YYC & YYZ OUTPERFORM

Calgary and Toronto office markets outperform
Calgary has nearly 6 million square feet under construction
BY MARIO TONEGUZZI
CALGARY HERALD SEPTEMBER 25, 2014

CALGARY - Lacklustre job creation continues to impact demand for commercial real estate in Canada, but office markets in Calgary and Toronto are outperforming the rest of the country, according to the CBRE Limited’s National Office and Industrial Third Quarter 2014 Statistical Summary released on Thursday.

The report said tepid job growth has undermined office leasing activity in Canada, but has been unable to stem an historic industrial construction boom.

“The Canadian economy may not be firing on all cylinders, but the Toronto and Calgary office markets turned out quite a performance last quarter,” said John O’Bryan, chairman of CBRE. “It was a bit of a have or have not summer. The standout office markets were exactly that, while other areas were fairly quiet. One assumes that strong office leasing activity in core markets will translate into more widespread office demand in the year ahead.”

The national office vacancy rate dropped for the first time in two years, retreating 10 basis points to 10.3 per cent in the third quarter. Office vacancy had been increasing at a slower pace in recent quarters. Demand for downtown office space in Toronto and Calgary tipped the scale and resulted in a long awaited drop in vacancy, said the report.

Calgary’s overall office vacancy rate of 10.1 per cent fell from 10.6 per cent in the second quarter while in Toronto it dropped from 9.6 per cent to 9.2 per cent. Calgary’s downtown market saw vacancy drop to 9.1 per cent from 10 per cent and Toronto’s downtown market dipped to 5.3 per cent from 6.1 per cent.

In the third quarter, Calgary’s office market had 511,021 square feet of positive absorption and Toronto’s was 712,564 square feet.

Office space currently under construction is 5.6 million square feet in Calgary and 7.1 million square feet in Toronto. Nationally, there is 21.7 million square feet of office space under construction.

Greg Kwong, executive vice-president and regional managing director with CBRE in Calgary, said the drop in vacancy in Calgary is a positive sign but on the negative side the amount of sublet space in the downtown as a percentage of the overall vacancy is at a fairly high level.

For example, in the downtown that percentage was 41.6 per cent in the third quarter, up slightly from 40.4 per cent in the second quarter.

“Any time it’s over 35 per cent of the overall vacancy that means there’s a lot of companies mostly oil and gas that are giving up space. If that continues, that will create negative pressure on the downtown core,” said Kwong. “But overall there seems to be a good sense of optimism. There are deals happening.”

The CBRE report said the Canadian industrial market continues to be characterized by limited availability as tenants remain hungry for industrial space across the country. Demand outweighs supply in most areas, especially for modern distribution facilities.

The overall industrial availability rate fell 10 basis points quarter-over-quarter to 5.3 per cent. In Calgary, it is 4.5 per cent, down from 4.6 per cent in the previous quarter.

There is 4.4 million square feet of industrial space under construction in Calgary and 19.9 million square feet across the country.

“The industrial market is very solid,” said Kwong. “In every size, category or asset class, there’s leasing activity whereas a year ago that was not the case. There was only hot spots in certain size ranges.”

SALE PRICE JUMP

Calgary repeat home sale prices rise 7.1%
Second biggest jump in Canada behind Vancouver’s 7.5%
By Mario Toneguzzi 
Calgary Herald February 12, 2014

CALGARY - Calgary had the second best year-over-year growth rate in prices for repeat home sales in January, according to the latest Teranet-National Bank National Composite House Price Index released Wednesday.

It said Calgary’s annual increase was 7.1 per cent which was behind only Vancouver’s 7.5 per cent.

The national composite, of 11 major centres surveyed, rose by 4.5 per cent.

The index is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation.

Toronto saw an annual increase of 5.8 per cent.

Sonny Scarfone, economic analyst with TD Economics, said the index surprised on the upside with a larger gain in momentum than expected across the country.

“Home price gains are still exceeding income growth by a considerable margin, especially in larger real estate markets like Toronto and Vancouver. A low supply of new listings is an important contributor to the upward pressure on prices,” said Scarfone.

“However, as U.S. and Canadian economic growth accelerates and the Federal Reserve continues to taper its quantitative easing program, North American bond yields are likely to rise over time and this will be reflected in mortgage rates. As a consequence, the current stronger-than-expected prices are likely to soften over the medium term.”

The index nationally rose 0.4 per cent from December to an all-time high. It was the largest monthly rise in five months.

The gain from a year earlier exceeded the cross-country average in four of the 11 markets: Vancouver, Calgary, Toronto and Hamilton (5.1 per cent). It was close to the average in Edmonton (4.4 per cent) and Winnipeg (3.9 per cent). It was minimal in Montreal (0.8 per cent) and Quebec City (0.6 per cent). Prices were down from a year earlier in Victoria (5.7 per cent), Halifax (2.9 per cent) and Ottawa-Gatineau (0.6 per cent). The 12-month decline was a first for Ottawa-Gatineau, the 11th straight for Victoria and the fourth in six months for Halifax, said the report.

On a monthly basis, price increases were led by Vancouver (1.1 per cent), Toronto (0.5 per cent) and Quebec City (0.5 per cent) led the composite index. Calgary equalled it. Hamilton prices were up 0.3 per cent, Winnipeg and Montreal prices 0.2 per cent. Edmonton was flat on the month. Prices fell 0.3 per cent in Victoria, 1.1 per cent in Ottawa-Gatineau and 1.7 per cent in Halifax. The January rises in Montreal and Quebec City interrupted runs of five consecutive monthly declines. For Ottawa-Gatineau it was the fifth straight monthly decline, for Victoria the fourth and for Halifax the second. For Vancouver it was a ninth straight monthly rise, for the composite index the 10th in 11 months, said the report.

“There are signs that national house price inflation is close to peaking. The earlier strength in existing home sales, triggered by fears of higher mortgage rates, has begun to fade,” said David Madani, economist with Capital Economics. “January’s preliminary data reported by the regional real estate boards indicate that national home sales declined for a fourth consecutive month.

“The drop back in the months’ supply of inventory is already consistent with annual house price growth rate remaining around 4.0 per cent. If we are correct about home sales drifting lower this year, it will once again start to put downward pressure on house price inflation.”

UP OVER 18%

Calgary helps fuel strong MLS sales in Canada

National transactions up more than 18% Y/Y

BY MARIO TONEGUZZI

CALGARY HERALD OCTOBER 15, 2013

CALGARY — Led by gains in Calgary, Edmonton, Greater Vancouver and Greater Toronto, Canada’s housing market experienced soaring MLS sales in September compared with a year ago.

