Steady as she goes for Canadian housing market in 2015, says CMHC

Marie Commisso
Vaughan Real Estate News

Canadian Press | October 30, 2014 | Last Updated: Oct 30 9:57 AM ET

CMHC said Thursday it expects housing starts to range between 172,800 and 204,000 units, with a point forecast of 189,500 units.
Brett Gundlock/BloombergCMHC said Thursday it expects housing starts to range between 172,800 and 204,000 units, with a point forecast of 189,500 units.
 
OTTAWA – The Canada Mortgage and Housing Corp. says it expects housing starts in 2015 to be about the same as they were this year, and in line with economic and demographic trends.

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The national housing agency says “some moderation is expected” in 2016.

The CMHC says that on an annual basis, it expects housing starts to range between 186,300 and 191,700 units in 2014, with a point forecast of 189,000 units.

Next year, the agency says it expects housing starts to range between 172,800 and 204,000 units, with a point forecast of 189,500 units.

In 2016, the CMHC says it expects housing starts to range between 168,000 and 205,800 units, with a point forecast of 187,100 units.

The agency says it expects Multiple Listings Service sales to range between 467,400 and 482,000 units in 2014, with a point forecast of 476,100 units.

Next year, it says it expects MLS sales to range between 457,300 and 507,300 units, with a point forecast to 482,500 units.

The CMHC says the average MLS price in 2014 is expected to be between $401,600 and $405,400, with a point forecast of $404,800.
Next year, the agency says it expects the average MLS price to be between $403,600 and $417,800, with a point forecast of $410,600, while in 2016 the average MLS price is forecast to be between $407,300 and $424,500, with a point forecast of $417,300.

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Should your home’s selling price be public information?

The selling prices of homes are currently the property of real estate boards. Should they be forced to share it with the public

 Marie Commisso
Vaughan Real Estate News
 
   
The selling prices of homes are currently the property of real estate boards. Should they be forced to share the information with the public?

 

The selling prices of homes are currently the property of real estate boards. Should they be forced to share the information with the public?

 
 

If you’re in the market for a house and know what other houses in the area are selling for, would that help you to make an offer?

This question is at the heart of the lengthy proceedings between the Competition Bureau and the Toronto Real Estate Board (TREB). The Bureau wants anyone to have access to the Multiple Listing Service (MLS) owned by real estate board. TREB says the information is private.

In a Supreme Court of Canada decision given last week, the parties were basically told to keep fighting.

The selling prices of homes are currently the property of real estate boards. When buyers or sellers use an agent, they agree that the price will be available to others using an agent. They have not agreed that the broader public should also have access to this information.

Real estate agents argue that since they pay to build and maintain MLS systems, people should not be able to get that information for free. It is the same, they argue, as asking Bell Canada to let others use their networks for free to offer consumers lower phone prices.

The case was first heard at the Competition Tribunal in April 2013. TREB argued that privacy laws mean this information can not be made available without the permission of the buyers and sellers involved. The case was thrown out because on the basis that TREB is not competing with anyone, so there is nothing for the Competition Bureau to complain about.

The case then went to the Federal Court of Appeal where judges decided late last year the case should go back for another trial in front of the Competition Tribunal. This was confirmed by the recent Supreme Court decision.

So after two years of legal bills in the millions of dollars, we are back to where we started, with another hearing likely within a year.

I still can’t figure out why the Privacy Commissioner of Canada has not come out and said where it stands. This would probably lead to a settlement. In prior decisions, the Commissioner has said selling prices are private and no real estate agent can advertise what your home sold for without your permission.

Some believe that if selling prices are widely available, you could figure out how to buy a home yourself, without an agent. I don’t think it will make any difference. Selling a home by yourself isn’t easy. Buyers will find out the same thing.

On a separate privacy issue, I am often asked whether you can take pictures of appliances when visiting a seller’s home. In my opinion, a seller is inviting you to look over the house, including any appliances. So, they shouldn’t complain if you took pictures to make sure that you are receiving on closing what you expect to receive.

Even though there is a lot of information out there, it is not easy to buy or sell your home by yourself. Be careful.

Mark Weisleder is a real estate lawyer and author. Reach him at mark@markweisleder.com 

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Toronto's real estate market is so hot, investors don't want to touch it

Marie Commisso
Vaughan Real Estate News
 
By CAROLYN IRELAND
 
(Fred Lum/The Globe and Mail)

Taking a long view, the risk/reward ratio isn't seen as very attractive

Scott Baker has a rarefied view of Toronto's real estate market.

"We tend to look at it from 40,000 feet."

