An Oversupply And Investors Are No longer As Interested
680 News reports from Canada. “A study by Angus Reid found that nearly half of millennials living in Toronto consider leaving because of high housing prices. In the survey, 45 per cent of people aged 18-34 agree they are ’seriously thinking of leaving the GTA because of the cost of owning a home here. ‘I would have loved to buy my own place in Toronto, but I ended up having to rent a place in Etobicoke,’ said Mona Khabaz, 26. Khabaz said when she’s ready to buy, she wants a two-bedroom, two-bathroom home, and that location is a big factor. Saving now could allow her and her boyfriend to have that in the future. ‘I can’t wait for the bubble to burst,’ laughs Khabaz. ‘I am looking forward to the one day that I can say I own this place.’”
From CTV Toronto. “Condo fees are rising to an unaffordable level for residents of an Etobicoke apartment building. After years of neglect, Eight million dollars’ worth of repairs were completed at a 200-unit condo building at 40 Panorma Court in Etobicoke. The building still needs another $600,000 in of work to repair mold problems. Many residents in the condo building are already paying $1,200 per month in fees but with the new renovations expected, prices could rise to $2,000 per month.”
“Unit owners like Wansa Hamo, who lives in the building, are struggling to pay the condo fees. Residents are also concerned because when condo fees rise, the units fall in value. ‘Either we will pay or they will put a lien on the unit and we will lose it to the power of sale,’ Hamo told CTV Toronto.”
The Montreal Gazette. “Federal election campaign signs have now been in place for three weeks. couple the appearance of these signs with a daily visual onslaught of other temporary signs in the neighbourhood and you get what can be referred to as sudden and substantial visual pollution. I refer to what appears to be hundreds, if not thousands of real estate and realtor agent signs that randomly clutter the landscape locally. Those are on the increase with no sign; pardon the pun, of letting up. On just one stretch of road here in front of a residential townhouse and condo development, there are at least 20 signs.”
From CBC News. “The frenzied condo-building boom in Ottawa appears to be waning and in its stead some developers are changing their plans to target renters instead of buyers. Ben Myers of Fortress Real Developments said a few years ago a condo project launch in Ottawa led to brisk sales. Now he says there’s an oversupply of units and investors who once snapped them up are no longer as interested.”
“The market shift led Myers’s company to change its plans for a 21-storey condominium tower on Bronson Avenue, instead constructing a rental building. ‘We felt we needed a change because we didn’t want to go through a prolonged pre-sale process and build a sales office and all that fun stuff if the sales weren’t there,’ he said.”
From Global News. “Declining sales coupled with elevated inventory levels has turned Saskatoon’s housing market into a buyer’s market. ‘The reality is that our market is feeling the effects of slower economic times,’ said Jason Yochim, CEO of the Saskatoon Region Association of Realtors (SRAR). ‘If someone is serious about selling their home, they need to sharpen their pencil regarding price to ensure a successful sale.’”
“According to SRAR, sales are down in nearly every price range, but most notably in the $450,000 to $500,000 and the $750,000 to $900,000 ranges. There are currently over 2,000 listings in Saskatoon, up 26 per cent from a year ago. Total sales are down 12 per cent so far this year, with 329 homes changing hands in August. Housing starts have also been affected, with construction started on 510 new single-family homes this year, down 28 per cent from the same period last year. There has been a slight upswing in multi-family starts, an increase of 10 per cent to 798 units.”
“‘It’s important to keep in mind that regardless of the market conditions, homes still sell, provided they are properly priced to the market,’ said Yochim.”
The Calgary Herald. “During August, new listings of 2,733 homes of all types outpaced sales of 1,643 units by 66 per cent in the Calgary residential resale market. Those 1,643 sales represented a drop of 27 per cent from 2,250 sales in the same month last year. As a result, the total inventory of resale housing on the market rose 12 per cent during the month to 5,146 units at Aug. 31. At the current pace of sales, the Calgary Real Estate Board (CREB) said this equates to 3.13 months of supply of resale homes, up from 2.54 month’s supply in July.”
“‘It’s higher than we’ve become accustomed to in Calgary, but it’s not a cause of concern, as of yet,’ said CREB chief economist Ann-Marie Lurie.”
“So far, the benchmark price (for an average resale home) is down just $400, or 0.09 per cent, to $456,300 from $456,700 in August 2014, after staging a modest recovery during the summer months. And Lurie noted that price gains in 2014 far surpassed this year’s declines. ‘We haven’t yet worked off all the price appreciation we had last year,’ Lurie said. ‘Those gains in 2014 were fairly steep.’”
“Hardest hit by energy-sector retrenchment has been the apartment market, where resales have dropped 39 per cent to 279 units from 456 in August of 2014. Lurie said there’s more selection in the apartment market, more vacancies in the rental market and very little upward pressure on rental rates, so potential condo apartment buyers are taking their time.”
From Macleans. “When it comes to the oil and gas industry’s hunger for new, cost-saving technologies, literally everything is on the table—particularly now, with oil having plunged to a recent low of just US$38 a barrel for West Texas Intermediate, the North American benchmark for light, sweet crude.”
“Yet while such investments make perfect sense for oil executives charged with keeping their operations afloat, the trend is collectively threatening to perpetuate the very oversupply problem that caused prices to falter in the first place: the more they can drive costs down, the less incentive there is to cut back on production. It’s also one of the reasons so many forecasters failed to predict how deep oil’s slide would ultimately become.”
“That’s bad news for Canada because, while cheap energy is generally seen as an economic tailwind, the country has become reliant on expensive-to-extract oil sands in northern Alberta to fuel GDP growth and create jobs in recent years. Now, Alberta leads the country in Employment Insurance applications. Not surprisingly, the once-hot housing markets of Calgary and Fort McMurray are also cooling rapidly with double-digit declines in home sales this summer. If prices follow suit, that could create a fresh round of pain for many local families.”
