adplus-dvertising
Connect with us

Real eState

LACKIE: In Toronto real estate, the party's over – Toronto Sun

Published

 on


Article content

I think we can all safely say that Toronto’s pandemic real estate boom is officially over.

Advertisement 2

Article content

It isn’t a consensus we arrived at easily, to be sure, but even the denialists have finally come around to admit that what we are now seeing is far from the seasonal slowdown or simple “market recalibration” one might remember from the Beforetimes.

The market has pretty much ground to a halt with sales falling off a cliff. Average sale prices in some parts of the GTA are down over 20% from February’s peak. I’m not being dramatic or sensationalistic, that’s quite literally what the data shows.

300x250x1

The only debate right now is whether or not we now find ourselves in real estate crash territory or simply in the midst of a correction.

Well, given that the definition of a real estate crash is a sudden downturn resulting in a loss of value more than 10% from the 52-week peak value, we’re not quite there yet as year-over-year our numbers aren’t faring too badly. But looking month-over-month there should be absolutely zero question that we are in the throes of a strong correction.

Advertisement 3

Article content

And given the froth of the past several years, I’m not sure anyone should be surprised.

What has been surprising to me, however, is how quickly this came on. Sure, there were signs this winter that buyer sentiment was shifting almost in lockstep with heightened anticipation of interest rate hikes, but this is not that.

We apologize, but this video has failed to load.

This [gesturing wildly] is a clear response to the Bank of Canada hiking interest rates far faster and far more furiously than anyone ever anticipated in response to out-of-control inflation. Add-in broader economic uncertainty, stock market instability, a war in Europe, and reasonable fears of impending recession, the almighty buyer sentiment couldn’t really be any worse.

Now, you’re likely expecting me to now launch into a tirade about how the sky is falling and we’re all doomed, but I am not there yet. I do, however, believe that what lies ahead is going to be messy and on the other side will almost certainly be a near-total wash of the pandemic gains to Canadian home values.

Advertisement 4

Article content

Why? Because that’s pretty much the point at which our real estate market became wholly untethered from any semblance of market fundamentals. And given that housing values have risen 50% Canada-wide over the past two years, it will be a long descent.

But what it also means is that we are now heading into an entrenched downmarket, territory that many will remember but will almost certainly feel foreign to broad swathes of Canadians.

Once buyers manage to wrap their heads around these new rates, and in time they absolutely will, they will find that the game has changed.

Does anyone in Toronto remember the time before bidding wars? When great properties still took weeks and months to sell? When market value was based on comparables and not established on the basis of whatever some crazed buyer also at the offer table was willing to spend to outbid you?

Advertisement 5

Article content

We apologize, but this video has failed to load.

For all the talk of blind bidding being the driver of the madness, what say you now that multiple offers will likely be the exception rather than the rule in the months ahead? Would it be safe to say that blind bidding was merely a symptom rather than the disease itself?

The sellers who have gotten used to being in the driver’s seat are going to have to accept that this new reality is just that — their new reality. February prices are long gone. Offers will likely include conditions. And for those who have to sell right now, it will likely be a tough pill to swallow, particularly if they are depending on the proceeds to close on another property.

Moving forward, the smart move will almost invariably be to sell before even thinking about buying.

Advertisement 6

Article content

And for the Toronto agents who have enjoyed the boom, especially the ones who rushed to get licensed during the pandemic, this business is about to get rough. The best are going to have to work infinitely harder to compete for a fraction of the business. And the ones who joined the party in hopes of catching the quick and easy deals will likely go back to their day jobs.

Professionalism, competency and ethics will mean everything in the coming months and years. And our relationships with one another will never matter more. I think it’s going to be a welcome change to get to flex our negotiation muscle again, a skill that became mostly redundant once success in a bidding war became almost entirely dependent on how much a buyer was willing to spend.

So yes, things aren’t great at the moment and will almost certainly get worse before getting better. And for those likely to be the most affected, the buyers who bought-in over the past two years and will be upside down on their mortgages for a while, we should all wish them well as they hunker down and ride this out.

For everyone else, let’s stop treating real estate like a national religion and return our focus to the things that matter again.

@brynnlackie

Advertisement 1

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Real eState

The Realtors' Big Defeat – The New York Times

Published

 on


A settlement in the real estate industry is a case study of a central flaw in free-market economic theory.

Free-market economic theory suggests that the American real estate market should not have been able to exist as it has for decades.

Americans have long paid unusually high commissions to real estate agents. The typical commission in the U.S. has been almost 6 percent, compared with 4.5 percent in Germany, 2.5 percent in Australia and 1.3 percent in Britain. As a recent headline in The Wall Street Journal put it, “Almost no one pays a 6 percent real-estate commission — except Americans.”

300x250x1

If housing operated as an efficient economic market should, competition would have solved this problem. Some real estate brokers, recognizing the chance to win business by charging lower commissions, would have done so. Other brokers would have had to reduce their own commissions or lose customers. Eventually, commissions would have settled in a reasonable place, high enough for agents to make a profit but in line with the rest of the world.

That didn’t happen. Instead, an average home sale in the U.S. has cost between $5,000 and $15,000 more than it would have without the inflated commissions. This money has been akin to a tax, collected by real estate agents instead of the government.

