April 14, 2015

You Could Say The Shortage Is Over

The Toronto Star reports from Canada. “Earlier this week, I participated in the Canada Mortgage and Housing annual industry roundtable. What I can say is that there is a strong demand for housing — both market and rental — in the GTA as up to 100,000 people choose to make this great region their home every year. In 2014, construction started on 15,581 apartments in multi-family buildings or purpose-built rental across Canada, according to a recent report. That’s 52 per cent higher than the average over the five preceeding years across the country.”

“I hear anecdotal evidence that the condominium market is aiding rental demand and that both renters and homeowners want similar things: well-situated buildings near amenities and transit. This helps to explain why Toronto’s rental vacancy rate is 1.6 per cent, according the Canada Mortgage and Housing Corporation.”

From Macleans. “As Toronto condos go, a cramped unit on the 52nd floor of a newly built downtown tower is as good a place as any to pick apart one of the most oft-repeated real estate stats in Canada’s largest city: the ultra-tight vacancy rate of little more than one per cent. But like all statistics emanating from Canada’s clubby real estate industry, this one should be taken with a grain of salt—especially since investors are a huge source of demand driving frothy condo markets here and across the country.”

“Rachelle Berube, a property manager who oversees several hundred rental properties in Toronto, is showing me the unit which she’d tried for weeks to rent out on behalf of the condo’s owner. On the door to almost every unit on the floor in this sold-out building, and multiple floors below, notices were posted by work crews to say they’d entered the units to do repairs—notices that hadn’t been touched in days or weeks. These were empty condos. A few are up for resale, most are for rent.”

“A condominium-owners survey by CMHC last fall showed percentage of investment condos sitting vacant at 5.5 per cent for units purchased more than six years ago, and up to 10.1 per cent for those bought in the last three years. Instead the vacancy rate reflects empty units as a share of the whole condo market, including those units occupied by their owners. ‘It seems to be a Franken-number,’ says Berube. ‘It means absolutely nothing and it’s encouraging people to buy condos thinking they’ll be easy to rent.’”

The Globe and Mail. “As lively as Toronto’s real estate market has been so far in 2015, this is the week that activity really starts to intensify. Not only are listings swelling, but the number of buyers is increasing too, says real estate agent Boris Kholodov of Royal LePage. Mr. Kholodov says the surge in listings began to appear early this week. ‘It’s definitely happening.’”

“In Toronto, not all houses attract multiple offers, notes Mr. Kholodov. At any price above $3-million, it’s rare to see a bidding war, he notes. ‘Around the $1-million mark it’s almost a guarantee that it’s going to happen.’ In the condo market, investors are a bit hesitant to buy because they fear over-building, he says. Bank of Montreal senior economist Robert Kavcic says that the Greater Toronto market is seeing a dramatic shift in housing stock. At the end of 2014, he points out, there were 57,000 condo units under construction, but just 7,200 detached homes being built. That’s the widest gap on record, Mr. Kavcic says.”

From Metronews. “You were probably glued to a television watching the OJ Simpson trial the last time Winnipeg’s real estate market saw as many new March listings as it did this year. WinnipegREALTORS reported new listings last month were up 33 per cent over last years numbers and existing inventory rose 29 per cent to 4,338. Winnipeg’s real estate market hasn’t seen as many new March listings since 1995.”

“‘Conditions are ideal for buyers to take advantage of a healthy supply of listings and historically low mortgage rates,’ said WinnipegREALTORS president David Mackenzie.”

The Calgary Herald. “Wide selection and low interest rates are helping drive resale market conditions in Calgary that benefit house hunters, says an economist. Over the first three months of 2015, the inventory for single-family homes on the resale market in Calgary grew by 84 per cent from a year earlier. That’s 2,754 homes between Jan. 1 and the end of March compared to 1,494 during the same span last year.”

“‘There are lots of listings right now, so lots of supply relative to demand right now,’ says Lai Sing Louie, regional economist for Canada Mortgage and Housing Corp. ‘So what that means is if you’re a buyer, there’s a lot of choice. It’s a market that gives the buyers some leverage in terms of negotiations.’”

“Over the first three months of this year, there were new owners for 2,356 single-family homes. A year earlier, that number was 3,443. Buyers seem to have a wait-and-see attitude, says Bill Kirk, past president of the Calgary Real Estate Board. ‘They may be anticipating another drop in housing prices or they’ve got concerns about their own employment,’ says Kirk.”

The Estevan Mercury. “The Estevan real estate market is flush with options heading into the busiest buying and selling season of the year. For buyers, there are a lot of options, perhaps more than ever before, while sellers may have to fight for attention. Prices have seen a slight dip from their all-time highs. Even though sellers should still receive good sale prices, Rhonda Blanchette, Re/Max realtor, doesn’t want to say Estevan is necessarily a buyers’ market, however, because of the glut in inventory, she said, ‘buyers have an edge they haven’t had in a few years.’”

“‘You could say our shortage is over. We have a surplus of condos. We have a surplus of single family listings,’ said Josh LeBlanc, realtor with Better Homes and Gardens Prairieview.”

“To Lynn Chipley, broker at Century 21 Real Estate in Estevan, the inventory surge is something that will not just help reduce prices short term but also aid in managing any resurgence back to the boom times of just a couple of years ago. ‘We have the biggest over supply I’ve ever seen, so I do think it’s going to take quite a bit longer to absorb that inventory,’ said Chipley. ‘The upside is that if there is a sudden boom or a new construction project announced in the area that brings people in, we’re going to be far better prepared this time. What happened (in 2012) was the first time I’d seen anything like it in 27 years.’”

“Chipley and LeBlanc remarked there haven’t been as many sales of higher-priced houses recently. LeBlanc said one house has sold for more than $500,000 since Jan. 1, and prior to that, nothing has been sold for more than $370,000. But Blanchette said there are still many listings in the city for homes that are more than $650,000. ‘We had a lot of inventory throughout the summer and the fall, so even people who were serious about buying would take their time and really look and try to get a deal because there was so much out there,’ said Blanchette.”

“While the units that are out there haven’t had prices plummet in any fashion, the price has fallen. Chipley is anticipating pricing similar to that seen in 2011, which, she noted, was a year of record high housing prices, only to be outdone in subsequent years.”

“‘We’ve continued to see a slow slide in pricing, in house prices and in rents. It’s not astronomical and it’s not drastic, but it is certainly very evident that prices are on a bit of a downward trajectory. I’m kind of anticipating 2011 pricing,’ she said.”

Bits Bucket for April 14, 2015

Post off-topic ideas, links, and Craigslist finds here.