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Sellers aren't panicking in Toronto's weakened housing market

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In the face of a correction in Toronto’s housing market, sellers aren’t panicking.

Even with transactions at their lowest level since the 2009 recession, sellers in Canada’s largest city have avoided listing their homes en masse in what could be a sign of confidence the market will come back. According to data released Tuesday by the Canadian Real Estate Association, new listings in Toronto fell 8.6 per cent in April from a month earlier and are down nearly 30 per cent from a year ago.

According to data by the Canadian Real Estate Association, new listings in Toronto fell 8.6 per cent in April from a month earlier and are down nearly 30 per cent from a year ago.  (Graeme Roy / THE CANADIAN PRESS file photo)

The drop has left the sales-to-listings ratio — a key gauge of a real estate market’s health — relatively stable in the face of a sharp drop in sales, which may explain why prices in Toronto continue to hold steady. Prices are up 3.1 per cent since the beginning of 2018, even as transactions plunged.

Read more:

Canadian home sales drop to seven-year low for month of April

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After plunge in early 2018, sales of high-end homes expected to post moderate gain in spring

Tumbling Toronto home sales signal a return to normal market, say analysts

“The market is actually surprisingly relatively balanced,” said John Pasalis, president of Toronto-based brokerage firm Realosophy Realty Inc. “When you’re comparing yourself to a bubble, sales can fall 40 per cent and inventory can rise and your market is still balanced.”

It’s still been a rough year for Toronto’s realtors, after federal regulators tightened mortgage qualification rules on Jan. 1 to quell a surge in prices early last year. The market is also facing a new foreign buyers tax and other measures to curb demand.

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Toronto’s real estate market is also coping with a bulk of unsold active listings, a legacy of last year’s surge in prices that prompted people rushed to sell their homes. The sales-to-new-listings ratio, while stabilized, is still at the lower end of the range over the past decade.

The ratio has averaged 0.46 over the last year, the lowest level since the recession and at the lower-end of what analysts typically consider a balanced market. But at least, it hasn’t been getting any worse.

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Year to date, sales have fallen by a third compared to the start of 2017. New listings are down just 4.7 per cent over the same period.

“It may be that people are trying to time the bottom of the market,” said Rishi Sondhi, an economist with Toronto-Dominion Bank. “They’re holding out because they think the market is going to turn around.”

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Foreign buyers all but disappeared from Metro Vancouver real estate market: data

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The latest property transfer data from the B.C. Ministry of Finance, released at the end of July, indicates that foreign buyers have all but disappeared from the Lower Mainland.

The numbers show that just one per cent of all real estate transactions in Metro Vancouver and the Fraser Valley Regional District during the first six months of this year involved foreign nationals, down from three per cent in the same period a year ago.

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Burnaby, Coquitlam and Richmond were the top destinations for foreigners buying property in the first half of 2018, with three per cent of transactions in Burnaby and two per cent in each of the other two municipalities involving foreign nationals. The sole municipality to see an increase in the proportion of foreign nationals making purchases was the City of North Vancouver, where foreign buyers were involved in one per cent of deals in the first six months of 2018.

Those concerned about foreign nationals purchasing agricultural properties will be reassured to know that foreign buyers of Lower Mainland rural properties have fallen from 14 per cent of the total in the first six months of 2017 to zilch in the first half of this year.

Nevertheless, a recent Insights West poll found foreign homebuyers are the most commonly identified contributor to the region’s housing crisis, with 84 per cent of Metro Vancouver residents naming them – more than the proportion that identified population growth or that other bête noire, shadow flipping.

Bold moves

While foreign buyers are the favourite scapegoat for the housing crisis, lower foreign participation in local real estate markets this year has barely budged housing prices in the Real Estate Board of Greater Vancouver’s jurisdiction.

Sales statistics from the board through the end of June pegged the benchmark price for a residential property in Greater Vancouver at $1,093,600, or 10 per cent higher than a year earlier. The board’s latest statistics through the end of July indicate a flattening in prices with the benchmark price now $6,100 lower than a month ago.

So, what’s a first-time buyer trying to scrape together a down payment to do?

It’s hard not to recall condo marketer Bob Rennie’s advice to Woodward’s buyers a dozen years ago: “Be bold or move to suburbia.”