The Canadian Real Estate Association said Tuesday that national sales of 38,147 during the month were up 18.2 per cent from September 2012.

That is roughly on par with the 10-year average in September. The 18.2 per cent increase compared to year-ago levels reflects weakened activity at that time, said CREA.

In Calgary, sales rose by 20.5 per cent to 2,475 transactions.

“Currently it is still a strong sellers’ market wherein we are seeing properties in prime locations come on the market and within a day being sold unconditionally for above listed price when priced accordingly,” said Grace Yan, a realtor with RE/MAX Real Estate (Central) in Calgary.

“We are still experiencing vast amounts of relocations from all parts of the world as Calgary’s oil and gas economy remains strong. We are expecting the rest of the year to remain a strong, healthy resale market due to the limitation of suburban developments and the long periods of time to obtain building permits for new builds along with limited public transportation in suburban areas.”

In September, sales year-over-year sales increases were 64.3 per cent in Vancouver (2,524 sales), 26.1 per cent in Toronto (7,411), and 24.8 per cent in Edmonton (1,712).

“Year-over-year increases in the sales over the past couple of months highlights how activity softened across much of the country following the introduction of tighter mortgage rules last summer,” said Gregory Klump, CREA’s chief economist.

“While the momentum for sales activity began improving a few months ago, it may be losing steam after having only just climbed back in line with an average of the past 10 years. Even so, one can see large year-on-year changes when comparing activity to a month like September 2012, when sales dropped to the lowest level for that month in more than a decade.”

CREA also said Calgary had the highest year-over-year increase in the MLS Home Price Index at 7.28 per cent. The aggregate for the 11 centres surveyed across Canada was 3.13 per cent. The index looks at benchmark properties in those centres.

Calgary average MLS sale price rose just slightly under the national average in September. It was up 8.2 per cent year-over-year to $435,934. Across Canada, the national average sale price was up 8.8 per cent to $385,906.

CREA said MLS sales in Alberta increased by 20.8 per cent in September to 5,694 while the average sale price was up 7.4 per cent to $381,308.

Diana Petramala, economist with TD Economics, said no two major markets in the country are the same.

“Momentum may prove more lasting in markets with fewer excesses, like Calgary and Edmonton where homes appear fairly valued and sales are being supported by decent labour markets and population growth,” she said.

Robert Kavcic, senior economist with BMO Capital Markets, said sellers in Calgary still have a slight upper hand.

Photos By: Nacoki

LIVIN' RIGHT

Toronto fourth most livable city in world: Economist

Vancouver, Toronto and Calgary keep their high rankings on The Economist's list.

By: The Star Staff

Torornto Star August 28, 2013

Three of the top 10 most livable cities in the world are Canadian.

Vancouver, Toronto and Calgary are third, fourth and fifth, respectively, on the list compiled annually by the Intelligence Unit of the business and political weekly magazine The Economist. That’s also where they stood last year.

Both Toronto and Vancouver won perfect 100-point scores for stability, healthcare and education. The 100-point score for infrastructure The Economist gave Melbourne and Vienna propelled them to first and second place on the list.

Melbourne has been the top city on the livability list since 2011, when it squeezed out Vancouver. Toronto and Calgary have traditionally been in the top five as well.

The Economist bases its ratings of 140 cities on 30 factors across five categories: stability, healthcare, culture and environment, education and infrastructure.

Seven of the top 10 cities are in Canada and Australia, which the Intelligence Unit points out reflects them being mid-sized cities in wealthier countries with relatively low population density and good healthcare and education.

The other cities on the top 10 list, from fifth through ninth, are Adelaide, Sydney, Helsinki and Perth.

Half of the bottom 10 cities are in Africa: Douala, Cameroon; Tripoli, Libya; Algiers, Algeria; Harare, Zimbabwe and Lagos, Nigeria.

Syria’s capital of Damascus ranks dead last because of the civil war tearing apart the country. Damascus also registered the biggest decline in livability over the last five years, by more than 20 per cent.

The livability list also highlights the cities with the most improved scores over the last five years. Bogota, Colombia, improving the most: by 7.9 per cent since 2008, because of an end to violence created by the drug trade and guerrilla activity.

Top ten cities (overall score)

Melbourne, Australia 97.5

Vienna, Austria 97.4

Vancouver, Canada 97.3

Toronto, Canada 97.2

Calgary, Canada 96.6

Adelaide, Australia 96.6

Sydney, Australia 96.1

Helsinki, Finland 96.0

Perth, Australia 95.9

Auckland, New Zealand 95.7

Photo by: stephenk1977

ONE UP

Canada’s new home prices tick up 1%, led by Calgary 
By Greg Quinn
Bloomberg News 13/07/11

Canada’s new home price index rose in May led by Calgary and cities in Ontario, the government statistics agency said.

The 0.1% national gain was led by a 0.9% increase in Calgary, Statistics Canada said Thursday in Ottawa. Prices also rose 0.6% in the Ontario cities of St. Catharines-Niagara, Sudbury and Thunder Bay.

Economists predicted the index would rise 0.2% on the month, according to the median estimate in a Bloomberg survey with nine responses. From a year earlier, new home prices increased 1.8% in May.

Other reports this week have shown housing-market strength as officials warn consumers not to become overextended with mortgage debt. Building permits rose a fifth month in May while housing starts fell less than economists predicted in June.

Thursday’s data showed prices in Toronto, the nation’s largest city by population, increased 0.2%. Montreal, the second largest, saw house prices climb 0.3% while those in Vancouver, the third-largest, fell 0.2%.

AGE AND CONDO DEMAND

Condo demand stronger among older Canadians: BMO
Business News Network May 30, 2013

Think the condo market is a young man's game? Think again, a report from BMO says the demand among potential homebuyers for purchasing a condo is greater for Canadians over the age of 50.

Among prospective buyers over the age 50, about 30 percent said they were willing to buy a condo over the next five years, compared to just 17 percent for Canadians under the age 50, the survey said.

The condo market in Canada's cities is also being divided into the haves and have nots, the survey noted.

In both Toronto and Calgary the appetite for buying a condo is on the rise, while demand is falling in Montreal and Vancouver.

About one-third of prospective buyers surveyed in Toronto said they were planning to buy a condo in the next five years, an increase of 11 points from a survey conducted in the fall.

In Calgary, 33 percent of buyers said they were considering purchasing a condo in that time period, up 8 percent from a previous survey.

But the story in Vancouver and Montreal is the complete opposite, with the percentage of buyers thinking of purchasing a condo falling to 28 percent from 33 percent in Vancouver and down 3 points to 24 percent in Montreal.

