
Still, housing markets in Vancouver and Toronto have become “severely unaffordable,” according to a January report by Demographia, a public policy firm.
Unaffordable
Vancouver’s median home price of C$678,000 in the third quarter was 10.6 times its median pretax household income of C$63,800, making the city the least-affordable housing market after Hong Kong among large English-speaking cities, Demographia said. Toronto’s home price of C$406,400 was 5.5 times household income of C$73,600, a 40 percent deterioration in affordability since 2004.Fallout from Toronto’s construction boom may not surface immediately, according to Queen’s University’s Andrew.
“It’s going to be three-and-a-half to four years from now when these loans are all coming up and you’ve got a number of people who say they can’t afford to refinance it, so they’ll just sell,” Andrew said. “They’ll find out that 40 units in the building all went on the market in the same month, and now they’ve got a big problem.”
To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net
To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; David Scheer at dscheer@bloomberg.net
Link to this article: http://www.bloomberg.com/news/2012-02-13/toronto-bubble-risk-topping-new-york-in-market-for-condominiums-mortgages.html
Thursday, January 19, 2012
Tuesday, December 13, 2011
9b Woodfield Road - Home For Sale - $519,000
Just Listed! A wonderful, bright home steps from the all the best Leslieville has to offer as well as the Beach!
Executive Luxury Freehold Townhome In The Beach And Walk To Leslieville. Steps To The Boardwalk And Queen. Builder's Model With Many Upgrades - 9' Baseboards, Crown Moulded Ceiling, 10Ft Ceilings On Main Floor. Gas Fireplace In Large Chef's Kitchen. Ideal Space For Entertaining - 2 Walk-Outs - Large Private Rooftop Terrace. Maple Hardwood Floors. California Shutters. Close To Parks And Leslieville Farmer's Market. Large Garage With Direct Access To House.
Stainless Steel Fridge & Stove, Stainless Steel Microwave, Dishwasher, Washer/Dryer, All Electric Light Fixtures, All California Shutters, All Blinds, All Curtains & Rods, Patio Furniture, Large Planter On Deck, Cac, Built-Ins In Master.
For more information about this listing please visit my website: 9b Woodfield Road
For all of the photos and virtual tour click here: 9b Woodfield Road
Google Street View:
View Larger Map
Executive Luxury Freehold Townhome In The Beach And Walk To Leslieville. Steps To The Boardwalk And Queen. Builder's Model With Many Upgrades - 9' Baseboards, Crown Moulded Ceiling, 10Ft Ceilings On Main Floor. Gas Fireplace In Large Chef's Kitchen. Ideal Space For Entertaining - 2 Walk-Outs - Large Private Rooftop Terrace. Maple Hardwood Floors. California Shutters. Close To Parks And Leslieville Farmer's Market. Large Garage With Direct Access To House.
Stainless Steel Fridge & Stove, Stainless Steel Microwave, Dishwasher, Washer/Dryer, All Electric Light Fixtures, All California Shutters, All Blinds, All Curtains & Rods, Patio Furniture, Large Planter On Deck, Cac, Built-Ins In Master.
For more information about this listing please visit my website: 9b Woodfield Road
For all of the photos and virtual tour click here: 9b Woodfield Road
Google Street View:
View Larger Map
Thursday, November 10, 2011
Attention Tenants and Landlords of Ontario...
I have recently come across some questions regarding what tenants are responsible for while renting, as well as what Landlords are responsible for. All of us at some point or another in our lives have rented, whether at university, or a flat before your first home purchase. There are many ins and outs that one needs to know...For example:
1) How much notice must a landlord give the tenant to visit the property (in a non-emergency)?
2) How much notice of termination must a tenant provide?
3) What if a toilet seat breaks, who is responsible?
I have included a PDF from the Landlord and Tenant Board website as well as a link to their site for your information.
Know your rights whether you own the property or rent. This can save a lot of hassle.
Landlord and Tenant Board link
Tuesday, November 8, 2011
Monday, November 7, 2011
November Toronto Real Estate Newsletter
Here is the latest news from our market watch. One thing I would like to add to this information is that we have felt a slow down in the first week of November, approximately 3 weeks earlier than our seasonal slowdown. What we have noticed is that once a buyer has purchased there are fewer buyers coming into the buying process...ie, we are seeing less multiple offers and we are seeing houses begin to go "under asking".
Greater Toronto REALTORS® reported 7,642 home sales through the TorontoMLS® in October 2011. This represented an increase of 17.5 per cent compared to the 6,504 transactions reported in October 2010.
Monthly sales data follow a recurring seasonal trend that should be removed before comparing monthly results within the same year. After adjusting for seasonality, the annualized rate of sales for October was 97,100, which was above the average of 90,700 for the first three quarters of 2011.
"The pace of October resale home transactions remained brisk in the GTA. This bodes well for a strong finish to 2011," said Toronto Real Estate Board President Richard Silver. "Home buyers who found it difficult to make a deal in the spring and summer due to a shortage of listings have benefited from increased supply in the fall."
The average selling price through the TorontoMLS® in October was $478,137 - up eight per cent compared to October 2010.
"Sellers' market conditions remain in place in many parts of the GTA. The result has been above-average annual rates of price growth for most home types," said Jason Mercer, the Toronto Real Estate Board's Senior Manager of Market Analysis.
"Thanks to low interest rates, strong price growth has not substantially changed the positive affordability picture in the City of Toronto and surrounding regions."
Monthly sales data follow a recurring seasonal trend that should be removed before comparing monthly results within the same year. After adjusting for seasonality, the annualized rate of sales for October was 97,100, which was above the average of 90,700 for the first three quarters of 2011.
"The pace of October resale home transactions remained brisk in the GTA. This bodes well for a strong finish to 2011," said Toronto Real Estate Board President Richard Silver. "Home buyers who found it difficult to make a deal in the spring and summer due to a shortage of listings have benefited from increased supply in the fall."
The average selling price through the TorontoMLS® in October was $478,137 - up eight per cent compared to October 2010.
"Sellers' market conditions remain in place in many parts of the GTA. The result has been above-average annual rates of price growth for most home types," said Jason Mercer, the Toronto Real Estate Board's Senior Manager of Market Analysis.
"Thanks to low interest rates, strong price growth has not substantially changed the positive affordability picture in the City of Toronto and surrounding regions."
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