The situation finally seems to be ending, though. On Friday, the National Association of Realtors, the industry group that has enforced the rules that led to the 6 percent commission, agreed to change its behavior as part of an agreement to settle several lawsuits.

The settlement is important in its own right. Americans now spend about $100 billion a year on commissions. That number will probably decline by between $20 billion and $50 billion, Steve Brobeck, the former head of the Consumer Federation of America, told my colleague Debra Kamin.

We are having trouble retrieving the article content.

Please enable JavaScript in your browser settings.


Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.


Thank you for your patience while we verify access.

Already a subscriber? Log in.

Want all of The Times? Subscribe.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Real eState

Allied REIT buys out Westbank on two building projects, the Home of the Week and more top real estate stories – The Globe and Mail

Published

 on


Open this photo in gallery:

Home of the Week, 80 John St., Upper Penthouse 1, TorontoJohn Lee/John Lee/Soare Productions

Here are The Globe and Mail’s top housing and real estate stories this week and one home worth a look.

Take The Globe’s business and investing news quiz

Canadians’ wealth is bolstered by stock rally amid housing slump, Statscan says

In the fourth quarter, households saw their net worth rise by $290-billion, or 1.8 per cent, to roughly $16.4-trillion, Statistics Canada said in a report Wednesday. But many homeowners have yet to face the full brunt of higher interest rates until they renew their mortgages, writes Matt Lundy. Others have variable-rate mortgages with fixed payments, which means that as rates have increased, more of their bill is going toward the interest portion rather than paying down the principal. The looming renewals, among other factors, led Canadians to stay cautious about taking on new debt — financial liabilities only rose by 3.4 per cent in 2023.

300x250x1

Allied REIT takes control of two towers co-developed with Westbank

Allied Properties REIT AP-UN-T is buying out its partner, Westbank Corp., on two office skyscrapers as the Vancouver-based real estate developer faces rising costs and legal claims at projects in Toronto and Seattle, writes Rachelle Younglai and Shane Dingman. The deal, which is expected to close in early April, will significantly cut the amount of debt Westbank owes Allied — giving them an infusion of cash in the process. In November, The Globe and Mail reported that Westbank faced legal claims for $25-million in unpaid work at the Mirvish Village development in Toronto.

Open this photo in gallery:

Advertised rents for purpose-built rentals were up 14.4 per cent nationwide in February, compared with the same month in 2023. An apartment rental building in Toronto’s Beach neighbourhood on Mar 11.Fred Lum/The Globe and Mail

Why rent inflation is much higher for rental apartments than for condos

In Canada’s overheated rental market, tenants are increasingly gravitating toward purpose-built rentals, experts say – demand that is driving up rent for these units much faster than for condos, writes Erica Alini. Advertised rents for purpose-built rentals, also called rental apartments, were up 14.4 per cent nationwide in February, compared with last year— rents for condos, on the other hand, grew by just 5 per cent in the same timeframe. A severe supply shortage, affordable prices and the allure of rent control in older buildings is driving up the prices in purpose-built rentals.

Renters have harder time accumulating wealth than homeowners, RBC report says

According to the report, homeowners have seen their net worth grow from nine times household disposable income to 13 times since 2010, while for renters, net wealth grew from three to 3.5 times over the same period. The gap has widened even though renters’ incomes have risen at the same pace as homeowners. Meanwhile, homeowners are also accumulating home equity with their housing payments. The tightening of renters’ incomes will make it even harder to save up for a down payment, economists say.

Home of the week: Festival Tower penthouse with an interior designer touch

  • Home of the Week, 80 John St., Upper Penthouse 1, TorontoJohn Lee/John Lee/Soare Productions

    1 of 23

80 John St., Upper Penthouse 1, Toronto

The 46th-floor penthouse sits right above the TIFF Lightbox theatre, which is home to the Toronto International Film Festival. When you first enter the two-bedroom-plus-den condo, you’re greeted by 11-foot-tall ceilings leading you into the living room. The previous owners had white-lacquered book cases installed on the wall separating the living area from the kitchen — which frames the spacious room — and the primary bedroom has its own hotel-style bathroom attached. The 180-degree view from the penthouse features a panoramic view of the city’s downtown. and stretches across Lake Ontario.

What do you think is the asking price for the property?

a. $2,999,000

b. $3,875,000

c. $4,195,000

d. $4,500,000

c. The asking price is $4,195,000.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Real eState

At Real Estate's Biggest Conference, Property Crisis Denial Shifts to Acceptance – Bloomberg

Published

 on


Welcome to The Brink. I’m Jack Sidders, a reporter usually based in London but this week I’ve been in Cannes where about 20,000 real estate professionals gathered for the annual Mipim conference. We also have news on German giant Bayer, crypto exchange FTX and Swedish debt collector Intrum. Follow this link to subscribe. Send us feedback and tips at debtnews@bloomberg.net or DM on X to @JackSidders.

Mipim is supposed to be a time for developers to show off their grand visions for projects of the future, with cities built in miniature hoping to lure pools of capital that will turn them into full scale realities.

Adblock test (Why?)

300x250x1

728x90x4

Source link

Continue Reading

Trending