"Condos remain an affordable alternative to the pricey detached market in some major cities," said Sal Guatieri, senior economist at BMO Capital Markets. "For example, a typical Toronto condo today requires just 22 percent of a median family's income to service; Vancouver condos - while more expensive - are still affordable at 28 percent of income.

The report from BMO comes amid a debate among economists and other investors whether the country's housing market is headed for a U.S.-style crash. While many economists on Bay Street say the country is moving towards a "soft landing," a number of investors say that call is too optimistic.

The condo market in major cities such as Toronto and Vancouver, has attracted significant negative attention.

On Wednesday, the Organization for Economic Cooperation and Development (OECD) in its twice-yearly Economic Outlook warned of a potential for a pullback in housing prices in Canada. The OECD said Canada is one of three countries in the 34-member group where "houses appear overvalued but prices are still rising." The Toronto condominium market is the agency's "number one concern."

While a dramatic collapse in the housing market is unlikely, Jarrey said it can't be ruled out completely.

"Nobody saw the huge decline in the United State coming either five or six years ago – not nobody, but very few – and we could be having something very similar but it's not a very likely outcome," he said.

BY COMPARISON

Calgary prices for repeat home sales on the rise
Nationally annual hike is smallest since November 2009
By Mario Toneguzzi
Calgary Herald May 14, 2013

CALGARY — Prices for repeat home sales in Calgary were up 5.5 per cent in April compared with a year ago, according to the Teranet-National Bank National Composite House Price Index.

The index, released Tuesday, also said prices in the city increased by 1.2 per cent from the previous month.

The index is estimated by tracking ob­served or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index.

Nationally, in 11 markets surveyed, prices were up 2.0 per cent on an annual basis and by 0.2 per cent month-over-month.

The year-over-year hike in Canada was the smallest 12-month rise since November 2009.

“By way of comparison, the Case-Shiller home price index of 20 U.S. metropolitan markets was up 9.3 per cent from a year earlier in February (the latest available reading),” said the Teranet-National Bank report.

In Canada, the rise over the 12 months ending in April exceeded the cross-country average in seven of the 11 markets surveyed for the national composite index: Quebec City (6.1 per cent), Calgary (5.5 per cent), Hamilton (5.4 per cent), Winnipeg (4.4 per cent), Toronto (4.3 per cent), Edmonton (3.6 per cent) and Halifax (2.8 per cent).

The report said price increases lagged the average in Ottawa-Gatineau (1.5 per cent) and Montreal (1.3 per cent). Prices were down from a year earlier in Victoria (3.3 per cent) and Vancouver (1.5 per cent). For Vancouver it was the ninth month of 12-month deflation.

Amna Asaf, economist with Capital Economics, said house price growth in Calgary and Edmonton have continued to accelerate, following from their housing downturn of two years ago.

“Although house prices rose in most of the cities, we suspect that as home sales drop, the former will eventually respond,” said Asaf. “Based on the figures already reported by the regional real estate boards, both Toronto and Vancouver posted fewer existing home sales in April compared to a year ago, although the pace of decline has eased. We suspect that national existing home sales . . . may have dropped at a more modest pace of around two per cent year-on-year.

“If we are correct about declining home sales this year, the month’s supply of inventory is likely to rise much further. Accordingly, we suspect that house prices will eventually begin to decline outright.”

On Tuesday, federal Finance Minister Jim Flaherty said he has no plans to intervene in Canada’s housing market, which he says is unfolding in a healthy way.

While some observers are expressing fears the bubble is about to burst, Flaherty said the market is responding the way he envisioned when he tightened lending rules last year.

The Teranet-National Bank index said the national monthly change was the weakest in the 15 years since the inception of the index with the exception of April 2009 when the country was in recession.

“In three markets considered lively, the monthly gain exceeded one per cent: Winnipeg (1.3 per cent), Edmonton (1.3. per cent), Calgary (1.2 per cent). Excluding these three regions, the Composite index would have been flat in April. Lesser monthly increases were recorded in Hamilton (0.6 per cent), Montreal (0.5 per cent) and Toronto (0.4 per cent). Prices were down from the month before in five markets: Vancouver (0.8 per cent), Quebec City (0.5 per cent), Ottawa-Gatineau (0.2 per cent) and Victoria and Halifax (0.1 per cent).”

Photo By: Poshmoggy

SECOND TO ONE

Calgary’s 8th Avenue S.W. second most expensive street for office space in Canada
Toronto’s Bay Street tops in average street rent
By Mario Toneguzzi
Calgary Herald November 28, 2012

CALGARY — Calgary’s 8th Avenue S.W. strip is the second most expensive street in Canada for office space, according to a report by Jones Lang LaSalle.

The company said Toronto’s Bay Street comes in at No. 1 with average rents running at around $68.91 per square foot and the top rent on the street at $82.28 per square foot.

Calgary’s 8th Avenue S.W. follows with average office rents of $55.33 per square foot and the top rent on the street at $76.50 per square foot.

“It is clear from our ranking that companies are keen to pay a premium to be in the most prestigious locations,” said Brett Miller, president of Jones Lang LaSalle Canada. “Our figures also prove that demand is not abating and rents have moved up year-over-year in every city confirming the strength of the Canadian office market.”

Calgary’s 8th Avenue S.W made its debut this year to reach second on the list. Last year, Calgary’s 3rd Avenue S.W. was in fourth place.

This year’s list after 8th Avenue S.W. with their average street rent and top street rent includes: Vancouver’s Burrard Street, $54.75, $65.41; Ottawa’s Albert Street, $53.18, $53.18; Edmonton’s 101st Street NW, $49.40, $55.25; Montreal’s Rene-Levesque Boulevard West, $46.46, $56.19; and Halifax’s Upper Water Street, $35.57, $35.78.

Maggie Schofield, executive director of the Calgary Downtown Association, said the high Calgary rent along 8th Avenue is due to the existence of office skyscrapers Bankers Hall and Eighth Avenue Place.

“We’re certainly not surprised that the rates would be very high. It’s all about location. These are very, very high demand properties and the market is certainly driving it. There’s a great deal of appetite for high level, the top class, real estate in the downtown core from the office perspective,” said Schofield.

“A number of companies are trying to take advantage of the fact that they can now get into some of these newer properties and get contiguous space which has been a real challenge for a lot of companies that are trying to expand. So they’re looking at these opportunities and they’re willing to pay that price to get all their people in the same office building rather than being scattered in three or four or five separate towers depending on which company you are.”

Other advantages include the number of amenities along 8th Avenue, particularly in retail, great access to transit and available parking spaces in newer buildings, she said.