With sky-high housing prices this side of the Port Mann, many have chosen the latter option. According to B.C. Ministry of Finance data, Surrey registered 498 first-time home purchases in the first six months of 2018. Abbotsford was the second most popular choice, attracting 148 first-time homebuyers. Perhaps even more remarkable, sales in the far eastern reaches of the Fraser Valley accelerated, with Chilliwack attracting 121 first-time buyers. This positions it to overtake Richmond as the third most popular destination for first-time homebuyers. Richmond had 123 first-time buyers in the first half of 2018, but Chilliwack has outsold it in each of the past four months.

Looking ahead

Regardless of where prices land, there’s a clear yet consistent pullback in sales activity. Total residential sales in Metro Vancouver fell by 25 per cent in the first six months of this year compared with sales during the same period a year earlier. Real Estate Board of Greater Vancouver commentary attempted to put July’s decline into perspective by saying housing sales “reached their lowest levels for that month since the year 2000.” While this point of fact was sobering, RBC Economics offered a more balanced perspective a couple of weeks earlier by saying that there was a greater balance between supply and demand in B.C. as policies within the province and at the Bank of Canada – read interest rates – were working to cool “persistently strong markets.”

Having forecast in March that house prices in the province would rise by six per cent this year, the B.C. Real Estate Association took a more cautious stance in its latest prognostication, simply anticipating “less upward pressure on home prices.”

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Real-Estate Magnate's NYC Townhouse Sale Is Among 2018's Priciest

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The 36-foot-wide townhouse measures about 15,000 square feet. The traditional design features marble, onyx and brass finishes.


Photo:

Brian Wittmuss

Real-estate investor

Joseph Chetrit

has sold a townhouse on New York’s Upper East Side for a price in the low-$40 million range, making it one of the priciest New York City townhouse deals to close so far this year, according to sources with knowledge of the deal.

Mr. Chetrit, a onetime owner of the

Sony

Building and Hotel Chelsea, listed the townhouse for $51 million in November 2017. It was part of a collection of three adjacent mansions Mr. Chetrit bought from Lenox Hill Hospital in 2007.

Mr. Chetrit paid a combined $26 million for six adjacent brownstones, then combined them into three. The properties are represented by Noble Black,

Richard Steinberg,

and

Roger Erickson

of Douglas Elliman. The agents declined to comment on the identity of the buyer, who purchased through a limited-liability company. The deal closed earlier this week.

The 36-foot-wide townhouse is the largest of the three. It measures about 15,000 square feet with eight bedrooms. The traditional design features marble, onyx and brass finishes. There’s a wall of glass on the ground floor overlooking the limestone-clad courtyard. A second townhouse is currently on the market for $39 million, while the third is not yet on the market.

One of the home’s eight bedrooms

One of the home’s eight bedrooms


Photo:

Brian Wittmuss

Mr. Chetrit could not be reached for comment.

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One person familiar with the deal said the buyer fell in love with the home, located at 110 East 76th St., while visiting it as part of the 2018 Kips Bay Decorator Show House. The buyer reached a deal with some of the event’s interior designers to retain some of their design elements, that person said.

The largest townhouse deal so far of 2018 closed in February, when Chinese conglomerate HNA Group sold a property formerly owned by art heir

David Wildenstein

for $90 million, property records show.

Write to Katherine Clarke at katherine.clarke@wsj.com

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Heatwave slows real estate deals

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Image: Kalle Niskala / Yle

While the summer heat has slowed down real estate deals, according to experts in the field, business is still faring better than the average over the last five years.

According to the Central Federation of Finnish Real Estate Agencies (KVKL), the slight drop in real estate transactions can be attributed to the unusually hot summer.

Sales of older apartments dropped during the first two quarters by two percent over the previous year, according to KVKL. For newer flats, sales dropped by 9 percent.

According to real estate agents surveyed by Yle, sales of older apartments was nevertheless 3 percent higher than the average for the previous year. New apartment sales were 22 percent above of the average for the last five years.

Only a slight slowdown

”Talk of the market slightly slowing down can be put down to the extreme heatwave this summer,” says Jockum Andersin, regional director at Aktia Kiinteistönvälitys realtors. "But sales are still very much in tune with the times," he adds.

During the first half of this year 33, 700 apartments were sold, which is 5.4 percent above the average of the previous five years.

”The volume of sales has varied this summer. It’s true that the trade could be more lively during the market upturn and during a time of low interest rates, but the overall figures don’t indicate any significant changes over the previous year," says Maria-Elena Cowell, chief executive officer at the Central Federation of Finnish Real Estate Agencies.

The prices of older flats continued to rise in the Helsinki metropolitan area. Meanwhile, in other parts of the country, price increases were less pronounced.

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