Saturday, January 31, 2015

■The Return of The Larger Condo

Two-bedroom units make a come back as developers eye live-in buyers rather than investors.

The black billboard in front of the old Dip ’n Sip Donut shop at Kingston Rd. and Main St. is a sign of the times — in more ways than one. It’s there to advertise that, yes, another condo is going up, and another eclectic piece of Toronto history is coming down. But it’s also a sign that change is coming to the condo industry.

Sometime next year, a bulldozer will be brought in and the aged diner, which had seen better days 20 years ago, will be razed. In its place will go the next generation of condos. They will be less shoe boxes in the sky aimed at investors, and more permanent homes aimed at so-called “end users” — young families, folks looking for the conveniences of turn-key living, baby boomers looking to downsize in the same neighbourhoods where they raised their kids.

Streetcar Developments, better known for the kind of ubiquitous, boxy, glass-walled suites that now dominate Toronto’s skyline, is moving to the next stage. Its newest project, The Southwood, will have just 45 units, most of them “family-sized suites” in a six-storey building with all the comforts of home (minus the upkeep), including outdoor space.

All the units will have balconies or terraces and more home-like amenities, such as gas stoves. Bigger units will have kitchen islands made for great gatherings. And there’s even a debate about whether to make a daycare centre part of the second phase, planned down the road and across the street, just steps from the Kingston Rd. TTC tracks. Streetcar is far from alone.

Developers across the GTA are now doing a major rethink, and a retooling, with a host of projects that will feature fewer tiny units and more spaces where people can really live. But they will come at a price — in Streetcar’s case, $600,000 and up.

“The biggest change in the condo market now is the bigger appetite for bigger homes for end users,” says Jim Ritchie, senior vice president of sales and marketing for Tridel, Canada’s largest condominium developer.

“As expensive as condominiums may be seen to be, when you look at alternatives — like houses — they are still less expensive.” Tridel, like Streetcar, has new projects in the sales or development stages for 2015 that are turning conventional condo thinking on its ear. Tridel was surprised when sales launched in the summer of 2013 for its 362-unitAqualina Bayside project on Queen’s Quay. The company found that the units in highest demand were some of the biggest and most pricey.

Those units are typically the last to sell, which is why developers have flooded the condo market with so many one-bedrooms and even micro-condos up to 500 square feet. They have been hugely popular with investors looking to buy a unit and rent it out. In fact, of the 100 units in Aqualina that sold for over $500,000, 31 of them were over $1 million and about 1,500 square feet. As a result, Tridel stepped up the number of bigger units in the second phase of Bayside, called Aquavista. Bigger units will account for almost one-quarter of the 227 total suites. Sales just launched in November, but already end users have snapped up 25 of the $1 million-plus bigger units, says Ritchie.

“We also have a lot in the $800,000 and $900,000 price range, and we have some one-bedroom units. But our focus is really on two bedrooms and larger,” says Ritchie. “We’re seeing more of this demand from end users, and not all of it in the downtown.”

In many ways, this is an overdue correction in a condo market that had gotten out of whack. Over the last five years in particular, unit sizes have been shrinking. Part of that has been a legitimate effort by developers to keep prices below $450,000 in the face of escalating land and development costs: Above that, buyers lose most HST rebates. But small condos also fed intense investor demand, which remains surprisingly strong but has eased from its 2011 peak.

In 2009, for instance, condo projects launched in the GTA had units averaging 929 square feet. By this year, new GTA projects launching sales had lost the equivalent of a bedroom and hit a low averaging 812 square feet, according to RealNet research. The loss of living space has been even more pronounced in the popular downtown core. But already, unit sizes are starting to creep back up, says RealNet president George Carras.

The down side, however, is that average prices will also climb as units get bigger – and that’s worrisome given that the average cost of a new condo has already reached $455,000 as of this fall, not including monthly maintenance fees, according to RealNet.

Part of that is because new-build houses and condos are subject to the HST, where resale home aren’t. The $600,000 price tag for one of Streetcar’s The Southwood condos, for instance, includes $54,000 just in HST.

“That acts as a really negative influence for developers looking to build bigger units,” says Streetcar Development founder Les Mallins.

Since 2004, the mix of condos coming on the market has changed dramatically, RealNet research shows: Back then, some 47 per cent of the units in new project launches were two bedrooms. One-bedrooms accounted for about 41 per cent of all new unit launches.

But as land and other costs escalated, the mix shifted dramatically. At the peak in 2011, one bedrooms made up about 61 per cent of all new launches and two bedrooms just 31 per cent. As of the end of this year, with developers looking to build bigger, the mix is returning to 2004 levels, with one bedrooms making up 48 per cent of new launches and two-bedrooms catching up at 41 per cent.