Commercial real estate firm CBRE said the vacancy rate in the downtown Calgary office market for Class AA space was 0.5 per cent in the third quarter of this year. It has dipped after being 10.6 per cent at the end of 2009.

According to CBRE, the average net asking rent for Calgary downtown Class AA office space was $23.50 per square foot in the second quarter of 2000. It peaked at $54.48 in the second and third quarters of 2008 then dipped to $33.78 in the first quarter of 2010.

In the third quarter of this year, the average net asking rent for Calgary downtown Class AA office space was $42.00.

The Jones Lang LaSalle report indicated that the differences between the average market rents and the average street rents this year were 133 per cent for Bay Street and 63 per cent for 8th Avenue S.W.

In 2011, it said Bay Street had an average street rent of $52.09 with a top street rent of $78.19. For 8th Avenue last year it was $49.94 for the average street rent and $54.19 for the top street rent.

Photo By: Tony Tran

TOP MARKETS

Calgary and Edmonton displace Toronto and Vancouver as top real estate markets
Limited supply in Calgary pushes rents higher
By Mario Toneguzzi
Calgary Herald November 6, 2012

CALGARY — Calgary and Edmonton have displaced Toronto and Vancouver as the top-ranked cities for overall real estate prospects, according to the Emerging Trends in Real Estate 2013 report released Tuesday.

The report, by PwC and the Urban Land Institute, said the Canadian real estate market is expected to remain steady with “modestly good” investment and development prospects across most property sectors for 2013, reflecting expectations of solid supply and demand.

Calgary was the top-ranked city in the country followed by Edmonton, Toronto, Vancouver and Ottawa.

In this year’s survey, Calgary ranked first in both investment and development prospects and second in homebuilding prospects.

“Growth characterizes Calgary’s future; it displaces Toronto as the top ranked city for 2013,” said the report. “This has made it challenging to acquire high quality real estate in Calgary, absorption of prime properties has reached record levels, and rents are being pushed due to limited supply.

“This trend will continue in 2013, especially in office and industrial employment space. Construction will increase in the housing and non-residential arenas, but nowhere near pre-crisis levels.”

According to survey participants, Canada’s real estate market will follow along in a seeming state of near-perpetual equilibrium compared with other more volatile regions studied in the report, including most obviously the United States.

“The results of this year’s Emerging Trends report reflects the fact that the Canadian real estate community understands real estate fundamentals and knows how to react to fluctuations in monetary policy and capital markets. Canada’s real estate industry continues to operate well despite uncertainties in domestic and global economies,” said Lori-Ann Beausoleil, PwC Canada’s Real Estate Leader.

The report said Calgary’s expanding economy is requiring a larger and more highly-skilled workforce. Employment forecasts indicate growth of 2.8 per cent next year and 2.9 per cent in 2014.

“This growth, driven mostly by the oil and gas industry, has made it challenging to acquire high-quality real estate in this market,” said the report.

“Absorption of prime properties has reached record levels and rents are continuing to be pushed due to limited supply.”

The report said potential approvals of controversial pipeline projects to the United States and into British Columbia would boost real estate construction projects further in Calgary.

The strength of Calgary’s real estate market is evident in both the residential and non-residential sectors.

According to the Calgary Real Estate Board, year-to-date as of Monday, total MLS sales in the city of 18,905 are up 15.56 per cent from the same period last year.

Canada Mortgage and Housing Corp. is forecasting total housing starts in the Calgary census metropolitan area to finish at 12,400 units this year, an increase of more than 33 per cent from 2011 and the highest level since 2007.

RealNet Canada recently said Calgary has experienced the second best ever year for commercial real estate transactions for the first nine months of the year with $3.394 billion in sales so far this year.

And a recent report by Jones Lang LaSalle suggested a downtown office development boom in Calgary could be on the horizon.

WRESTLING UP A DEAL!

15 tactics to win a real estate bidding war
Business Insider
Aug 22, 2012

Canada’s housing market is slowing, but bidding wars are still common in major markets like Toronto.

And as the U.S. housing market shows signs of recovery, homebuyers are flocking to snap up deals on bargain properties across the country.

That means running into competition is par for the course — and the weakest bids will not survive.

“If you are serious about buying, it becomes a bit of a part time job,” says Zillow.com real estate expert Brendon DeSimone. “This is your home and your only investment.”

We asked DeSimone to clue consumers into how they can make their bids stand out.

Don't wait for the open house

DeSimone is quick to advise clients to see as many houses as possible on weekends––whether or not they're invited.

"With the Internet, information moves so quickly. [Sellers] could do a private showing Wednesday [days before a scheduled open house]" he says. "If it looks good online, go see it."

Check email hourly for listing updates from your broker

"If you're a serious buyer, you make it a priority in your life and you're going to get email alerts from your broker every other hour," he says.

"Be in touch with your agent and know about new properties as they hit the market."

Don't be intimidated by higher bidders

These days, investors and average joes alike are flocking to snatch up deals on homes. Don't let them psych you out, DeSimone says.

"Don’t spend too much energy trying to figure out what’s really going on with the other offers. If you love the property, keep moving forward, but at your own pace. Make the offer you’re comfortable with, and only when you’re comfortable making it."

Make sure your broker is local and well-known

That's because 80 percent of business is done by just 20 percent of brokers. The more respected they are within the community, the better shot they have at wooing listing agents.

"My clients (win) because the listing agent knows me," DeSimone says. "In a competitive situation, working with a known broker will make the listing agent feel better and boost your chances, especially if two offers are close."

Get in the listing agent's good graces

Why? Because the listing agent is the only person who meets all the parties involved in a sale.

"Though the seller ultimately decides and signs a contract, the listing agent has a giant say in who gets the property in a competitive situation," DeSimone says. "If you make a good impression with the listing agent, you are in much better shape. Acting like a jerk to the agent tells the sellers to work with another offer."

Line up an appraisal even before making an offer

Per DeSimone:

"One thing I once did was to have the bank try to get an appraiser lined up and on their calendar before an offer was made. That way, the buyer could tell the seller that the appraisal would happen within x days of signing a contract. If you tell the seller two or three weeks, your offer looks weaker."

Look for the WORST house on the block

It may sound counterintuitive, but you're better off looking at a fixer-upper than going for the McMansion next door. Chances are competition won't be as fierce.

Says DeSimone:

"You can always improve the property and therefore increase its value. And because it’s on a great block, improvements you make to the home will be practically guaranteed to give you a top return on your investment. Just don’t get carried away and turn the worst house on the block into the biggest and most expensive one."

Keep tabs on your mortgage lender and rates

Once you've been pre-approved for a loan, have your mortgage broker or lender write a letter saying as much.

