Number of real estate sales down by 2% in April 2013 (compared to April 2012), but the average sales prices is up by 2% (average sales price in the GTA is $526k for a property). The decrease of 2% in the number of sales is an improvement compared to prior months however. Perhaps the real estate market will rebound for the Spring – Summer seasons.
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Finance Minister Jim Flaherty shouldn’t interfere with mortgage pricing set by the country’s lenders, Bank of Nova Scotia Chief Executive Officer Richard Waugh said.
Flaherty, who has taken steps to cool the housing market in a bid to avert a crash, raised concerns last month over reduced five-year mortgage rates offered by Bank of Montreal and Manulife Financial Corp. amid record levels of household debt in Canada. Both lenders have since increased rates.
“I understand why the finance minister is concerned about the Canadian economy, but I just philosophically don’t think” government should be setting product pricing, Waugh said yesterday in an interview in Halifax, Nova Scotia, where the bank held its annual shareholders meeting. “Despite the difficulties of central banks to use interest rates, the alternative of trying to manage specific products or prices, to me, is fraught with difficulty.”
Scotiabank hasn’t been approached “that I’m aware of,” by Flaherty over the Toronto-based bank’s mortgage rates, said Waugh, 65. He said Canada will have a “soft landing” in the housing market instead of a full-scale crash.
“Volumes for mortgage brokers and banks will be affected, but I don’t see it as a credit event of any significance,” said Waugh. Kathleen Perchaluk, a spokeswoman for Flaherty, didn’t return e-mails seeking comment.
Baby boomers rejoice.
All those twenty-something echo “kids” who have been living at home in the wake of the 2008 recession seem to be finally moving out of their childhood bedrooms and into the real world now that job prospects are looking brighter.
Only problem is, they are fuelling some of the most intense demand for rental accommodation seen in Toronto in the last 20 years.
“Huge pent-up demand” among 25- to 30-year-olds, combined with more people opting to rent rather than buy since the condo market started softening last summer, is putting significant pressure on Toronto’s rental market, says Canada Mortgage and Housing Corporation market analyst Shaun Hildebrand.
Demand, especially for rentals in brand new downtown condo buildings, has been unrelenting right through the usually quiet winter months and bidding wars have become commonplace as folks like Nicole Shlass, 25, prepare to move out of family homes and into the heart of the city.
“Now I feel really bad for my clients when they don’t get a place, because I know how devastating it can be,” says Shlass, a novice realtor who has helped dozens of people find downtown rentals, but was recently beat out for a two-bedroom condo on Portland St. she’d hoped to share with a girlfriend.
They’ve since found a smaller, older 850-square-foot rental condo at King and Spadina where Shlass will move May 1, despite the fact her parents aren’t keen to see her leave the north Toronto home where she’s lived since graduating from university in 2010 to a bleak job market.
“I moved home because I wanted to figure out what direction I wanted to take in life. It was a very, very hard time for people my age,” says Shlass.
“But I’m very excited about the move. Most of my friends are starting to move downtown as well. For a lot of us, adult life is just starting a little later.”
Just since 2009, the rental vacancy rate has dropped from 3.1 per cent to just 1.7 per cent in purpose-built apartment buildings across the GTA. But it’s closer to just 1 per cent in highly coveted downtown condo buildings where investors have units up for grabs within walking distance of universities, medical facilities and Bay St. office towers.
At the same time, the job market has picked up considerably: Last year full-time employment in Toronto among the 25 to 44 age group hit its highest levels since 2008, says Hildebrand, with 25,000 new jobs.
Even with all the new condo projects coming on stream, it’s been hard to keep up with demand this winter from young people wanting to live downtown, says Kimberly Sears of Dash Property Management which oversees about 250 condo units for investors looking to rent them out. And the peak rental period, May 1, has yet to come.
It’s not unusual now to see rents in newer condo buildings of up to $2000 a month for a one-bedroom unit with den and parking and close to $3,000 for two-bedrooms with the same extras, says veteran realtor Jamie Johnston.
The fierce competition for a glass-and-granite box in the sky may be stressful for renters, but it’s eased some fears among housing officials that the downturn in condo sales and prices which started last summer could lead to a panicked sell-off by investors.
Toronto’s rental market has become so lucrative that 20 per cent of newly registered condos were rented out in 2012, according to Multiple Listing Service data, says Hildebrand.
Just six per cent were put up for sale.
The trend continues in Toronto. In February 2013, the number of real estate sales dropped, but the average sales prices increased (compared to February 2012).
Compared to last year, the average home sales price is up by about 4%. Number of sales remained roughly the same.