Market Remains Tight with Sales Up in April

May 3, 2012 — Greater Toronto REALTORS® reported 10,350 transactions through the TorontoMLS system in April 2012. This level of sales was 18 per cent higher than the 8,778 firm deals reported in April 2011. The strongest sales growth was reported in the single-detached market segment, with transactions of this home type up by 22 per cent compared to a year ago.

“Interest in single-detached homes has been very high, both in the City of Toronto and surrounding regions. Growth in single-detached listings has not kept up with demand, which means competition between buyers in this market segment increased. With this in mind, it was no surprise that the strongest annual price increase was also experienced in the single-detached segment,” said Toronto Real Estate Board President, Richard Silver.

The average price for April 2012 transactions was $517,556 – up 8.5 per cent compared to April 2011. While price growth was strongest for single-detached homes, the better-supplied condominium apartment segment experienced a more moderate annual rate of price growth, at four per cent.

“Monthly mortgage payments remain affordable for home buyers in the Greater Toronto Area. While interest rates are generally expected to increase over the next two years, the extent and timing of rate hikes has been thrown into question by slower than expected economic growth in the first quarter of this year. On net, borrowing costs are expected to remain a positive factor influencing home sales through 2012,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

Full neighbourhood reports are available and just a phone call or email away.  Email dkoegl@sagerealestate or call 416-258-0484 and let me know what area interests you.

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The much anticipated SPALUSCIOUS event has finally come.  Fabulous packages and promotions from so many of the members of  The Eglinton Way.  Stroll along Eglinton Avenue before or after your special treat.  There is bound to be one more irresistable little thing for you.

Take a look at all of the wonderful offers on The Eglinton Way web site

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April 23, 2012 — Central Toronto REALTORS® reported 1446 home sales through the Toronto MLS® in March 2012. It was also reported that on average homes sold for $822,623, they took 19 days to sell and sold for 101% of list price.   

 But what exactly is happening in your neighbourhood? I’ve broken down the sales activity by neighbourhood and provided detailed reports below to give you a true sense of what’s happening in your local market.    

 I hope you enjoy this month’s reports and encourage you to ask me any questions that come to mind. And if you have friends or family you think might be interested, please feel free to pass the reports on to them. I would appreciate it!

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 Congratulations to all who took part in the Beltline Clean Up.  It was an outstanding success, parcipants ranging  in age from four to senior. With a full on effort by everyone the result was nothing short of spectacular.  Massive piles of wire, debris and garden waste were piled on the sides of the Beltline.  There was a wonderful sense of accomplishment and pride.  Parks and Rec came early Monday morning to take everything away.  The Beltline was left looking beautiful and clean. 

Councillor Josh Matlow was on hand to thank the Accardi Family from Ashford cleaners not just for their generous donation of the park bench but to acknowledge their participation in the community.

Accardi Family of Ashford Cleaners, Chaplin Estates, Toronto.

 Second Cup, 518 Eglinton Ave. W., was out first thing in the morning to serve hot chocolate.  A real treat since it was a cool morning.  Sage Real Estate provided bottled water.

Urban Forestry came with their full support and encouragement.  Without them we could never accomplish such large task. 

Stay connected for word of the next clean up and planting of native trees and shrubs.   Until then, come for a walk along the beautiful Beltline.

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 Wayne Whaylen of Parks & Rec. kept his promise.  Today, Wayne installed the first ever park bench donated by a member of  The Eglinton Way.   On April 21^st Councillor Josh Matlow will give a special thank you to the donors of the bench.  Be sure to come back so you will know who to thank as well. 

 Or, you could join us on April 21^st at 9:45 for the Second Beltline Clean Up.  With full support from Urban Forestry and Parks & Rec it promises to be as successful asthe first.

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When the European Central Bank (ECB) injected more than US$1 trillion in cheap, three-year loans into troubled euro-zone countries using its Long-Term Refinancing Operation (LTRO), investors breathed a sigh of relief. It was widely believed that these loans would buy the euro zone more time – a year at least.

The plan was to let troubled banks use their existing bonds (even those of “questionable quality”) as collateral for three-year loans at 1%. The hope was that domestic banks would use this money to buy up their government’s sovereign debt in countries like Italy and Spain, bringing their respective bond yields back to sustainable levels.

 There’s a bit of genius in the way the LTRO was designed. The framers knew that the most troubled banks and countries would lean on these emergency ECB loans the hardest, and the more sovereign debt could be shifted out of foreign hands and back onto the balance sheets of each struggling country’s domestic banks, the more contained the risk of contagion would become (at least in a relative sense).

 The LTRO was arguably the best of the bad options that remained for the ECB, which knows that both struggling Italy and reeling Spain are too big to save, and too big to let fail.

