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Realtor data shows Edmonton’s real estate market gaining momentum, despite slight drop in prices – Edmonton Journal



The data compiled by the Royal LePage Canadian Real Estate Market Composite found strength in two-storey, single-detached homes, and condominium apartments.

File / Postmedia

Prices for Edmonton homes saw a modest decrease in the last quarter of 2019, with some market segments actually showing price growth.

Royal LePage House Price survey data released earlier this month found the aggregate price of a home in the city fell by 0.7 per cent in the last three months of 2019, compared with the same period in 2018, rising to $379,426. Those numbers speak to a growing sense the market is stabilizing, says Tom Shearer, broker and owner of Royal LePage Noralta Real Estate in Edmonton.

“I feel we’re getting back to whatever the new normal is,” he says.

Although the city is a far cry from pre-recession market conditions, he notes buyers and sellers are adjusting to a new era of price stability.

The data compiled by the Royal LePage Canadian Real Estate Market Composite found strength in two-storey, single-detached homes, and condominium apartments, which rose by 1.2 and 0.3 per cent respectively. That translated into a median price of $435,426 for a two-storey and $230,969 for a condo.

“Condo had been beleaguered for quite some time, but over November and December prices have started to creep back up, exceeding the previous year’s figures,” Shearer says.

Shearer points to pockets of strength in the city driving the market, including downtown’s Oliver neighbourhood where a number of condominium sales occurred later in the year.

“That’s likely where that small bump up in average condo prices could be coming from.”

In contrast, the bungalow market has struggled, seeing prices fall by 5.1 per cent to $361,943, year over year for the quarter.

The year-end data bolsters the forecast by Royal LePage from last month, which predicted housing prices will increase by one per cent in 2020 to $383,200.

Shearer explains the positive momentum is a result of buyers finally getting their footing after a few of tough years for the economy and changes to lending regulations. He notes the OSFI (Office of the Superintendent of Financial Institutions) stress test was particularly impactful. It came into effect in 2018, stipulating buyers with 20 per cent down needed to qualify at the Bank of Canada benchmark, five-year fixed rate, or their contractual rate plus two per cent.

Shearer says historical sales figures for December show the impact with sales dropping in 2018 to 799 from 962 in 2017 for the Edmonton census metropolitan area. Last year, December saw 845 sales in the city.

He further adds some areas of the city are experiencing more sales activity, including in the south side off of Ellerslie Road, where new homes (built after 2005) are changing hands at a relatively brisk rate.

For the year, sales in the Anthony Henday region, which encompasses communities around Ellerslie, saw 1,440 single-family home sell, according to Realtors of Edmonton Association data.

That is an increase from 2018 (1,356) and 2017 (1,312). Sales were up year to date for December in the northwest and north central, too, but modestly so, while single-family detached homes sales were down in other regions from past years.

He further notes activity in new neighbourhoods is also driving the market because builders “are more competitive than they ever have been.”

Overall, Shearer says the data shows the market is moving toward balance. Just don’t expect boom conditions to return anytime soon.

“But that’s OK because what you really want is steady, gradual increases, and I think that’s we’re going.”

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This Week’s Top Stories: Canada’s Immigrants Are Unhappy With Real Estate and Central Banks See Odds of A Correction Rising – Better Dwelling



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This Week’s Top Stories: Canada’s Immigrants Are Unhappy With Real Estate and Central Banks See Odds of A Correction Rising  Better Dwelling

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Investment properties are driving up Toronto real estate prices: report – NOW Toronto



Bank of Canada says buyers are making the housing market more vulnerable to a correction

Homeowners purchasing investment properties are driving up prices in Toronto real estate and making the housing market even more vulnerable to a correction, according to the Bank of Canada.

In a November 23 speech summing up a trend across Canada but especially felt in Toronto and Montreal, Bank of Canada’s deputy governor Paul Beaudry says investors are flocking to buying secondary or multiple homes with expectations for future price increases, which he says can become “self-fulfilling” in the short term but catastrophic later.