By: Susan Pigg


Friday, January 30, 2015

■CIBC expects another rate cut in March despite weak loonie

A forecast from CIBC World Markets predicts that the bank of Canada will make a further 0.25 per cent cut to interest rates in March despite the current weakness of the Canadian dollar. Chief economist Avery Shenfield says that growth will be lower than 2 per cent this year and sees the loonie falling to 77 cents US and not recovering too much above 80 cents US. Avery notes that there is a need to shift economic growth from housing and debt to exports in spite of the weak oil prices and also that the US is likely to increase its interest rates in the summer, putting additional pressure on the Canadian dollar. There is also a possibility that the BoC will take even more action later in the year: “While that second cut is priced in, markets may then guess about a third" Avery says but with CIBC expecting a recovering oil price by the end of the year it is also forecasting a “reversal of the Bank of Canada’s rate cuts in 2016.”

by Jamie Henry 


Tuesday, January 27, 2015

■RBC cuts mortgage rate, price war coming?

It was always going to happen but while last week the big lenders were reluctant to pass on the Bank of Canada’s interest rate cut to borrowers, this week there’s talk of a price war.

Royal Bank of Canada has become the first of the big banks to cut mortgage rates, dropping its 5-year fixed rate deal to 2.84 per cent and also cutting its other fixed products. Flexible rates are unchanged though along with other lending from the bank. Of course these rates are their published deals and brokers frequently secure better ones but a ‘battle of the rates’ creating headlines can only help the perception that now is a great time to buy. How low those rates go is anybody’s guess but there are already predictions of sub-2 per cent mortgages.



Thursday, January 22, 2015

Sunday, January 11, 2015

■Market Watch-January, 2015

Near Record Sales in 2014

January 7, 2015 -- Toronto Real Estate Board President Paul Etherington announced that Greater Toronto REALTORS® reported 92,867 residential sales through the TorontoMLS system in 2014, including 4,446 in December. The calendar year 2014 sales result represented a 6.7 per cent increase over the 2013 sales figure of 87,049 and was just short of the record set in 2007.

"TREB's 2014 sales figures are a testament to the importance Greater Toronto Area households continue to place on home ownership. GTA households realize that home purchases have been a quality long-term investment. While home prices certainly increased substantially in 2014, the purchase of an average priced home remained affordable, in terms of the average household's ability to comfortably cover their monthly mortgage payments," said Mr. Etherington.

"Even with a constrained supply of homes for sale in many parts of the Greater Toronto Area, buyers continued to get deals done last month. Households remain upbeat about home ownership because monthly mortgage payments remain affordable relative to accepted lending standards. This is coupled with the fact that housing has proven to be a quality long-term investment," stated Mr. Etherington.

The average selling price continued to grow on a year-over-year basis in calendar year 2014, with an 8.4 per cent increase over calendar year 2013 to $566,726. This included a seven per cent increase in the December 2014 average selling price to $556,602. Throughout 2014, annual increases in the average selling price and the MLS® HPI Composite Benchmark were consistently reported on a monthly basis for most market segments, from detached homes through to condominium apartments.

"The strong price growth we experienced in 2014 can be explained with two words: listings shortage. The constrained supply of listings was especially evident for low-rise home types like singles, semis and town houses. The number of households looking to purchase these home types increased, while the number of homes from which they could choose decreased. This situation resulted in more competition between buyers and more aggressive offers," said Jason Mercer, TREB's Director of Market Analysis.


Monday, January 5, 2015

■Market Watch-December, 2014

Sales & Price Growth Continue in November

December 4, 2014 -- Toronto Real Estate Board President Paul Etherington announced that Greater Toronto REALTORS® reported 6,519 residential transactions through the TorontoMLS system in November 2014. This result was up by 2.6 per cent compared to 6,354 sales reported in November 2013. Through the first 11 months of 2014, total sales amounted to 88,462 - up 6.6 per cent compared to the same period in 2013.

While the trend of year-over-year sales growth continued, the supply of listings remained constrained, with active listings at the end of November down in comparison to last year.

"Even with a constrained supply of homes for sale in many parts of the Greater Toronto Area, buyers continued to get deals done last month. Households remain upbeat about home ownership because monthly mortgage payments remain affordable relative to accepted lending standards. This is coupled with the fact that housing has proven to be a quality long-term investment," stated Mr. Etherington.

The average selling price for November transactions was up by 7.4 per cent year-over-year to $577,936. The year-to-date average price was up by 8.4 per cent to $567,198. The MLS(R) Home Price Index Composite Benchmark price for November was up by 7.7 per cent compared to a year earlier.

"The robust average price growth experienced throughout 2014 has been fundamentally sound, with demand high relative to supply. Strong competition between buyers has exerted upward pressure on selling prices. Barring a substantial shift in the relationship between sales and listings in the GTA, price growth is expected to continue through 2015," said Jason Mercer, TREB's Director of Market Analysis.

6,519件 (前年同期に比べ約2.6%増加)
577,936ドル (前年同期に比べ約7.4%増加)