See how Vancouver’s real estate prices have outperformed global cities

May 19th, 2016

Real estate prices in key global cities are rising at a slow, moderate pace, particularly in Europe.

According to new research published by international real estate consultant Knight Frank, 35 of the world’s most important cities saw an average price increase of 3.6% in the year to March 2016.

“Since 2014 the index has consistently seen annual growth of 3-4%, with no city recording double-digit annual price declines since the second quarter of 2015,” notes Kate Everett-Allen of Knight Frank, who carried out the study.

However, Everett-Allen found some notable differences both between regions and within them. In North America, for example, New York, Miami and Los Angeles grew by 2.3%, 3.8% and 5.1% respectively but Vancouver saw a spectacular 26% rise in real estate prices — despite a 1% increase in land transfer tax on purchases above CAD2M.

Australasia was more homogeneous, with both Sydney and Melbourne posting a 12% rise. The two African hubs were also in positive territory, albeit with some difference between the two—Cape Town went up 6.9% and Nairobi up 3.3%. Asia was rather more of a mixed bill, with excellent growth in Shanghai (to the tune of 20%) but sizeable drops in Hong Kong and Taipei (down 6.4% and 7.6% respectively.

In Europe, real estate growth was modest and fairly consistent across the majority of cities, with prices either remaining flat or recording small rises of less than 3%. Only Moscow, Paris, Milan and Monaco bucked the trend. The first three saw dips (of 5.9%, 2.7% and 1.2% respectively) while Monaco recorded a 4.9% rise.

However, says Everett-Allen, some of these numbers need to be analysed in the context of past performance. Prices in London, for example, only grew by 0.8% in the year to March, the lowest figure since October 2009
 — but the British capital had experienced a period of exceptional growth in earlier years so a slowdown was natural.

Interestingly, the Knight Frank study also showed that, across the world, the impact of new transparency rules, new taxes or fees for foreign buyers—all of which are seeing a surge in global hubs—varies hugely depending on the pre-existing fundamentals and market cycles.

Thus, the land transfer tax rise had no depressive effect in Vancouver, nor did new transparency rules for cash buyers affect the New York and Miami markets. In London, by contrast, a series of changes to stamp duty land tax and to purchases by non-domiciled residents, have amplified the market cycle and helped slow down price growth.

Source: Carla Passino, Forbes http://www.forbes.com/sites/carlapassino/2016/05/19/slow-and-steady-real-estate-growth-in-world-cities-is-an-exercise-in-moderation/#108e2b7349c6

Vancouver area benchmark house price up 30% in 1 year

May 3rd, 2016

The insanity, it seems, is not over.

Despite ongoing warnings from the CMHC that the Vancouver housing prices are overvalued and have outpaced the economic fundamentals in the city, they keep climbing.

In the past year, the benchmark price for a detached home in the region — not just the City of Vancouver itself — has climbed 30.1 per cent, to $1.4-million, according to new numbers from the Real Estate Board of Greater Vancouver.

The “benchmark” price is a measure used by the board to describe what it calls a “typical property” in the market, taking into account bedrooms, lot size, and other factors, and is not an average or median price.

To put that in context, the median family income in the Vancouver metropolitan area is $73,390 — lower than the Canadian average, according to the latest census numbers available.

The highest benchmark price for a detached home is still Vancouver’s west side, at $3.2-million, which is up 172 per cent over ten years, and 28.4 per cent in the past year.

But the largest increases in house prices in the past year are outside Vancouver:

Tsawwassen up 41 per cent to $1.16-million.
Richmond up 36.5 per cent to $1.5-million.
Ladner up 35 per cent to $971,500.

Apartment and townhouse listings went up 20.6 and 22.1 per cent, respectively, in the past year in Greater Vancouver.

The Real Estate Board of Greater Vancouver covers Vancouver, Burnaby, New Westminster, Richmond, Port Moody, Port Coquitlam, Coquitlam, North Vancouver, West Vancouver, Squamish, Whistler, Sunshine Coast, Pitt Meadows, Maple Ridge, and South Delta.

The benchmark detached home price in the Fraser Valley also rose 30 per cent over the last year, to $776,500, according to the Fraser Valley Real Estate Board.

That area includes Surrey, White Rock, Langley, North Delta, Abbotsford and Mission.

The price increases are, not surprisingly, driven by a strong demand with not much supply.

There was a slight increase in residential listings last month, but not enough to keep up, said Greater Vancouver Real Estate Board president Dan Morrison in a release.

