July 6, 2017

The Million Dollar Question, Or Maybe Two Or Three

A report from the Canadian Press. “The number of homes sold last month in the Greater Toronto Area plunged a whopping 37.3 per cent compared with a year ago, the city’s real estate board said Thursday after Ontario introduced measures aimed at cooling the housing market. The Toronto Real Estate Board said 7,974 homes changed hands in June while the number of new properties on the market climbed 15.9 per cent year-over-year to 19,614. ‘We are in a period of flux that often follows major government policy announcements pointed at the housing market,’ Tim Syrianos, president of the Toronto Real Estate Board, said in a statement.”

“There have been growing worries that overheated prices in Vancouver and Toronto could be a problem for the broader economy, especially if there is a sudden decline in housing prices sparked by higher interest rates. The Bank of Canada has recently signalled that time is running out for the rock bottom interest rates it put in place in 2015 to cushion the blow of a sudden decline in global oil prices.”

The Calgary Herald. “New listings greatly outpaced resale demand in June as the city’s improving housing market led more Calgarians to put their homes on the market. Apartment and condo sales slumped in June, declining almost 8 per cent from a year ago, to 286 units. Year-to-date sales remain up 8.6 per cent from 2016, however unsold inventory is 7 per cent higher than 2016. Listings in the apartment category jumped 20 per cent. As of June, the benchmark price for an apartment style product was $265,800, about four per cent below last year’s levels.”

“‘While there were many buyers waiting for lower prices to step into the housing market, there were also many sellers waiting until prices stabilized before listing their home,’ said CREB president David P. Brown.”

From CBC News. “Vancouver’s empty homes tax came into effect over the weekend, causing some property owners to scramble to rent, sell or find a way around the fees, according to one property manager. Cameron Fazli is with Re/Max Crest Realty. He has seen a spike in calls from concerned owners looking for advice and solutions, he told CBC guest host of On The Coast Gloria Macarenko. ‘We are getting a lot of calls from people who are unsure what they are going to do,’ Fazli said. ‘There is a lot of uncertainty and definitely a lot of unhappy property owners.’”

“He recently met with a woman who owns three empty properties in Vancouver — and says one of them is now listed for rent, another will be listed shortly and she is thinking of selling the third. ‘This is a scenario of someone who is kind of in a panic now and needs to rent them out,’ he said.”

From News 1130. “It is the million dollar question in our real estate market — or maybe the two or three million dollar question — when will Metro Vancouver’s housing bubble burst? Other hot global markets have been hit by a drop in Chinese investment in 2017 but the local housing scene seems to keep defying expectations, according to a story featured recently in Business Insider.”

“But at least one local realtor sees nothing but price increases in Vancouver’s near future, even as sales in the city’s luxury segment have dropped since introduction of a 15 per cent foreign buyers’ tax last year and China has clamped down on capital outflows.”

“‘There seems to be a slow down at the higher end. We’ve seen that not only in sales but in terms of the actual dollar volume spent,’ says Steve Saretsky with Sutton West Coast. ‘To put that into context, the amount of dollars spent on Vancouver homes above two million dollars has dropped five per cent while the total dollars spent on homes above three million dollars in Vancouver has dropped 12 per cent,’ he tells NEWS 1130.”

“‘Real estate markets that saw locals scramble to cash in on foreign buyers are now noticeably cooler. Toronto is seeing new listings hit an all-time high, coupled with a massive dip in sales,’ writes Daniel Wong. ‘New Zealanders who were complaining about a ‘flood’ of Mainland Chinese buyers, are now complaining about the market cooling faster than expected. Australia’s leading property analyst is now telling people to prepare for a 10 per cent drop in prices soon.’”

“Wong — who is a contributing editor for Better Dwelling – believes that while Chinese investors were buying a lot of international real estate, ‘over-excited locals’ bought into the narrative way too much. ‘Countries that are nice, but not global leaders got way too excited that they were the next ‘New York.’ Canadians after all, have been heavy real estate speculators without Chinese influence. Now that mainland Chinese buyers aren’t buying in any significant quantity, buyers are finding themselves in an existential real estate crisis,’ he writes. ‘Is a 30 percent rise in a single year a justifiable increase in property prices? We’ll find out.’”