Market Monitor
Home sales see small April gain
Canada’s residential resale market eked out another small gain in April, as sales activity continued to retreat from the peak reached last year, the Canadian Real Estate Association said on Wednesday.
Existing home sales in Canada’s major markets edged up 0.8 percent in April to 27,039 units after a 0.9 percent increase in March, according to CREA, an industry trade organization representing more than 90,000 realtors.
The average price rose 3.2 percent to $334,293 in April, the smallest year-over-year price increase in more than six years, CREA said.
According to Douglas Porter, deputy chief economist at Bank of Montreal, so far this year home resales are down 11 percent year-over-year, and prices are up a moderate 4.8 percent.
“The sales drop and the modest price gain are well down from years of double-digit increases, and further confirmation that the boom days are over,” he said.
The number of newly listed properties reached 52,775 units last month, up 1.8 percent from the previous month. The differential between the increase in sales and the number of new listings resulted in a “more balanced” resale housing market, according to CREA.
“This means buyers face less competition in their search for a home,” CREA’s president, Calvin Lindberg, said in a statement.
The retreat in house sales activity in Canada is still far from what has occurred in the United States.
“Notably, no city in the country has reported a price decline from year-ago levels over the first four months of the year, so the slowdown is still far from mimicking the U.S. experience,” Porter said.
But the more than 8 percent increase in the number of new listings this year shows that another period of double-digit price gains is not coming soon, the economist said.
Market Monitor
Toronto Real Estate Update
GTA resale housing market moderate in April, but prices up
With 8,762 houses sold in the Greater Toronto Area, April’s resale housing activity was down seven per cent from the record 9,452 transactions from the same timeframe a year ago, Toronto Real Estate Board President Maureen O’Neill announced today.
“The market is showing signs for a healthy 2008 compared to the diminished activity we saw in the first quarter of the year,” said Ms. O’Neill. “We continue to experience a supply and demand situation and to-date, it remains a sellers market.”
Sales activity however, was markedly different in the 416 and 905 regions. With 3,467 transactions in the City of Toronto, sales were down 10 per cent from a year ago. The 905 region was down five per cent from April 2007 sales, with 5,295 homes changing hands.
April’s GTA average price was $398,687, up eight per cent from the same period a year ago. In the City of Toronto, the average price was $446,781, up six per cent from last April. In the 905 region the average price increased five per cent compared to a year ago, to $367,196.
Several neighbourhoods experienced strong sales in April.
Scarborough East (E08) saw an eight per cent overall sales increase compared to April 2007, driven by robust detached home sales.
Caledon (W28) experienced a 15 per cent increase compared to the same timeframe a year ago as a result of strong condominium sales.
Condominium sales also drove Willowdale (C07) to a 32 per cent increase from a year ago.
In Thornhill sales increased eight per cent from last April due to strong detached home sales. “The number of listings on the Toronto Real Estate Board’s Multiple Listing Service has increased to 24,539, up seven per cent from a year ago, which is good for homebuyers, who will find a greater range of options in the market,” said Ms. O’Neill. “With prices continuing to appreciate and increased listing inventory there are favourable factors in today’s market for consumers.”
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Market Monitor
GTA real estate market slows
Low inventory levels kept the Greater Toronto Area resale housing market brisk but well off record levels last month, Toronto Real Estate Board President Maureen O’Neill announced today. “Overall sales in the GTA declined 22 per cent compared to March 2007, 27 per cent in the City of Toronto and 18 per cent in the 905 suburbs,” said Ms. O’Neill. “It’s important to recognize though, that despite the worst winter in decades, 6,631 homes changed hands last month in the GTA and that is still a significant number.”
Diminished listing inventory, which at 20,533, was down six per cent from a year ago, kept prices strong in March. Compared to last March, the average price in the GTA rose four per cent to $380,338 and two per cent in the City of Toronto to $404,361.
As well, a few neighbourhoods experienced increased sales activity last month.
Bowmanville (E17) saw a three per cent increase in transactions compared to March 2007, driven primarily by strong detached home sales.
Sales in Burlington (W25) were up 18 per cent compared to a year ago, with brisk activity in most housing categories.
Thorncliffe Park (C11) saw a six per cent overall increase in transactions, based mainly on semi-detached sales.
Increased semi-detached transactions also drove sales in Georgina (N17) up one per cent compared to last March.
Ms. O’Neill says March’s moderate performance isn’t disquieting given that Canadian economic fundamentals are holding steady.
“Forty per cent of international households that come to Canada settle in the GTA, giving us robust immigration levels; employment and wages continue to be strong; borrowing costs remain at historically low levels and there is a wide variety of mortgage products from which to choose,” she said.
“This means that there is a steady demand for housing and consumers should have the financial resources to buy homes; with such pent-up demand it is an excellent time to sell your home.”