“While we’re seeing more homes listed for sale in recent months, supply is still chasing this unprecedented surge of demand in our marketplace,” he said.

In April 2016, sales of all properties (not just detached homes) in Metro Vancouver were 41.7 per cent above the 10-year sales average for the month.

Meanwhile, the total number of properties currently listed in Metro Vancouver is down 38.3 per cent from last year.

That means the sales-to-active listings ratio — a measure analysts use take the temperature of a market — was 63 per cent in April 2016, the sign of a seller’s market.

Home prices tend to experience upward pressure when that ratio is just 20 or 22 per cent, according to the board.

Source: CBC News http://www.cbc.ca/news/canada/british-columbia/vancouver-real-estate-house-prices-1.3564528

B.C. real estate sales break another record as demand soars

April 18th, 2016

A total of 12,560 homes were sold across the province in March, up 38 per cent year-over-year, according to British Columbia Real Estate Association data released April 15.

This figure shatters the previous record, which was set in May 2007 when 11,683 units were sold in B.C.

“Housing demand has never been stronger in the province,” said BCREA chief economist Cameron Muir. “Most large population centres of the province are now experiencing record levels of housing demand.”

Muir credits strong employment growth, increasing wages and growing inter-provincial migration into B.C. for the increase.

Demand is so high, inventory levels are now a decade-lows in some areas across the province.

In Vancouver alone, sales increased 28.3 per cent to 5,301 units, compared with 4,132 units last year. The benchmark price increased 22.6 per cent to $1,093,267, compared with $891,652 last year.

“Supply [in Vancouver] simply can’t keep up with demand, be it domestic or foreign, and the sales-to-new listings ratio remains a sky-high 86 per cent,” said BMO Financial Group senior economist Robert Kavcic.

“In other words, almost every new listing is getting absorbed within the month.”

Kavcic points out that even condo prices—up 19 per cent year-over-year—are increasing at a rate similar to those for detached homes.

Across Canada, home sales increased 12.2 per cent in the 12 months to March and prices were up 15.7 per cent. This growth is due almost entirely to the market strength in Toronto, where prices increased 12.1 per cent and sales grew 15.5 per cent, and Vancouver.

“With supply in the two hot markets extremely tight, prices are likely to push even higher through the always-important spring selling season,” Kavcic said.

“The question is, will policymakers in B.C. and Ontario do anything to quell the fires?”

Kavcic said the data from these two cities is making up for losses in centres in oil-dependent Alberta, most notably Calgary, where home sales fell 11.7 per cent. That city was the only one in Canada to see a drop in prices over the period, although the decrease was small (down 0.5 per cent).

Teranet also released its Home Price Index April 15. This measure showed price increases of 17.3 per cent over the year in Vancouver and 7 per cent across the country. Teranet uses statistics compiled from public land registries using a repeat-sales methodology; this means it looks at sales of homes that have been sold at least twice since 1990.

Source: Emma Crawford Hampel, Business in Vancouver
http://www.vancourier.com/news/b-c-real-estate-sales-break-another-record-as-demand-soars-1.2232731#sthash.wMXe3y27.dpuf

How can you win a real estate bidding war in Metro Vancouver?

March 5th, 2016

In a red-hot real estate market where inventory is low, prices are high and competition is fierce, the seller holds exponentially much more power than the buyer.

Multiple offers have become the new normal in the Vancouver market, with many properties selling for hundreds of thousands of dollars over the asking price.

Those bidding wars have buyers going to extraordinary lengths just to get a chance at getting into a market that’s really out of control.

CTV Vancouver has compiled a list of expert tips to help you get the property you want, if you’re faced with a multiple offer situation.

1. Unconditional offer

Gone are the days where offers can be subject to financing, inspection or lengthy waiting periods. The key to winning a bid now is going in with zero conditions attached. That means having your financing in place well ahead of even going to see properties. It can also mean having a bank draft deposit in hand to present to the realtor and homeowners.

Realtor Gary Serra says it can also help to make sure that deposit is bigger than your competitor’s.

“I think in some cases people are coming in with a higher deposit because, again, if you want to stand out compared to other offers – obviously people will notice that,” he told CTV Vancouver.

2. Do your home inspection early

It used to be that you could include a home inspection in a conditional offer, but that practice all but gone by the wayside in this frantic market. Many potential homeowners are now opting to take their home inspector with them to open houses, where dozens of other buyers are doing the same thing.

“It’s really crazy,” said home inspector Shawn Anderson. “I was just in one recently where it was so packed it was like they were giving away free wine.”