Indeed, as the manager of a private pool of real estate assets, he looks at the broader housing picture in North America from that height.

Mr. Baker, a senior vice-president with Toronto-based MacNicol & Associates Asset Management, manages several alternative asset pools. One of those is the MacNicol 360 Degree Realty Income Fund.

Mr. Baker gets a pretty good look across North America through investing in third-party managed funds with "extreme local knowledge."

The Toronto market, he says, is driven by powerful trends that are not likely to end any time soon.

"All the money's flowing into Toronto. Everything looks good."

But precisely for that reason, his firm doesn't own much real estate in Toronto.

"We don't see any value," he says. "That's completely different from the trends. The trends are all positive ... that's the paradox."

Looking first at the bulls' view, Mr. Baker recalls how Canada avoided much of the fallout from the global financial crisis and U.S. housing market collapse that started in 2008.

Big money around the world began looking at Canada's conservative banking system with new respect, he says.

"We escaped pretty much unscathed through the recession."

Those investors see Toronto as a secure place to put capital, a global financial centre, a 24-hour city and a cultural powerhouse.

He points to the large influx of immigrants, for example, and the "Manhattanization" of Toronto caused by vast numbers of people choosing to live downtown rather than in the suburbs. Meanwhile, the greenbelt around the city has limited sprawl and the Great Lake to the south prevents expansion in that direction. The City of Toronto and many surrounding municipalities are committed to increasing density.

Builders are also putting up more townhouses and semis on smaller lots because land is so expensive.

"Developers are packing more people into smaller areas."

Condominium towers downtown continue to fill up, he points out – and there are still projects with untold numbers of units on the books.

"Toronto is the condo capital of North America, hands-down."

He expects people will have to get used to living in smaller places because only the top earners in double-income families can afford a detached house approaching the $1-million mark.

Interest rates are low and international capital is pouring in.

Huge institutions such as pension funds and real estate investment trusts have cash to burn, he says. Too much institutional money combined with all that positive sentiment pushes up the risk, in his view.

For a fund to expect a good rate of return, he adds, "you're betting that these trends are going to continue and there's no increase in interest rates."

For the bearish view, Mr. Baker points to the risk to the market if interest rates rise substantially.

People in Toronto are buying single-family houses that suck up as much as 60 per cent of pretax income.

Prices, meanwhile, can't continue to rise faster than the rate of inflation forever. The math doesn't work.

"It just can't sustain itself."

Taking a long view, he doesn't see the risk/reward ratio as very attractive.

"Everybody's very levered here in Canada."

So where does Mr. Baker have holdings?

"We're looking below where the big money wants to be."

After 2008, Mr. Baker says, money managers could invest almost blindly in the United States.

His firm was part of a syndicate, for example, that bought projects in Miami's South Beach, finished them off and sold them.

His fund is not interested in big trophy projects; today they are finding the highest quality and lowest risk in the secondary cities. Jacksonville, Fla., is one city where he's seeing opportunity, along with places in Texas and Georgia.

As for residents of Toronto who are not running money but just wondering whether to buy a place to live, Mr. Baker says that is a question he gets asked from time to time.

One relative who rents a condo recently asked if he should buy.

Mr. Baker says it really comes down to a lifestyle preference. He says the best value now seems to be in 10- to 15-year-old condo projects. If you are budget conscious, look at some of the older ones that are well-maintained, he suggests.

If someone doesn't need to own, he adds, they may be better off putting their savings into other asset classes and waiting for a correction in the market.

Not – he hastens to add – that he is predicting one.

But he thinks it's a good idea for people with a short time horizon to be cautious. Anyone looking to own a place for 20 years or more doesn't need to be as careful. Also, he advises caution about borrowing because no one wants to be under water on a mortgage.

"If you're going to buy a house in Toronto at these fully inflated prices, don't use a lot of debt."

Mr. Baker urges Canadians to remember the pain of the early 1990s. Buyers who bought in 1989 got killed, he says.

"People get lulled into thinking this can never happen. [That] this time it's different."

But he points to the United States for an example of a downturn that blindsided many. Millions, he says, lost their homes.

"In the U.S., virtually no one saw it coming."

For now Toronto remains strong and he agrees with the bulls who see the positive trends continuing. But investors should weigh the risk.

"Be cautious," is his advice.

"I wouldn't be buying those things thinking you're going to get rich. It could be the opposite. You could get poor."

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Marie Commisso
Vaughan Real Estate News
July 31, 2014

Why are some Toronto homes being relisted - at a higher price?