 The plan appeared to work in the beginning. Italian ten-year bond yields went from 7% to less than 5% and Spanish ten-year bond yields from 6.5% to less than 5%. But both countries have large debt refinancing requirements this year and must keep retesting the market with new bond issues. In Spain’s case, nervous investors have already pushed the ten-year yield on Spanish bonds back to 5.98% as of last Friday. Only two short months after round two of the LTRO emergency loan program, Spanish bond yields have already returned to unsustainable territory (Italy seems less of a concern these days.)

 It’s hard to blame investors who may at some point (and perhaps sooner than we think) decide that they don’t want Spanish debt at any price.

 Consider that:

 Spain backed up the trucks during round two of the LTRO and borrowed almost 40% of the entire emergency debt issued by the ECB during that round.

• Spanish unemployment is now at 23% (youth unemployment is above 50%), and the country is mired in a recession that threatens to be deep and long lasting.
• Many Spanish banks are underwater and it is believed that the government’s debt-to-GDP ratio is well above the officially reported 60% level when federal guarantees of local-government debts are factored in (John Mauldin estimates the number to be closer to 90%).

 When you throw in a massive housing bubble, new government regulations designed to staunch the flow of cash to banks outside the country and an increase in violent protests, doesn’t this start to look like Greece 2.0 minus the ouzo?     

 Five-year Government of Canada (GoC) bond yields fell twelve basis points last week as fear once again trumped greed as the market’s main driver of momentum. Demand for the safety of GoC bonds pushed our yields down to 1.52% on Friday, and five-year fixed-mortgage rates are now clustered in the 3.29% range. Most lenders are still taking a breather from their three- and four-year fixed-rate promotions, but if our bond yields stay in the 1.50% range, lower five-year fixed rates are possible.

 Variable-rate mortgage holders were made nervous last week by comments from Bank of Canada (BoC) Governor Mark Carney. He said that the BoC might raise short-term rates as an emergency measure to slow consumer borrowing and fight housing-bubble risks. While it seems unlikely that the BoC will do this (it seems more likely that OSFI, our federal bank regulator, will try to tighten lending practices instead), even the possibility that the BoC would take this emergency step reinforces my belief that variable-rate mortgages aren’t worth the risk at current prices. When you can enjoy the stability of an ultra-low fixed rate for a very small premium over the equivalent variable rate, locking in makes sense.  

 The bottom line: There is a growing risk that Spain will take the euro zone crisis to a new level and that fear will further increase demand for the safety of our GoC bonds. As I have written many times before in this space, unless we experience a severe systemic shock that rocks financial markets everywhere, heightened euro-zone fears should help keep our mortgage rates low for the foreseeable future.

 David Larock is an independent full-time mortgage planner and industry insider. If you are purchasing, refinancing or renewing your mortgage, contact Dave or apply for a Mortgage Check-up to obtain the best available rates and terms

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Join your fellow Friends of  The Beltline for a wonderful morning of improving our neighbourhood treasure

Date:  April 21, 2012 – 9:45 – 12:00

Location:  ROBERT BATEMAN PARKETTE 
(at Russell Hill and Chaplin Crescent)

Complimentarty beverages will be generously served by
Effie & Tony of SECOND CUP, 518 Eglinton Ave. W.

Bottled water compliments of
Sage Real Estate Ltd.

Toronto Urban Forestry
will attend and supply gloves and tools

Josh Matlow, Ward 22 Councillor
will be present to kick off the event

For more information
Donna Koegl at 416-483-8000 or dkoegl@sagerealestate.ca

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View Video

For eight years Rick Casaccia has been an important member of Chaplin Estates onEglinton Ave. W.  Here, Rick talks about what it’s been like for him since he came to the neighbourhood.  Coming from an entirely different background, Rick is enjoying every day surrounded by happy dogs and grateful owners.  Rick and his team are trusted with the care and wellbeing of some of the neighbourhood’s most loved members. 

Drop by for a 35 dog greeting from behind the fence.

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In February 2012, 1116 properties sold in Central Toronto, at an average price of $844,406. On average these properties took 18 days to sell and sold at 102% of their listing price. A total of $763,904,752 worth of real estate changed hands on the MLS system in February. 　

The signs point to a continuing, strong seller’s market in Toronto. Average selling price is up 14% over this same time last year, homes are selling at 102% of their asking price, and took on average 5 fewer days to sell this year as compared to last year. Now is a great time to sell real estate  in Toronto.

But what exactly is happening in your neighbourhood? I’ve broken down the sales activity by neighbourhood and can provided detailed reports to give you a true sense of what’s happening in your local market.  It’s always good to remember that the averages include all parts of Central Toronto and may not  reflect your immediate neighbourhood.