With some people putting in bids on multiple properties before actually winning a bidding war, this can add up to thousands of dollars in extra costs during house hunting.

3. Write a personal letter

Although it’s far from a requirement to pen a magnum opus to the current owner of the home, Metro Vancouver realtors say it’s worth the effort in a bid to make a personal connection to the seller.

Serra said explaining why you want the home can give interested parties an advantage over others.

“We want to appeal to the seller and make sure our offer stands out over someone else’s,” he said.

In its tips for writing a letter, Realtor.com says homebuyers should use flattery whenever possible, and compliment the current owner on the condition or décor of their home. In a market like Vancouver, where many heritage homes are torn down to make way for newer buildings, it can help to mention if you’re planning to keep the home intact.

4. Appeal to the seller’s timeline

Your needs should come last when it comes to the real estate sale, says Serra. Home sellers don’t want to be bogged down while interested parties secure a mortgage or sell their current home, so try to make things work in the timeline they want. They may have purchased another property and don’t want to wait around to get out of their current residence.

New buyer Kyle Gould says he’ll take any advice he can get. Just moving to B.C. from Ontario, Gould says he has been hit by “sticker shock” and a big reality check about the market.

“It kind of smacked me in the face that it’s a wild game out here,” he said.

Source: CTV Vancouver
http://bc.ctvnews.ca/how-to-win-a-real-estate-bidding-war-in-metro-vancouver-1.2804164

Average Metro Vancouver home price climbs 20% in January

February 22nd, 2016

Vancouver’s hot real estate market isn’t showing signs of slowing. January saw year-over-year growth of more than 20 per cent for the Metro region, according to the Canadian Real Estate Association.

That brings the average price of a home in Metro Vancouver to $775,300.

Thanks to hot markets in B.C. and Ontario, the national average home price grew a staggering 17 per cent to $470,297 – but without those two provinces, there would have been a decline of 0.3 per cent to $286,911.

“January 2016 picked up where 2015 left off, with single family homes in the GTA and Greater Vancouver in short supply amid strong demand standing in contrast to sidelined home buyers and ample supply in a number of Alberta housing markets,” said Gregory Klump, CREA’s Chief Economist in a statement.

“Tighter mortgage regulations that take effect in February may shrink the pool of prospective home buyers who qualify for mortgage financing and cause national sales activity to ease in the months ahead.”

New rules for mortgage rates took effect on Tuesday. Canadians are now required to put down a minimum of 5 per cent for the first $500,000 and 10 per cent for every dollar amount after that.

Two-storey single family homes posted the largest year-over-year gains nationally of nearly 10 per cent, followed by one-storey homes at 6.9 per cent, townhouses at 6.5 per cent and apartments at 5.2 per cent.

In stark contrast to Vancouver and Toronto’s housing markets, average home prices in Calgary saw a decline of three per cent year-over-year.

Nationally, the number of newly listed homes in January fell five per cent compared to December, and Canada’s largest housing markets such as Vancouver, Toronto, Montreal, Calgary, and Edmonton were to blame.

Source: Lauren Sundstrom, Vancity Buzz

If you’re flipping houses, expect to face tax on 100% of your profits

February 10th, 2016

News reports of insider trading and house flipping among some Metro Vancouver real estate agents has led B.C.’s Superintendent of Real Estate, Carolyn Rogers, to launch an investigation into the matter.

Earlier this week, NDP housing critic David Eby claimed that some B.C. real estate agents have been avoiding property transfer tax as well as capital gains taxes by using a clause in real estate contracts that allows homes to be flipped.

But when it comes to house flipping, Canadians need to be warned that profits from real estate may not necessarily be taxed as a capital gain, in which case only 50 per cent is taxable, but rather they could be taxed as business income, in which case 100 per cent of the profit is subject to tax.

The most recent published tax case on flipping real estate occurred just over a year ago when a taxpayer found herself in Tax Court fighting CRA reassessments for multiple years in which she disposed of six real estate properties and realized total profits of more than $100,000. While she reported them as 50 per cent taxable capital gains, the CRA said the transactions should be treated as business income and thus fully taxable. The average holding period of five of these properties was nine months and the taxpayer financed her properties via a one-year mortgage.

The taxpayer’s argument was that she wanted to keep the real estate “in order to generate rental income and extra income during retirement.” As it turned out, however, she reported significant rental losses in two of the tax years and she didn’t keep any of her properties for the long term. The taxpayer explained that the reason she sold the real estate within such a short time frame was that “rents were too low.” This argument wasn’t convincing enough for the CRA, which maintained that the taxpayer “has a lot of experience and could not have been unaware that the price of income properties is determined on the basis of rents.”