"Even reference the property so that the listing agent knows that the lender/mortgage broker is up to speed," DeSimone says.

Keep an eye on current mortgage rates

"Sometimes the rates drop or increase significantly from the time you first spoke to the lender and the time you write an offer," DeSimone says.

"If rates have decreased, maybe you can afford more. You should know this."

Know your neighbors––and what their homes are worth

Getting to know the neighborhood you're hoping to call home one day goes far beyond scoping out local schools and seeing who prowls the streets at night.

"When you are ready to seriously write offers and compete, you should know what is going on with the local neighborhood market," DeSimone says. "Follow what has recently sold, what was competitive and what was not."

Try bending the rules a little

Per DeSimone:

"One thing I did in the past was with a very serious and motivated buyer. The home was vacant [sellers moved out]. So, we went in with an inspector because the home had a lock box. The buyer did their inspections before writing the offer. This way the buyer could make an offer knowing what the issues were, if any. And, for their offer they could waive their inspections contingency. No inspections means no risk for the seller."

Hire an inspector within two days

"Order the inspection before you write the offer. It doesn’t necessarily have to be two days but your offer should show the seller that you are prepared to move quickly," DeSimone says.

"If you wait two weeks and then the inspector finds something and you walk away, the seller is left out to dry. The seller wants to know this is out of the way quickly."

Use cash to put your bid over the edge

More often than not, most homebuyers simply can't afford to plop down $180,000 in cash on a new home.

But when it comes to sweetening your bid, offering to pay at least the deposit in cash could push you over the edge.

"The more you offer, the better," DeSimone says.

Put your passion into words

Once you've had the chance to get to know the current owners, don't be afraid to appeal to their interests the old-fashioned way.

"I've seen buyers Google the owners and see that they have a love for horses, so they wrote them a letter talking about their love for horses, too," DeSimone says. "Sometimes it'll work [to give you an edge]."

Don't get distracted by what you can't afford

As with any bidding war, it's important to be quick on your feet. People slow themselves down when they don't stick to what they can afford, DeSimone says.

"Know your limits on the high and low end. Knowing this will allow you to act fast," he says, as it'll help your broker weed out properties out of your range.

Photo By: Fabbio

OLD HOTELS, NEW USES

Condo developers snapping up old hotels
By Garry Marr
Financial Post August 15, 2012

The condominium market seems to be gobbling up a new victim — old hotels.

A new report from Colliers International Hotels suggests more than half the sales activity in the sector can be chalked up to developers buying hotels to convert to alternative use with a large segment going to condo units.

“This theme has been fuelled in part by the strength in the residential condominium market in Toronto and Calgary,” said Colliers, in its mid-year report on transaction activity.

Alam Pirani, executive managing director of Colliers Hotels, said the conversion of hotels to alternative use has become a national story.

“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,” said Mr. Pirani. “The trend here is hotels for alternative use.”

In its report, Colliers said there was $627-million in sales activity over the first six months of the year. That amount was up from $599-million a year earlier. Of that figure, 53% of the transactions, worth about $335-million, were for new development.

The trend comes as a slew of new high end hotel/condominium developments hit the market like Trump Tower, Ritz-Carlton, and Shangri-La in Toronto.

“We will continue to see the conversion of hotels that have a higher and better use for residential and in some cases retail,” said Mr. Pirani. “That conversion has made way for some of the new product that has come in. The good news from a supply perspective is the older product is converting which is creating less of a strain on supply. Everyone is concerned about the number of new luxury hotels opening up but the flip side is you have conversion to alternative use.”

Colliers said the demand for existing hotels from developers helped push sale prices in the first half of the year to $125,000 per room, a 19% increase from a year ago. The market did slow down to a degree in the second quarter with the $253-million in sales activity about 40% of the year to date number.

Hotel conversion activity comes after 2011 was a relatively weak year for that type of sale with only about 7% of transaction last year going towards redevelopment opportunities.

There have been some high level defections to the condo market like the Sutton Place Hotel but also smaller deals like a Travelodge in Calgary which was sandwiched between some great retail opportunities making it a prime target to be converted to shopping space.

Colliers is expecting alternative use strategies for hotels will continue the rest of the year and expects that be good news for the overall market.

“Looking through the second half of the year, we expect sales activity to remain robust, given a good mix of institutional-quality urban and suburban assets currently on the market and being met with strong buy-side demand,” Colliers said in its report.

SUNNY DAYS

Calgary housing market showed strong sales activity in July
Sales and average price gain top national averages
By Mario Toneguzzi
Calgary Herald August 15, 2012

Calgary residential MLS sales in July experienced one of the highest year-over-year rates of growth in the country, according to data released Wednesday by the Canadian Real Estate Association.

Also on Wednesday, the Calgary Real Estate Board released its 2012 housing market forecast update saying the city has outperformed expectations this year after the first seven months.

The national real estate association said sales in Calgary of 2,502 transactions were up 26.7 per cent from July 2011. In contrast, MLS sales across Canada rose by only 3.3 per cent to 40,863 units.

And while the national average sale price dipped by 2.0 per cent to $353,147, in Calgary the average rose by 3.0 per cent to $409,670.

In July, new listings in Calgary dropped by 5.1 per cent to 3,573 while at the national level they rose by 1.4 per cent to 74,685.

CREB’s report said the Calgary area is still short of the peak pricing of 2007 and sales are returning to typical levels of activity.

CREB president Bob Jablonski said tight conditions in the single-family market have boosted sales in the condominium market and surrounding towns. And he said more new home starts have occurred because of the lower than expected resale inventory.

“Expectations are relatively bullish in the city despite overhanging global uncertainty. However, concerns in the oil sector and continued weakness in the natural gas sector are issues that will keep consumers wary. While consumers are aware of the economic risk when it comes to housing, many are thinking about job security and long-term potential,” said the CREB report.

“Based on activity this year, consumers are comfortable purchasing in a city where the long-term outlook is prosperous and the housing industry has yet to fully recover. While the pace of growth will likely cool over the second half of the year, the resale housing market will stay on the path to recovery into 2013.”

The local board is forecasting single-family home sales this year to jump to 14,800 transactions from 13,120 in 2011 and the annual benchmark price to move to $410,123 from $398,225 last year.

It is also forecasting condo sales to increase to 5,675 this year from 5,377 in 2011 and the annual benchmark price to jump to $240,585 from $239,676.

Ann-Marie Lurie, CREB’s chief economist, said Calgary is sensitive to significant changes in the oil sector and that has a “domino effect on employment, migration, consumer confidence and ultimately the housing sector.”

