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WILD: Toronto real estate market still 'highly vulnerable' – Toronto Sun

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When the economy begins to fire on all cylinders, buyers tend to show more interest in the housing market.

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And over the past several months, the gradual reopening of the economy, high vaccination rates, historically low interest rates and government support programs have all fueled job recovery, savings and propelled many more buyers into the market.

A market over the past 18 months that’s been characterized by high demand, limited supply, wildly rising prices, record sales and intense competition in the form of multiple bids on available homes.

Those conditions have led to a warning from the Canada Mortgage and Housing Corporation (CMHC) in its recent national Housing Market Assessment report.

Rising prices for homes combined with “continued overvaluation” of home prices and a growing gap between fundamental factors such as worker income have “created a high degree of vulnerability in Canada’s housing market.”

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“A high degree of vulnerability means the housing market is more vulnerable to a potential downturn, with greater consequences if the downturn were to happen,” the CMHC notes in its recent release.

“Exceptionally strong demand and home price appreciation through the course of the pandemic may have contributed to increased expectations of continued price growth for homebuyers in several local housing markets across Ontario and Eastern Canada,” said Bob Dugan, CMHC’s chief economist. “This, in turn, may have caused more buyers to enter the market than was warranted.”

The HMA looks for potential imbalances in the housing market by assessing four key factors:

  • Overheating: when demand is significantly stronger than supply
  • Price acceleration: when house prices rise at an increasing pace over a sustained period
  • Overvaluation: when house prices differ significantly from their level consistent with housing market fundamentals
  • Excess inventories: when there is an unusually high level of vacant housing units

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According to the report, the GTA housing market in particular continued to be assessed at a high degree of market vulnerability, even after existing home sales started to ease and the pandemic-induced buying frenzy calmed down during the second quarter of 2021.

Overall, CHMC found moderate evidence of imbalances in the GTA market and high market vulnerability.

Existing home sales remained elevated, relative to the number of new listings coming to market, even though we saw some easing in prices and sales in the second quarter.

It will come as no surprise to anyone that a persistently tight market led us to an overheated market with a demand-supply imbalance for existing homes that contributed to non-stop price acceleration.

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The decline in new listings was enough to keep market conditions tight and price growth elevated, well into the second quarter of 2021.

As we moved into the third quarter of this year, market conditions further tightened which accounted for most of the market activity in the GTA. The seasonally adjusted sales to new listings ratio was 80% in July 2021, which was well about the five-year historical average of 58%.

The downturn in condo sales we saw heading into the pandemic as city dwellers migrated to the suburbs and cottage country to embrace the work from home model, started to rebound as regional openings resulted in workers and students returning to urban centres across the GTA looking to buy or rent, while the supply of new listings trended lower.

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The HMA goes on to report that demand has persisted in suburban markets amid the pandemic due to increased prevalence of teleworking and the general desire among households to own larger homes while paying lower prices.

Home sales eased during the second quarter of 2021 while the lack of new listings on the market supported persistent price growth as a pool of buyers called it quits. Driven by tight market conditions for single-detached homes in suburban markets, average MLS price growth was higher in places such as York, Halton and Durham regions. The City of Toronto’s average MLS price growth was less obvious due to lower priced condominium apartments making up a larger share of sales.

And the HMA noted that despite high prices in Toronto, employment among high-income earners was relatively strong and remained supportive of housing demand in the second quarter of 2021. What we know is high income earners are more likely to be owners.

Looking toward next year, even with inflation on the rise, the CMHC report doesn’t suggest more than potential concern for price correction but it does seem likely we’ll see continued pressure on home and condo prices into 2022.

— Penelope Wild is the former Homes editor of the Toronto Sun and a realtor with Keller Williams Real Estate Associates.

penelopewild@kw.com

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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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New Zealand Real Estate Investors Pull Back After Policy Changes, Price Growth Slows – Better Dwelling

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Real estate board donates to Inn of the Shepherd – Woodstock Sentinel Review

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Members of the Sarnia-Lambton Real Estate Board presented a cheque for $2,000 to the Inn of the Good Shepherd as part of Realtor’s Care Week celebrations on Nov. 19.

During the national week, local realtors are encouraged to do good turns in their community.

Funds given to the Inn will help feed the 170 individuals in the care of the Inn, up significantly since the beginning of the pandemic.

Representatives of the Inn thanked the realtors for their donation as well as for their involvement year round in activities such as the annual CANstruction fundraiser as well as food drives.

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