While the Tax Act doesn’t list the criteria to distinguish when profits are taxed as business income rather than a capital gain, the case law has developed a number of factors that are generally taken into account in making this determination. These factors include: the nature of the property sold, the length of time you owned the property, the frequency and number of real estate transactions you carry out, the improvements you made to the property (if any), the circumstances surrounding the eventual sale of the property as well as your intention at the time the property was acquired.

The judge, upon reviewing these criteria, concluded that the taxpayer acquired the properties for the purpose of reselling them at a profit “at the earliest opportunity,” rather than holding them as long-term investments with the intention “to build a diversified retirement portfolio,” and that the taxpayer’s main intention was to make short-term investment returns. As a result, the taxpayer had to pay tax on the profits as business income, not as half-taxable capital gains.

Using the criteria above, it’s likely that any profits enjoyed by those Vancouver real estate agents would be fully taxable as business income, especially since their intention was to profit from a quick flip. Although perhaps their bigger intention was to avoid getting caught in the first place.

Source: Jamie Golombek for the Financial Post. Jamie Golombek, CPA, CA, CFP, CLU, TEP is the Managing Director, Tax & Estate Planning with CIBC Wealth Advisory Services in Toronto

Vancouver property assessments go through the roof

January 4th, 2016

Assessed values of both Vancouver east and west side single-family properties climbed dramatically over the past year, according to B.C. Assessment.

It released its annual assessment figures January 4 and it provided a few examples of some individual assessments including one for an East Side, single-family, 33-foot lot, which jumped by 28% from $993,000 to $1,267,000, and one for a West Side, single-family, 33-foot lot that rose by 23% from $1,575,000 to $1,940,000.

Assessed values for strata properties didn’t grow nearly as significantly. In one example provided by B.C. Assessment, a West Side low-rise strata unit increased by 8% from $615,000 to $662,000, while the value of an East Side high-rise strata increased 6% from $381,000 to $405,000.

“The real standout [in Vancouver] this year would be the market movement for single-family properties. You would probably have to go back — if you went back to 1980, there’s probably only two or three other times when single-family properties in Vancouver have moved by this much this quickly,” Jason Grant, regional assessor for B.C. Assessment, told the Courier.

“What really contrasts this year as well is the strata market would really be down in that five to 10% range, so it’s not moving the same amount. It’s a significant contrast this year.”

Grant added that in any given year there might be extreme pockets of movement, but what’s notable this year is that the assessed value of the majority of single-family properties across Vancouver climbed by between 15 and 25% — and some in excess of that figure.

The fact many East Side residential properties, on a percentage basis, outperformed West Side ones also doesn’t happen very often, he said.

Property owners should note that the assessment roll reflects market values as of July 2015 and the value of many single-family properties have grown — in some cases significantly — since then.

“So the other big difference this year is people might open their assessment and it’s reflecting July values and their values might have risen fairly dramatically since then depending on whereabouts they’re located. That also doesn’t happen very often to that degree,” Grant said.

B.C. Assessment sent 37,000 warning letters, in a province of more than 2,000,000 property owners, advising of extreme changes in assessments — that is, if a property’s assessed value was going up more than 15% above the typical for the taxation jurisdiction.

Grant said 22,000 of those letters went to property owners in the Greater Vancouver region.

“If the typical was 25% in a particular jurisdiction, we would send letters to people who went up 40% or above,” he explained. “… You probably wouldn’t get a letter in Vancouver unless you were going up more than about 40%. If you’re in the 20 to 30% range or the 25-35% range that, believe it or not, is fairly typical.”

Assessments for single-family properties in many Lower Mainland communities including North Vancouver, West Vancouver, Burnaby, Tri-cities, New Westminster and Squamish also saw large assessment increases in the 15 to 25% range, but assessed values of single-family and strata properties outside the Lower Mainland didn’t grow as much. They ranged from 0-10%.

Overall, the Greater Vancouver region’s total assessments increased from $546.7 billion in 2015 to $636.2 billion this year.

Assessments are in the mail this week, but they can be found online already. B.C. Assessments’ e-valueBC service went live January 1.

It’s been overhauled since last year. Now it’s map-based, so you don’t have to know the address of a property — you can simply click on it. The site allows users to check other properties’ assessed values and compare them to their own.

Typically, only 1-2% of property owners ask for a review of their assessment, a figure that usually doesn’t change even in years where assessment values rise significantly. A notice of appeal must be filed by February 1.