“Our fundamentals on the economic side are very strong . . . We have very strong GDP growth. We’ve got investments into our province and our city and this is creating full-time employment growth. Significant full-time employment growth. All of these factors are contributing to that growth in the housing market.”

At the national level, some first-time home buyers may have difficulty qualifying for mortgage financing due to shortened amortization periods included in recent changes to mortgage regulations, said Gregory Klump, chief economist for CREA.

“As the linchpin of the housing market, lower first-time buying activity will have knock-on effects over the rest of the market. It will likely take more time for move-up buyers to sell their current home,” he said.

The MLS Home Price Index, which tracks home price trends in five of Canada’s most active markets, rose 4.5 per cent year-over-year in July. The largest increase was in Greater Toronto at 7.1 per cent followed by Calgary (6.0 per cent), the Fraser Valley (2.5 per cent), Montreal (2.1 per cent) and Greater Vancouver (0.6 per cent).

CREA says these five markets comprise about 45 per cent of all home sales activity in Canada.

In Alberta in July, MLS sales of 5,819 were up 16.5 per cent from a year ago, the average sale price rose by 2.7 per cent to $363,924 and new listings fell by 3.3 per cent to 9,315.

Francis Fong, economist with TD Economics, said the recent slowdown in housing activity at the national level is a reflection of a Canadian household that is increasingly wary of taking on more debt.

“Job growth has effectively stalled over the last few months, owing to an uncertain outlook for the global economy,” said Fong. “Meanwhile, new mortgage lending rules are making it more difficult for Canadians to access credit, despite interest rates still at historic lows.

“TD Economics has been calling for a modest correction in housing activity to the tune of 10-15 per cent for some time. (Wednesday’s) report provides some evidence that that correction is now beginning to take place.”

Photo By: Kevin Mullett

THE UPSWING

Resale market on the upswing
By Josh Skapin
Calgary Herald August 3, 2012

The upswing on resale activity of single-family homes in Calgary continued in July.

Last month, 1,386 single-family homes changed hands in Calgary, a 21.37 per cent increase on the 1,142 units sold in July of last year, says the Calgary Real Estate Board (CREB).

Changes to Canada’s mortgage rules earlier this year fuelled talks of a national housing correction, which has yet to be seen in Calgary says CREB chief economist Ann-Marie Lurie. These changes include shortening the maximum amortization period from 30 years to 25 years.

“While the two largest cities (Vancouver and Toronto) have started to witness declines in home sales activity, Calgary continues to record improving sales and prices,” says Lurie in a news release.

To date, the city’s single-family resale activity is up 18.9 per cent over the same span in 2012.

That pace is fuelled by the region’s economic growth, adds Lurie.

“Last year, Alberta led the country in economic growth and, with Calgary being the energy capital of the country, the city has benefited from growth in full-time employment, migration and overall improved confidence.”

The average price of single-family homes sold in Calgary’s resale market is also on the rise.

Last month, the average price was $485,528, marking an 4.85 per cent climb over $456,374, the average price from July 2011.

The average resale price on single-family homes since the start of 2012 is 2.11 per cent higher than the same period one year ago.

Zone A, which roughly translates to northwest Calgary, had the highest sales totals in the city last month at 504 units moved.

Coventry Hills led the zone and the city in resale activity last month with 47 houses changing hands.

Zone C, which roughly covers southwest Calgary had the second highest resale activity in July with 405 units moved. The highest average resale price in the city last month also came from Zone C at $599,565.

The third highest sales totals came in Zone D, which roughly translates to southeast Calgary, with 295 sales.

The slowest section in the city for single-family homes last month was Zone B’s 189 sales.

This zone roughly covers northeast Calgary. Zone B also had the least average resale price at $301,602.

RISE IN LUXURY HOMES

Resale of luxury homes in Calgary soared in the first seven months of this year compared to the same time in 2011.

There have been 318 transactions of single-family homes priced $1 million or more since the start of 2012 compared to only 266 during the same span last year, according to numbers from the Calgary Real Estate Board.

The biggest rise was in the $1 million to $1.249 million price category, with 152 units sold since the start of the year after only 102 transactions during the same period in 2011.

Photo By: Thomas Hawk

THE HOUSING SQUEEZE

Jay Bryan: Did Ottawa squeeze housing at the wrong time?
By Jay Bryan
The Gazette July 16, 2012

Did the Harper government blunder into overstimulating a housing market that it’s now in the process of squeezing at just the wrong time?

The question springs to mind now that new numbers show Canada’s housing market showed signs of significant softness in June, with sales falling 4.4 per cent below their year-earlier level – the first such drop in a year – as the national average home price edged down by nearly one per cent.

This comes just as new, tighter mortgage-lending rules went into effect early in July, the key change being one that shortens the allowed repayment period on a government-backed insured mortgage to 25 years from 30.

The result is to jack up the monthly payment on a mortgage by about 10 per cent if the buyer was originally hoping to use the longer 30-year repayment option.

This is just the right medicine for an overheating real-estate market, but much more dubious when demand is already weakening. It will price some buyers, especially first-time ones, right out of the market.

Analysts, including some who favoured the tightening, are a little worried.

There was already a recent undercurrent of concern as home prices moved inexorably higher in the winter and spring: was the market setting itself for a painful fall? At TD Bank, chief economist Craig Alexander predicts an average price drop of 10 per cent to 15 per cent over the next two to three years.

Most analysts didn’t see such a big correction, although many think the priciest markets, Vancouver especially, are overdue for a dip.

But, warns economist Robert Hogue at Royal Bank, “the risks are higher now than they were before.” Hogue thought markets were cooling nicely even before the stricter rules came in. Now, he worries, “this may give a push beyond what the market needs.”

Douglas Porter, deputy chief economist at BMO Capital Markets, thinks the market will probably adjust without too much trouble, but acknowledges that he too feels a little tug of concern. “This may have been one turn of the screw too many,” he says. “That’s the risk.”

The irony is that it was under this same Harper government that Canada loosened its mortgage rules so much that by late-2006 you could borrow for 40 years with nothing down. The then-governor of the Bank of Canada, David Dodge, saw this as so irresponsible that he broke the central bank’s usual rule against criticizing government policy.

It’s what foolish governments often do: curry favour by loosening policy too much in good times, only to have to tighten as conditions worsen.

So far, though, the market still appears to be healthy, with modest price gains in most big cities across Canada, but a downtrend in sales pointing to the possibility of further cooling in the very costly Vancouver and Toronto markets.

Indeed, in the country’s priciest market, Vancouver, prices actually fell by nearly one per cent last month, according to the Home Price Index compiled by the Canadian Real Estate Association. Over the entire past year, Vancouver prices are only up by a modest 1.7 per cent.