“We remain concerned about the land transfer tax in Toronto and the economic slowdown in the United States,” added Ms. O’Neill. “Home sales in the City of Toronto spiked towards the end of 2007 probably in a bid to avoid the Toronto land transfer tax, but have since dropped off since the introduction of the tax.”
See the Toronto Real Estate Board’s Market Watch Report »
Clients & Customers
Young homebuyers savvy
Today’s young adults aren’t about to let lingering student loans, uncertain career tracks and stratospheric housing prices stop them from finding their first home sweet home. This investment-savvy generation of 20- and 30-somethings knows a hot market when they see one, and many have developed creative strategies to reach home ownership at a younger age, often without the benefit of a spouse’s salary.
Some buy their first home jointly with a friend or sibling. Others become small-scale landlords, renting out basements or extra bedrooms to tenants whose rents offset the mortgage.
It’s something that a lot of people have to turn to because housing prices are just sky-high, particularly in a lot of the larger cities,” says Brenda Bouw, author of Home Girl: The Single Woman’s Guide to Buying Real Estate in Canada. “I think a lot of people have been influenced by their parents, whose best investment has been their house. They’re feeling pressure to get into the market any way they can.”
About one-quarter of Canadians aged 18 to 34 are homeowners, according to a recent survey by the Canadian Association of Accredited Mortgage Professionals.
See story in the Windsor Star »
Buying Strategy
Is Title Insurance Right For You?
Title insurance is growing in popularity in Canada. But what is it exactly? Should you get it? Do you need it? Whether title insurance is right for you is something you should discuss with your lawyer, as it depends on the circumstances of your transaction. This article will provide you with some background information about title insurance to help you make an informed decision.
Title to Property
Title insurance is unlike any other kind of insurance. It is not house insurance which only protects the contents of your home or its structure and for which you have to pay a monthly premium. Rather it protects your ownership to the property and protects you against many factors. Unlike house insurance, you only pay a one-time premium with no deductible. Title insurance usually covers all legal expenses related to restoring title, meaning that you do not have to take time off work and deal with the added stress needed to defend yourself.
Title is the legal term for ownership of property. Buyers want a “good and marketable” title to a property. A good title means that the property is appropriate for the buyer’s purposes and a marketable title means the buyer can convey this title to someone else. Public records are usually “searched” before the closing to determine the previous ownership of the property, as well as prior dealings related to it. The search will reveal very valuable information such as existing mortgages, liens for outstanding taxes, and utility charges, that may be registered against the property. The buyer usually expects to buy a property that is free of such claims. This means that such problems must be cleared up before the closing. For example, the seller’s mortgage will be discharged and outstanding monetary expenses will be paid for at closing.
However, problems regarding title may not be discovered before closing, or are not remedied before closing. Such defects can make the property less marketable when the buyer tries to sell it and, depending on the nature of the problem, they can also cost money. For example, the survey might have failed to show that a dock and boathouse built on a river adjoining a vacation property was built without legal permission. The buyer of the property could be out-of-pocket if he is later forced to remove the dock and boathouse. Or, the property might have been conveyed to a previous owner fraudulently, in which case there is the risk that the real owner may come forward at some point and demand their rights with respect to the property.
What does the Title Insurance protect?
There are a series of matters which are covered by a title insurance policy that deal with events that occur after the date of the purchase. These include fraud and forgery after the policy date, matters that are obviously not protected by the lawyer’s usual title opinion given effective as of closing. There may also be some cost savings that can be achieved from title insurance.
Title insurance policies can be issued in favour of a purchaser (on new/resale homes, condos and vacation properties), a lender, or both the purchaser and lender. Lenders will sometimes require title insurance as a condition of making the loan. Title insurance is made to protect purchasers and/or lenders against loss or damage sustained if a claim that is covered under the terms of the policy is made.
In addition, there are many types of risks that are usually covered under a title insurance policy such as survey irregularities, forced removal of existing structures, unregistered easements and rights of-way, lack of pedestrian or vehicular access to the property and many more. For a risk to be covered, it has to have existed as of the date of the policy. However, as with any type of insurance policy, there are certain types of risks that might not be covered, such as, native land claims and environmental hazards. Before obtaining a Title Insurance, discuss with your lawyer or real estate agent what risks are covered and what are excluded.
How Long is the Insurance Coverage?
In the case of title insurance covering the purchaser, title insurance remains in effect as long as the insured purchaser has title to the land. Some policies also protect those who received title as a result of the purchaser’s death like certain family members to whom the property may have been transferred for a nominal consideration.
In the case of title insurance covering a lender, the policy remains in effect as long as the mortgage remains on title. A lender covered under a title insurance policy is insured under the condition that the lender suffers actual loss or damage with respect to a risk covered under the policy. This means that lenders are usually covered up to the principal amount of the mortgage.
If you feel that Title Insurance is right for you and would like more information, contact a local real estate agent or lawyer. They will be more than happy to answer any of your questions and guide you through making a decision.