Grant said changes in assessments don’t automatically translate into a corresponding change in taxes.

“It’s going to depend on where you are relative to the average,” he said.

So, what should property owners expect next year?

“We are already, believe it or not, six months in towards our next valuation cut off of July 2016 and the market has moved significantly already since July. So if it keeps on this trajectory, there will be an increase again next year for 2017,” Grant said.

Source: Naoibh O’Connor, Vancouver Courier

Vancouver real estate prices up an incredible 18% over 2014

January 3rd, 2016

B.C. is buoying the country’s residential real estate market, according to a forecast update from the Canadian Real Estate Association (CREA). Prices increased 11.5 per cent, significantly bolstering the national average, while sales activity increased 21.4 per cent in 2015 over 2014 – and those figures aren’t just for Vancouver. The association, however, expects increases in sale prices in B.C. to continue but to drop to a more modest two per cent next year, down from an unprecedented 11.5 per cent in 2015.

Over the last 12 months, the Lower Mainland has bucked up not just the provincial average but also the national average. Prices increased 18 per cent over the last year in Greater Vancouver and 12.3 per cent in the Fraser Valley. The benchmark price for a property in the city of Vancouver, which includes condos and townhouses, hit $930,000. Even on Vancouver Island, which hadn’t seen a full recovery since the 2009 recession, prices fluctuated at between six and eight per cent higher last month over November 2014.

The CREA, which represents the country’s realtors, also laid out its analysis of the recent changes to Canada’s mortgage rules, which affect properties sold for over $500,000. “Larger more expensive housing markets will be affected most,” said Gregory Klump, CREA’s chief economist, in a statement. “Unfortunately, the regulatory changes will also cause unintended collateral damage to housing markets beyond Toronto and Vancouver, including places that are facing economic headwinds from the collapse in oil prices.”

Source: Jacob Parry, BC Business

Canada’s mortgage rules tightened to cool off red-hot Vancouver and Toronto markets

December 11th, 2015

The federal government is attempting to take some momentum out of the country’s most expensive — and frothiest — housing markets in Vancouver and Toronto, announcing Friday changes to mortgage lending rules that lift minimum down payment requirements on homes listed between $500,000 and one million dollars.

At a press conference in Ottawa, Finance Minister Bill Morneau said that as of Feb. 15, buyers purchasing homes in that price range will have to make a minimum down payment of 5 per cent on the first $500,000, and 10 per cent of the dollar value above that amount.

Morneau used the example of a $700,000 home, which will now require a minimum down payment of $45,000, or an increase of $10,000 above what the existing minimum of 5 per cent would require.

“By targeting higher priced homes, we’ll minimize the impact on first time buyers,” the minister said. “This protects all homeowners, including middle class Canadians whose biggest investment is in their homes.”

Benchmark home prices in Vancouver and Toronto have rocketed higher this year amid ultra-low borrowing rates and sustained interest from foreign buyers, experts say. Each city’s boom has led to market dynamics in those centres that are “not as stable as they should be,” Morneau said.

“The motivation of the [new] policy is clear,” Benjamin Tal, economist at CIBC Economics said. “The attempt is to slow down the only two markets that are really moving (Toronto and Vancouver). Those markets happen also to be the most expensive.”

How effective the new minimums will be in cooling off those markets isn’t clear — the finance minister said the change would affect “one percent or less” of borrowers.

Fears over a possible real estate bubble in the Vancouver and Toronto areas have risen significantly as prices have surged.

In November, benchmark prices in Vancouver surged 17.8 per cent as sales soared 40.1 per cent, the region’s real estate association said.

In slightly tamer Toronto, benchmark prices increased 10.3 per cent as sales climbed 14 per cent compared to November a year ago, making 2015 the most active year on record for the country’s biggest housing market (eclipsing 2007).

The Vancouver and Toronto markets have firmly decoupled from the rest of the country, where home prices are moving at a far slower rate of about 2.5 per cent, according to CREA, the national real estate board.

What’s fueling the torrid price gains remains a matter of fierce debate, but many suspect a wave of foreign cash is playing a key inflationary role. Rock bottom interest rates are also continuing to fuel domestic demand.

“An influx of foreign wealth is one driving force, but lower interest rates — and the witches’ spell of forever-low rates—are also stirring the pot,” Sal Guatieri, economist at BMO, said in a recent note.