This evaporation of price gains in a market that was red hot last year was so dramatic that it helped stabilize the entire Canadian market. The average Canadian price fell by 0.8 per cent from a year ago, but once you remove Vancouver from the numbers, the average price elsewhere goes up by 3.2 per cent, not down.

This resulted from the unwinding of frenzied demand early last year for some of the highest-priced homes on the Vancouver market, said Hogue, the Royal Bank economist. Possibly because foreign demand waned, such homes are now much slower to sell.

Toronto prices barely moved last month, edging up by 0.2 per cent, although earlier gains pushed the average up by a strong 7.9 per cent year-over-year.

Montreal, where last month’s gain was a modest 0.3 per cent, is ahead by a total of 2.7 per cent over the past year, according to the Home Price Index, which, unlike simple price averages, seeks to eliminate the distortions caused by varying numbers of high-priced and lower-priced homes sold in different months.

Calgary stands out as the only city where the number of sales went up significantly – by a robust 17 per cent, in fact – but prices rose by a more modest 5.3 per cent.

BALANCE IN JUNE

Fewer home resales in June in a more balanced market: real estate association
By LuAnn LaSalle
The Canadian Press July 16, 2012

The number of Canadian homes sold last month dropped more than four per cent from the level in June 2011, the first year-over-year decline in sales volume since April 2011, the Canadian Real Estate Association said Monday.

Resales of homes were also down 1.3 per cent in June from May — the second month-to-month decline — with a total of 46,444 transactions through CREA members. That was down from 48,591 in June 2011, the association said.

"Canada's housing market lost a little altitude in June, but it's still flying pretty high," association president Wayne Moen said in a news release.

"That said, sales activity and average prices bucked the national easing trend in a number of markets, which underscores that all real estate is local," Moen said.

The national average home price in June was $369,339, down 0.8 per cent from the same month last year, CREA said.

Prices increased in Calgary, remained strong in Toronto and continued to slow in Vancouver.

However, CREA said its MLS Home Price Index — which the association says is a better measure because it adjusts for different types of properties sold — increased 5.1 per cent between May and June 2012.

There have been several reports saying some real estate markets and some types of housing are over valued, although there's a range of opinions about how much and how quickly prices will decline.

Economists and consumers have been closely watching for signs that demand has softened to the point where prices will start going down.

But the association, which represents real-estate boards and associations that handle most of the country's property transactions through the MLS system, said Monday the decline in sales activity and an increase in new listings resulted in a "more balanced" national housing market in June.

The number of newly listed homes rose 1.4 per cent in June compared to May, led by the Toronto market. Some 42 local markets, out of 100 markets across the country, registered a monthly increase in new listings of at least one per cent, the association said.

RBC senior economist Robert Hogue noted the resale market eased again in June but the number of homes newly listed for sale rose 1.4 per cent last month.

"Market conditions, therefore, eased a little, providing more breathing room for Canadian buyers," Hogue said in a research note.

"Despite this easing, the demand-supply equation continued to be balanced in the majority of markets in Canada. The previously tight Toronto market became much more balanced, whereas the Vancouver market inched closer to conditions favouring buyers," Hogue said.

In the first half of 2012, a total of 257,193 homes traded hands over Canadian MLS Systems, up 4.7 per cent from the same period in 2011.

Gregory Klump, CREA's chief economist, said home buyers didn't rush to make purchases before the latest restrictions on mortgage regulations came into effect in July.

"That's a big change compared to what we saw as a response to previously announced changes," Klump said.

"It will take some time before the compound effect of previous and recent changes to regulations on Canada's housing market becomes apparent."

Hogue also said that going forward this year he expects home resales to ease in light of the latest mortgage restrictions.

"This moderation trend will become more entrenched next year when we expect the Bank of Canada to begin normalizing its interest rate policy."

Under new mortgage rules announced in June by Finance Minister Jim Flaherty, borrowers will be allowed to use up to 80 per cent of their property's value as collateral for home-equity loans, down from 85 per cent.

In addition, the maximum amortization period dropped to 25 years from 30 years for government insured mortgages.

Flaherty also said government-backed mortgage insurance will be limited to homes with a purchase price of less than $1 million.

Photo By: the past tends to disappear

RISE UP!

New-home prices in Calgary region on the rise
By Mario Toneguzzi
Calgary Herald July 13, 2012

Real estate . New-home prices in the Calgary region continued to rise in May.

Statistics Canada said Thursday that prices in the Calgary area were up 0.3 per cent from April and 0.8 per cent from a year ago.

Nationally, the index rose by 0.3 per cent and prices were up 2.4 per cent from May 2011.

Gains in Toronto, Oshawa and Calgary were the top contributors to the May increase, StatsCan said. The most significant monthly price declines were recorded in Victoria (0.8 per cent) and Charlottetown (0.4 per cent).

The Royal LePage house-price survey, released earlier this week, showed varied year-over-year resale house price increases in Calgary.

In the second quarter, detached bungalows posted the largest average year-over-year price increases, rising five per cent to $432,322. Prices for two-storey homes rose 2.5 per cent year-over-year to $425,456. Condominiums declined by 0.8 per cent year-over-year to $247,056.

YOU'RE HOT & YOU'RE COLD!

Hot Toronto, cold Vancouver have competing effects on Canadian housing market
By Sunny Freeman
CANADIAN PRESS May 15, 2012

TORONTO – The Canadian housing market gained momentum in April as strong sales in the Toronto offset weakness in Vancouver, the Canadian Real Estate Association said Tuesday.

April seasonally adjusted home sales on CREA’s Multiple Listing Service gained 0.8 per cent compared with March.

On a year-over-year basis, the association said there were 49,480 homes sold in April, up 11.5 per cent from 44,370 a year ago, when sales slowed following a tightening of mortgage lending rules including the elimination of 35-year amortizations came into effect in March 2011.

Two of Canada’s largest markets are having opposite effects on the national average, with slowing sales and falling prices in Vancouver dragging, and soaring sales and prices in Toronto exerting upward pressure.

The average home price in Canada in April was up 0.9 per cent from a year ago at $375,810.

“It bears repeating that the national average price was skewed higher last spring by record level high-end home sales in Vancouver’s priciest neighbourhoods, and that a replay of this phenomenon was not expected this year,” said Gregory Klump, CREA’s chief economist.

The average selling price in Vancouver was down 9.8 per cent compared with a year ago at $735,315, while the average price in Toronto was up 8.4 per cent at $517,556. April sales in Vancouver slid 13.2 per cent while Toronto sales picked up 14.5 per cent compared to a year ago.