This link will take you to the full Central Toronto Report, with the year over year stats.     

 I hope you enjoy this month’s report and encourage you to ask me any questions that come to mind. And if you have friends or family you think might be interested, please feel free to pass the report on to them. I would appreciate it!

 You can call me at 416-258-0484 or email me at dkoegl@sagerealestate.ca

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Be sure to visit Dave Larock’s website for information on all your mortgage questions:  

Taming the Housing Beast

The Canada Mortgage and Housing Corporation (CMHC) issued a release that warned it would try to rein in the explosive growth of its insured mortgage portfolio in the coming years (CMHC grew by $170 billion from 2007-10). While much of the tightening will occur behind the scenes, by limiting the amount of bulk-portfolio insurance that lenders can purchase on what are deemed to be lower-risk loans, this new mandate will limit flexibility and increase the cost of borrowing for different sub-groups of mortgagors over time.

Clearly CMHC is concerned about fueling an over-heated housing market and while this announcement may not come as welcome news to many real-estate industry professionals, it is a prudent and measured change that can be implemented over time. Something had to be done and if you’re trying to engineer a ‘soft-landing’ for our housing market, this seems like the right approach.

Meanwhile, the Office of the Superintendent of Financial Institutions (OSFI), otherwise known as Canada’s banking regulator, issued a draft paper that proposed several changes to the underwriting practices and procedures used by our banks and other federally regulated lenders. This was big news in the mortgage world and if the recommendations in the report are implemented, they will significantly alter our lending landscape.

While I would describe the ongoing changes at CMHC as having been made with a scalpel, OSFI’s recommendations look more like a sledgehammer approach to regulation. I’ll need a full post to adequately deal with OSFI’s report and to that end, I’ll try to put something together this week.  

Keeping Inflation Under Control

Statistics Canadareleased its latest Consumer Price Index report on Friday. Overall inflation rose to 2.6% in February, up from 2.5% in January. While the increase was primarily led by higher energy prices, core inflation also rose by 2.3%, compared to 2.1% in January. (Reminder: core inflation strips out more volatile factors like food and energy costs.) Both numbers were a little higher than expected but experts noted that the increase was not nearly as pronounced when adjusted for seasonality.

Looking for Signs of the Global Recovery

The hangover from the euro zone’s last-one-in-is-a-rotten-egg liquidity party, otherwise known as the European Central Bank’s trash-for-cash Long-Term Refinancing Operation (LTRO), appears to be kicking in. Both Italian and Spanish ten-year bond yields are back above 5%, which is concerning, in light of their large ongoing budget deficits, and surprising, given how much extra liquidity has just been pumped into the euro zone’s financial system. I smell yet another ministers’ meeting and photo op announcing that the end of the crisis is on the way.

On our side of the  pond in theU.S., the string of recent positive data has investors reconnecting with their bullish animal spirits but U.S. Fed Chairman Ben Bernanke sounds less convinced that theU.S.recovery is firmly underway. In a speech atGeorgeWashingtonUniversitylast week, he said that consumer spending is still “quite weak” and that there are still “a lot of issues to be resolved”. Chairman Bernanke also reiterated his long held belief that the Fed exacerbated the Great Depression by tighteningU.S.monetary policy too quickly, and he didn’t give any indication that he plans to change his current strategy of keeping rates low until late 2014.  

Five-year Government of Canada (GoC) bond yields were down 9 basis points for the week, closing at 1.65% on Friday, and not a moment too soon for lenders caught between shrinking profit margins and the siren song of spring mortgage-market competition. While only a few promotions have been pulled so far, with yields at these levels, the threat of increased fixed-mortgage rates still looms. If you are in the market for a fixed-rate pre-approval, you’re still well advised to get ‘em while they’re hot.

Variable-rate mortgage discounts still aren’t deep enough to justify taking on floating-rate risk. 

The bottom line: While CMHC’s decision to curtail the growth of its insured mortgage portfolio will be phased in over time, more onerous lending rules from OSFI could hit the housing market with a pronounced thud. In fact, there is a risk that some of OSFI’s tighter controls over mortgage lending could cause the very correction in house prices that the OSFI is trying to prevent. Stay tuned.

On the economic-recovery front, higher Spanish and Italian bond yields and cautious comments by U.S. Fed Chairman Bernanke were actually somewhat positive omens for Canadian mortgage rates. Ongoing euro-zone uncertainty will ensure there is still plenty of demand for the safety of GoC bonds (which will keep fixed-mortgage rates low), and the continuation of the U.S.’s  loose monetary policy will help keep short-term Canadian borrowing rates in check.

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