Source: Jamie Sturgeon, Global News

Rate cut could add fire to Vancouver and Toronto housing markets

July 13th, 2015

Sales — and prices — have hit new records in both Toronto and Vancouver this year. A further interest rate cut by the Bank of Canada could further fuel flames in the country’s two biggest real estate markets which are once again showing signs of overheating, housing watchers say.

“It’s another log on the fire for the Toronto and Vancouver housing markets,” says economist Sal Guatieri, vice president of BMO Economic Research, who expects to see a cut next week in an attempt to kickstart lagging growth.

“It’s not the amount that matters — the reduction in borrowing costs will be quite minimal — it’s the message it sends to homeowners and potential buyers that rates are going lower rather than higher and will almost certainly stay low for quite some time. That just encourages more people into the market.”

Both of Canada’s priciest cities are already swamped with far more buyers than properties for sale.

Sales — and prices — have hit new records in both Toronto and Vancouver this year. The frenzy has been driven by low interest rates, an ongoing shortage of listings and a growing sense of panic, especially among first-time buyers, that if they don’t get in now, they will be locked out of the market forever, particularly the low-rise house market.

“We are becoming concerned again about the possibility of a housing bubble in Toronto and Vancouver because prices are rising so much faster than incomes and because interest rates are continuing to fall rather than go up,” says Guatieri.

“We were much more comfortable a year or two ago when both markets seemed to have cooled off a bit and prices were rising more moderately.”

Both Toronto and Vancouver set new sales records for the month of June.

Almost 12,000 houses and condos changed hands last month across the GTA, up 18.4 per cent from a year earlier. The average sale price of a detached house was $816,583 – and over $1 million in the City of Toronto – up 14.3 per cent year over year.

Greater Vancouver’s 4,375 sales were up 28.4 per cent for the same period. The average detached house was $1.45 million – and a staggering $2.39 million for a stand-alone house in the core City of Vancouver – up 20.2 per cent from June of last year.

Condo sales skyrocketed in both regions, up 22.4 across the GTA and 35.6 per cent across Greater Vancouver, year over year.

All that demand helped push up condo prices 6.3 per cent in the GTA, to an average of $390,894, and up 5.6 per cent in Greater Vancouver to $479,450.

Last January’s surprise Bank of Canada rate cut to .75 per cent has been a contributing factor to those escalating sales and prices, says Penelope Graham, editor and spokesperson with mortgage comparison site RateSupermarket.ca.

A cut to .5 per cent, as is expected, would see the five-year fixed rate dip below the current low of 2.39 per cent and further boost the illusion of affordability, she said.

“There are more people now entering the market with just five per cent down, because that’s all they can afford. There is a real sense of urgency in the bigger markets to get in now, before it’s too late, and get in with what you have,” says Graham.

“That’s potentially putting people in a really vulnerable position in terms of their debt levels.”

Toronto realtor David Fleming says he’s seeing a surge in demand even for condos — especially under $400,000 — and younger buyers than ever, backed by low interest rates and help from their real-estate rich baby boomer parents who want only the best for their children.

“I’ve seen a serious culture change. Young buyers used to be 26 or 27 years old. They’d graduated university, worked for a few years and lived at home then rented and bought. Now buyers are cutting out those middle steps.”

He’s seeing first-time buyers as young as 22 determined to own rather than rent. And he’s hearing from people who stepped to the sidelines three or four years ago, thinking the much-talked-about bubble was about to burst.

Instead, they’ve watched prices climb further out of reach: Back in June of 2012, the average sale price of houses and condos combined across the GTA was $508,622. This June, the average sale price was $639,184.

Where the average sale price of a condo in the sought-after City of Toronto was $364,597 in June of 2012, last month’s average was $418,599.

That was up seven per cent just over June of last year as bidding wars and bully bids — long the hallmark of the highly competitive low-rise house market — have pushed up prices for well-located, unique or larger condos seen as sound investments and house alternatives for the longer term.

“That’s a testament to the froth in the house market,” says BMO economist Guatieri.

“So many people are now priced out, they have no other alternative than to get into the condo market, and that’s pushing up prices, even though there is ample supply.”

Apart from the oil-impacted markets of Alberta, Saskatchewan, Newfoundland and Labrador, Canadian house prices are holding up well and consumer confidence appears to be strong, even in the midst of growing talk about a possible recession.

“None of my clients are talking about the Big R word,” says Toronto-based mortgage broker Jake Abramowicz.

“They’re confident that rates will stay low for a very long time now and that the market — both condos and houses — will not correct anytime soon.”

Source: Susan Pigg, Toronto Star


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