The damage from a drastic fall in house prices can “spread far beyond the investors” because so for many households have their wealth tied to low-mortgage rates and the value of their home.

“A key concern here is that financially stretched households have little breathing room to absorb any disruption to their income,” Beaudry says.

Beandry’s speech comes as more and more homeowners are witnessing massive real estate price gains, particularly over the past year, experiencing FOMO and jumping into the investment property game, seizing on every available listing and pre-construction condo opportunity up for grabs. They’re able to scoop up properties by leveraging the equity amassed on their homes from those very same price gains, which leaves first-time homebuyers in the lurch.

According to Teranet’s market insight report, 25 per cent of the people purchasing a home between January 2011 to August 2021 were multi-property owners, competing against roughly the same number of first-time home buyers.

A chart provided by the Bank of Canada shows the year-over-year growth in investors buying homes surged 100 per cent compared to just over 40 per cent among first-time home buyers. The growth between these demographics were roughly in line in the past, so the extremely wide gap in the past year is a jarring indication of the imbalance in the housing market.

According to Teranet, most multi-property owners were gen-Xers (32 per cent) and generational households with multiple buyers (26 per cent). Millennials only made up 22 per cent of that demographic. And the sales data indicates that most people multi-property real estate in owners in Toronto are flocking towards purchasing condos as investment units since they are the more affordable option.

Beaudry reminds that investment buyers expectations for price gains are predicated on the current situation, where supply is short. He says the expectations are “becoming extrapolative, which could create “a disconnect between actual home prices and their more fundamental levels.”

At this point, most buyers seeking investment properties owners are relying on future immigration to drive Toronto real estate prices further up from their current sky-high levels. Meanwhile they’re driving those prices up themselves.

Gold rush

“Buyers beware,” says Odeen Eccleston, broker at WE Realty. We’re discussing recent trends with Toronto real estate agents selling pre-construction condos as investment properties, after a recent sales pitch I encountered.

A realtor I spoke to, who did not want to identified in this story, has been heavily marketing new sales of pre-construction condo units at the edge of eastern edge of Scarborough. Two-bedroom condos were selling for approximately $700,000, which is roughly the current market rate, though not really in that relatively untapped area.

The realtor dismissed any concerns I had about not being able to secure a big enough mortgage that would cover that unit and my current home when it would be ready to close in four years. The realtor also vaguely promised being able to secure an adequate mortgage for me or an easy re-assign, which means I could simply sell the property to a new buyer in a tight window before closing, provided there’s interest.

“Better hurry up, lay down that deposit before the opportunity is gone,” was the vibe of our conversation and the mantra for the Toronto real estate market. “We could sort out the actual finances later.”

“It makes me extremely nervous,” says Eccleston about that attitude among realtors when it comes to handling transactions worth nearly a million dollars. “A lot of times people are overly confident.”

I personally decided to opt-out. Why deal with real estate fees and taxes, while stressing that this condo unit needs to gain value at the rate that condos have been gaining value over the past few years to make that investment worthwhile. I could just purchase stocks in Lowes or Home Depot instead. If real estate is doing well, then surely those businesses must. And that investment takes much less effort and has been growing at a faster rate than real estate.

Of course, some people don’t have the stomach for stocks. Eccleston notes that she doesn’t always have the stomach for these extrapolative real estate investments, warning that counting on major price gains in the condo market is still a risk.

“At the same time, I was saying that five years ago,” says Eccleston. “I was apprehensive then as well. All of those agents pressured their clients to buy something five years ago are winning big time.”


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Canada’s Real Estate Bubble Is Getting Even More Irrational: US Federal Reserve Data – Better Dwelling



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Canada’s Real Estate Bubble Is Getting Even More Irrational: US Federal Reserve Data  Better Dwelling

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