 
By Carolyn Ireland

In a fickle summer, buyers are noticing a trend

It seems some Toronto homeowners aren't getting the bidding wars they hope for when they list their houses for sale. But in a move that irks many market watchers, the owner pulls the listing, then relist a week or two later at a higher price.

Just this week, real estate agent Chander Chaddah glimpsed an opportunity as a similar scenario unfolded. He was heading off to the Danforth with two of his buyers to make an offer on a house that hadn't sold on the designated offer night.

The sellers listed their semi-detached house with an asking price of $629,000, then set a date for offers. Their neighbour's house had sold for $715,000 in May.

But July isn't May. It's especially not February. Summer is fickle. Bidding wars still erupt spontaneously, but for some sellers the strategy of underpricing fizzles. Buyers who've been through a few rounds of bidding and lost out are fried.

"Even the weather makes people a little less intense," says Mr. Chaddah of Sutton Group Associates Realty Inc.

So for the unfortunate east-end sellers, offer night came and went with only one bid. It was higher than the asking price but not as high as they were hoping for. They cancelled the listing and came out again with a new asking price $60,000 higher at $689,000. Offers welcome any time, they said.

That tactic of increasing the price when a house doesn't sell alienates a lot of potential buyers, agents say. It particularly annoys those who submitted an offer on the scheduled evening.

In the case of Mr. Chaddah's clients, they had seen the property at the first open house but they didn't think it was for them so they didn't submit a bid. They went back with him for a second look and reconsidered. To Mr. Chaddah, the situation seemed like a chance to cut a deal. He was heading off this week in the hope of negotiating the sellers down from $689,000.

Mr. Chaddah says the Toronto market is still robust and continues to suffer the perennial problem of too few listings to meet demand. As a result, desirable houses on good streets are still causing a commotion.

In Roncesvalles Village, a renovated semi with a basement apartment set the neighbours abuzz when it sold for $1.01-million. Mr. Chaddah believes it's a high-water mark for a two-storey semi in the neighbourhood.

The Toronto Real Estate Board is seeing some signs that the supply of listings is beginning to rise.

In the first half of July, sales through the multiple listing service rose 11.6 per cent in the Greater Toronto Area compared with the same two weeks last year. Listings jumped 9.7 per cent in the same period compared with the first half of July in 2013. The average selling price in the GTA increased 8 per cent in the first two weeks of July from a year earlier.

TREB's senior manager of market analysis, Jason Mercer, says it's possible the number of new listings will continue to swell in the second half of the year. If so, he adds, the increased choice for buyers could tame some of the price growth in certain segments.

Mr. Chaddah says that the strange thing about competition is that it seems to give buyers needed affirmation that others see the same qualities as they do in a house. "It's the multiple offers that make people confident. It's perverse."

The condo market in Toronto, meanwhile, is still largely disconnected from the single-family segment.

Christopher Bibby of Sutton Group Associates Realty Inc. says detached houses are in such high demand and sell so effortlessly that he has seen some agents who previously specialized in condos switch camps.

Mr. Bibby is sticking with a focus on condo sales because that is where he has built his business. But he turns down listings when the owner wants to set a lofty asking price for a basic condo surrounded by competing units.

He's working longer hours these days because when he does list a condo unit in a busy building he looks for an edge. "We need a different approach to the whole selling strategy."

If the owner wants to set an asking price based on what they "need" to turn a profit on their investment, Mr. Bibby doesn't take the listing. "It's a very touchy subject when they're going to break even or have a loss."

But in an area with a cluster of towers, the market is diluted.

"When I have a vendor that wants to overprice their place by $50,000 and doesn't understand there are 50 others in the area ... if we don't see eye-to-eye, it can just be a frustrating process for everyone."

In a building with 500 units, surrounded by 10 other buildings with 500 units each, it's very difficult for an agent to make one listing stand out, he explains; price is typically the only real factor.

Ideally, Mr. Bibby prefers to sell one-of-a-kind lofts. They go quickly because buyers are just waiting to pounce.

He listed a unit in the Vinegar Lofts near Queen and River street for $689 a square foot. It was aggressive for a neighbourhood that's out of the core and still a bit sketchy, he acknowledges.

"Colleagues said: 'You're priced on the high side.' I said: 'Yeah, but I'm going to get it.' "

He succeeded, he says, because there was nothing comparable anywhere nearby. A potential buyer couldn't claim to be considering a competing unit because competition didn't exist.

Mr. Bibby says many condo owners have sold their units in order to free up cash. Some are renting for now because they can't find a single-family house to buy. Competition is so intense, he says, that the leap in price can be too great.

Loft owners, on the other hand are hard-core.

"The loft people don't care," Mr. Bibby says. "It's a lifestyle for them."

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