A Noticeable Slowdown In The Frantic Bidding Wars
The Financial Post reports from Canada. “Torontonians who can barely wrap their minds around a housing market where $1-million is the average price for a detached home might want to take notice of a new fast-approaching benchmark. ‘What you are seeing is $2-million is the new $1-million,’ says Drew Laszlo, an architect in the city who has been involved in several infill projects that have fallen into the new threshold.”
“BlueShore Financial conducted an online survey of 650 of its members asking whether they’ve had a ‘family-financed’ mortgage. The credit union got 356 responses with 41% of those responding saying they received financial assistance from parents or family members in either the form of a loan or a gift. David Batori, a 25-year veteran of the industry, says family money continues to be a factor in the market, especially for young couples buying in the $1-million range. ‘Thank God for the parents and the grandparents,’ he says, with a laugh.”
The Hamilton Spectator. “Canada’s housing market emerged from its deep freeze late this year, thanks to the winter that refused to end, leading to a rash of pent-up buying and selling in April and May that is now largely over, according to the Canadian Real Estate Board. Their warnings of a ‘transient’ summer for sales supports what realtors are seeing in the GTA market as well — a noticeable slowdown in the frantic bidding wars that largely defined this year’s spring market as buyers take a breather and sellers start to feel just a little less cocky.”
“Realtors are now seeing more buyers taking a survival-of-the-fittest approach to Toronto’s pricey home market — simply walking away from multiple bid situations, or holding off seeing properties at all unless they’ve been on the market more than a week and the deadline for offers has passed.”
The Star Phoenix. “May was a phenomenal month for existing homes sales across the country, but the jump in activity may say more about the harsh winter than the state of the market. The Canadian Real Estate Association said there was a ‘delayed start’ to the spring buying season as people deferred putting their homes on the market until the end of a harsh winter. With summer just about here, the group doesn’t think the pace of the last month can be maintained. That’s a view held by many in the market.”
“‘One reason policy-makers might be a bit hesitant to act again soon is that strong price gains are confined to a few select markets, or even submarkets, while a wide swath of the country (at least geographically) is seeing downright dreary conditions,” Robert Kavcic, an economist with Bank of Montreal said.”
“Real estate sales in Hamilton and Burlington broke records in May, the local realtors association announced. But as sales sped up, prices went down. The average sale price of freehold homes, or homes where the owner also owns the land, decreased 2.3 per cent to $435,440. Association CEO Ross Godsoe attributed the lower sale prices to a flood of new listings in May, 213 more than May 2013. ‘It wasn’t record-setting, but new listings were higher than the 10-year average for the month,’ he said. ‘That may account for the slight decrease in average sale price compared to May of last year.’”
24 Hrs. Vancouver. “The latest Statistics Canada data shows a year-to-year 41.2% drop in Metro Vancouver building permits in April and it’s the softening demand for housing in the region that’s likely to blame. Lee Loftus, president of the B.C. Building Trades Council, said the numbers are a head-scratcher since construction typically spikes during warmer months. ‘Traditionally, when we see a decline in building starts it’s due to the economy and I don’t think the economy is off that much to generate those numbers,’ he said. Loftus said he knows construction workers are finding it increasingly tough to find work over the past few years.”
“‘The labour is available, but there’s no work,’ he said.”
Business in Vancouver. “Home prices in Vancouver dipped 0.03% in May compared with April, according to the Teranet-National Bank National Composite House Price Index released. This is the first decrease after 12 consecutive monthly increases. Statistics Canada New Housing Price Index showed that Vancouver has once again had Canada’s biggest decrease in new home prices in the twelve months to April. New homes cost 1.5% less than they did in April 2013. On a month-to-month basis, new home prices in Vancouver fell 0.3%. This was due to builders reporting lower selling prices and decreased list prices.”
From CBC News. “In the first major survey of the Canadian economy in two years, the Organization for Economic Co-Operation and Development takes aim at risks in the housing market. The report criticizes Canada for the increasing unaffordability of housing in big cities like Vancouver, Toronto and Calgary, saying high household debt leaves families vulnerable to interest rate hikes.”
“‘Almost 40 per cent of the country’s population lives in a city where house prices are seriously or severely unaffordable,’ it states. ‘A shock to even one segment could have spillover effects to the broader economy if banks respond by tightening credit significantly or if negative wealth effects depress consumption.’”
“Given such risks, the OECD wonders why the government allows Canada Mortgage and Housing Corp. to insure 100 per cent of high-leverage mortgages when most other countries limit potential losses to 10 to 30 per cent of outstanding balances. ‘Imposing a deductible on mortgage insurance, as is common in other lines of insurance, would help promote stability by better aligning the interests of the lenders and those of the insurer, thereby reducing moral hazard,’ it recommends.”