“Trends in Vancouver and Toronto continue to diverge. These two housing markets have an obvious influence on national statistics and a high profile, but Canada is a big place,” said Wayne Moen, CREA President.

Excluding Toronto and Vancouver, the average price in Canada was up 3.1 per cent from a year ago.

Gains in Montreal, Winnipeg, Edmonton, as well as London and St. Thomas, Ont., also contributed to the increased sales, offsetting declines in Ottawa, Windsor-Essex, Quebec City, the Fraser Valley, and Vancouver.

Continued strength in the housing market, largely due to the staying power of low interest rates, has led some economists to warn the market is overvalued. That could make homeowners vulnerable to a downturn, especially those who have used low interest rates to borrow more than they could otherwise afford.

TD Bank estimates Canadian home prices are 10 to 15 per cent overvalued, with the excess most evident in Toronto and Vancouver, said TD economist Diana Petramala.

“With mortgage rates still at rock bottom through the early part of this year and job creation heating up through March and April, it’s not that surprising to see continued growth in Canadian home sales,” she said.

“Still, growth in home prices and sales will likely be limited as the overvaluation has led to a deterioration in affordability. Overall, we anticipate the Canadian housing market to remain relatively flat in the coming year with home prices to rise just another two per cent this year, following gains of seven per cent in each of the last two years.”

The number of newly listed homes pared back 0.2 per cent from March to April, which, combined with slightly higher sales resulted in a tighter national housing market, but remains firmly entrenched in balanced market territory,” CREA said in a release.

A total of 157,804 homes have traded hands so far this year, up 6.4 per cent from levels reported in the first four months of 2011.

That’s also about four per cent higher than both the five- and 10-year averages for sales during the first third of the year.

Sales on CREA’s Multiple Listing Service was either up or held steady in half of all local markets, with Toronto and Calgary posting the biggest monthly increases for the second consecutive month.

Toronto home sales in 2012 have been particularly strong, up 9.5 per cent from year ago levels at 31,639 homes sold so far this year. But sales in Vancouver, a market that was bustling with high-end home purchases last year, are down 19.9 per cent so far this year at 9,935 homes sold.

“While these two cities are garnering most of the attention, Calgary is quietly becoming a market to watch,” said BMO economist Robert Kavcic, adding that sales in the city jumped 30 per cent year-over-year in April.

“If oil prices remain high enough to continue supporting strong economic growth and migration flows, Calgary could again become Canada’s real estate hot spot in short order.”

GO BIG & GO HOME!

Canadians want more luxury homes, Re/Max says
By Canadian Press May 16, 2012

MISSISSAUGA, Ont. – The Re/Max real-estate sales organization says demand for high-priced housing was strong in most Canadian markets in the first months of this year, with records set in 10 of the 16 markets it tracks.

Vancouver was one of the six markets where the luxury market has cooled off after an especially hot period last year but demand in Toronto remained high.

The organization says the price of luxury housing depends on the market, from a low of $500,000 in such mid-sized cities as St. John’s, N.L., and Halifax to a high of $2 million in the Vancouver area.

In the case of Regina, which had the biggest increase in luxury sales this year, there was a 56 per cent more sales of at least $500,000.

In Canada’s most expensive market, Vancouver, there was a 31-per-cent decline from last year’s peak with 393 luxury homes sold in the first quarter.

By contrast, Toronto’s market has been hotter than last year, with 412 homes sold for at least $1.5 million each – a 49-per-cent increase from early 2011.

ON THE RISE...NATIONALLY

Canada’s home sales back on the rise
Postmedia News
Mar 15, 2012

Following a rough start to 2012, home sales in Canada rebounded in February with a modest increase from the previous month.

The Canadian Real Estate Association (CREA) said Thursday that home sale rose by 1.4% between January and February, which helped recover roughly one-third of the 4.5% drop recorded the previous month.

Compared with the same reporting period the previous year, activity was 8.6% higher than February 2011. Over the first two months of 2012, some 61,772 homes were sold, which represents a 6.7% hike from the same period in 2011.

“The national rise in both sales activity and the number of newly listed homes beyond the normal seasonal increase provides clear evidence that Canadians are confident in housing market prospects,” CREA president Gary Morse said in a new release.

New home listings also jumped 1.9% in February, representing the highest level since May 2010. The association said a spike in new listings in Canada’s two busiest markets — Toronto and Montreal — helped counterbalance a decrease in listings in Vancouver, which is the country’s third-largest market.

CREA said that the balance between sales and new listings remains fairly equal.

On a year-over-year basis, average home sale prices were up fully two% in February 2012. The average price of all homes sold that month was $372,763.

The association said that the increase was partly due to a rise in high-end home sales in the Vancouver area, which was not anticipated. Single detached residences in the Toronto area also continue to fuel home gains.

TIME FOR TAKE OFF

Move over Toronto, Calgary’s condo market about to take off in 2012
Garry Marr
Financial Post Mar 2, 2012

A new report suggests Toronto’s condominium market may have finally peaked in 2011 but Calgary’s may be just catching fire.

The report from real estate research firm Altus Group notes new condominium sales climbed more than 100% in 2011 from a year earlier in the oilpatch.

“New condominium apartment sales in Calgary had plummeted with the recent economic crisis and stayed low in 2010. However, the market turned in 2011,” says Altus, in its report. Sales of new condominiums climbed from 1,100 in 2010 t0 2,500 in 2011.

Altus says the number of unsold units was steady from the end of 2010 as new projects saw strong initial sales. The group says improved economic conditions and lower rental vacancies are attracting investors back into the market.

“The weakness in the Calgary market from 2008-2010 was at least in part due to the exit of investors,” says Altus.

Meanwhile, Toronto has to deal with a large potential supply of new condominiums in the pipeline. RealNet Canada says more than 79,000 condominium apartments were under construction or in pre-construction in the greater Toronto area at the end of 2011.

“Planned occupancies extend as far as 2016,” Altus says, noting it takes about five years for all units released for sale in any given year to be completed.

Even if half of those condos under construction become rentals, that would add 40,000 units to the supply of condo apartments, meaning demand for rental would have to increase by 8,000 units per year to maintain current vacancy levels.

“While this was achieved last year it is more than double the average annual growth,” says Altus, adding government plans are encouraging condos as a percentage of new home sales.

The issue in Toronto remains whether rental levels can be maintained for investor-owned apartments, although a portion of investors are said to be off-shore buyers with less concern about their returns in the short-term and medium term.

“Looking ahead our expectation is that GTA new condominium apartment sales peaked in 2011, and more moderate sales levels will emerge over the next few years,” says Altus. “In Calgary, there is a potential for further improvement in sales during this cycle.”