This week’s top stories include how Canadians are not prepared for an emergency expense, how sales in the Greater Toronto Area (GTA) are expected to slow for the remainder of this year and next, how Canadian home prices have continued to decline and how condominium developers are buying up the old hotels.
A recent poll done by Harris/Decima for CIBC was conducted during the months of April and March of roughly 2000 Canadians. The poll show showed that 45% of Canadians did not have an emergency fund setup to deal with emergency expenses.
Ontario and Alberta residents came out with the worst scores with 53% stating that they had no emergency fund or means to deal with emergency expenses. British Columbia residents were the most likely to be prepared for emergency expenses with 60% stating that they have money set aside for a rainy day. Quebec and the Prairie provinces of Saskatchewan and Manitoba tied at 57%.
Canada Mortgage and Housing Corporation (CMHC) is downgrading its housing market outlook for the reminder of the year and next year as well. The downgrade is due to a significant slow down in sales of condo’s and high end homes in the past few months in the Greater Toronto Area (GTA).
Housing activity is expected to slow across majority of southern Ontario well into next year with rising inventories of new condo’s, tougher mortgage lending guidelines, a lack of demand from investors and abnormally high home prices. This was the statement from CMHC in their Housing Market Outlook report that was released on Tuesday of this week. The report stated, “Housing activity will hold up better in northern and southwestern Ontario communities thanks to improving goods sector performance, relatively less expensive housing and an improving migration picture.”
Shaun Hildebrand a senior market analyst with CMHC commented, “Toward the second half of (2013) we’re going to see more of a moderating effect because of the slowdown in new condo sales that we’re starting to see now.” Condo sales have continued to slow in the past few months but highrise construction still dominates the Greater Toronto Area market with a record number of units being sold last year and 28,000 units currently being built in the pipeline.
CMHC’s report outlines that the previous sales predictions for this year were 95,000 real estate transactions in the GTA by the end of the year. CMHC now expects to see 91,500 sales this year and 88,000 sales expected next year. The drop in demand for housing has not hit the lower end of the housing market in the Toronto area but home over $1 million and condo’s will take the brunt of the impact. What do you think of the revised numbers? Please comment below.
It seems that a housing downturn is taking a hold of the Canadian real estate market. Home prices have continued to decline across Canada in the month of July, according to the latest release from the Canadian Real Estate Association (CREA) this Wednesday.
CREA’s release showed that the average selling price of a home sold in the month of July was $353,147, which is a decline of 2% from the previous year. The year over year decline in the month of June was only 0.8%. CREA stated, “Prices are off their recent peaks in Greater Vancouver and Greater Toronto, but remain above year-ago levels in most markets.”
Activity had increased in parts of Canada from last month in Kingston, Ontario, Calgary and Chilliwack, B.C. But a slump in sales in Toronto, Edmonton and Newfoundland and Labrador offset the gains in other area’s. Actual sales across Canada were up 3.3% overall from the same time last year. The majority of the decline attributed to the national average is mainly due to Vancouver’s struggling housing market.
Vancouver witnessed home sale prices decline by more than 12% to $667,462. Last years average sale price was $761,763. RBC economist Robert Hogue commented, “We still believe that Vancouver is probably the most stressed market right now because of extremely poor affordability. Plot the resale figures over the last year or so and you see a fairly significant decline in resales, so I think that this does the fit the definition of a market correction.”
The British Columbia Real Estate Association’s chief economist also tuned in on the news and commented, “Typically to see a price correction you need to see a macroeconomic shock such as recession, very high unemployment, for example or you need to see interest rates go up very dramatically in a short period of time. Both of those we don’t see on the horizon,”
Toronto is currently experiencing a decline in their market with prices increasing only 3.9% year over year. Tighter mortgage lending guidelines have started to impact the market but we are still not sure where the cooling will end. It could be six months before we really understand what the changes are doing to the Canadian housing market. What do you think? Please comment below.
Toronto’s condo market has been on fire for quite some time now and it seems that builders are still trying to build and move forward. The newest purchases by builders seems to be old hotels in the area.
A report released this week from Colliers International Hotels states that more than half of the sales activity in the sector is attributed to developers that are purchasing hotels to convert to condominium units or for commercial use. Colliers was noted as saying, “This theme has been fuelled in part by the strength in the residential condominium market in Toronto and Calgary,” in their report.
Akan Pirani, executive managing director of Colliers Hotels commented, “We are not just talking about Toronto, it’s across the board. There are two hotels in Calgary, one sold for apartment the other for retail. The trend here is hotels for alternative use.”
The Colliers report outlined that there were $627 million in sales activity between January and June of this year. The figure was up $28 million from $599 million during the same period last year. Out of that, 53% of the transactions were for new development.
The demand for existing hotels by developers has increased sales prices for the first half of the year to $125,000 per room, which is a 19% increase from last year. This is a huge change from last year where only 7% of activity was attributed to new developments. What do you think of the numbers? Please comment below.
Please note that I will be away for the next few weeks as we change our office location.
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