October 28, 2008
Toronto Real Estate Trends
Agents told to brace for tough times at Toronto Real Estate Board annual meeting as industry leaders try to put a positive spin on an expected downturn in home sales and prices.
A crowd of more than 1,000 real estate agents and brokers, including many who joined in the boom and have yet to live through a downturn, gathered yesterday in Toronto for an industry pep talk. The message they got was to expect Canada’s residential real estate market to be rocky in 2009, but that it would be followed by a brighter picture for 2010.
In the meantime, a lot of the talk at the Toronto Real Estate Board’s (TREB) annual general meeting centred around what do to ride out the slowdown. In tough times, agents will drop out, brokerages will consolidate and cut costs, and everyone will have to make better use of technology, a panel of eight Canadian real estate company representatives said at the event.
Serious agents who stick out the downturn will have the opportunity to shine, they added, although their optimism appeared lost on some participants.
“They’re basically saying that next year is a writeoff,” one audience member told her colleagues.
The downturn may have a silver lining, causing the industry to “raise the bar” on customer service, said panelist Michael Polzler, regional director at Re/Max.
“There are far too many agents out there who don’t specialize, who do just two or three deals a year. Would you use a part-time lawyer or a part-time dentist? We need to raise the bar,” Mr. Polzler said.
The average number of housing units sold per realtor each year in Canada is just 5.7, reflecting the number of part-timers, said Phil Soper, chief executive officer of Royal LePage Real Estate Services Ltd.
There were 95,000 realtors in Canada last year, up from 77,000 in 1987, Mr. Soper said. During that time yearly industry revenues rose from $30-billion to $160-billion, he added.
As the real estate pie shrinks over the next year, agents and brokers must listen to customers and become consultants rather than marketers, said panelists Gary Hockey, president of Coldwell Banker Canada and Kimberly Fleming, regional director at Prudential Real Estate Affiliates.
The meeting came on the heels of a midmonth report from TREB showing sales for the first half of October in the GTA plummeted 21 per cent from a year earlier, and the average resale home price declined by 15 per cent.
Sales and prices in other markets across the country, including Vancouver and Calgary, have also slumped. Depending on the region, the downturns have variously been attributed to lack of affordability, the economy, and taxes.
The negative effect of a land transfer tax that came into effect in February will be reflected in Toronto’s sales numbers for October, which are due out next week, said TREB spokesman Von Palmer.
In Vancouver, agents with more experience are being asked to mentor those who haven’t gone through a downturn before, said Dave Watt, president of the Real Estate Board of Greater Vancouver, in a telephone interview.
“We’re also telling our members…we’re well funded. Our biggest concern is that for the 90 per cent of our members that will remain in the business…all of our services and the products they rely on…will not be pulled back,” Mr. Watt said.
October 23, 2008
Toronto Rental Market Report
Rental Transactions and Rental Rates both increase
Both leased transactions through the TorontoMLS system and monthly rents achieved in these transactions climbed in the second four-month period of 2008. Total units rented came to 4,297 (apartments and townhouses), up 12 per cent over the same timeframe in 2007. Meanwhile, benchmark two-bedroom apartments rented for $1,885 per month, up one per cent over the $1,860 per month recorded in the corresponding period of 2007, and in fact, rental prices in all categories rose.
The most active districts for rentals within the GTAfor apartment rentals remained in the downtown core (C01, which had 1,130 rental transactions), North York (C14, with 500 rentals), and Cooksville (W15, with 402 rentals). With townhouses, the most active districts were within Mississauga (W19 and W20, with 33 and 49 rentals respectively), and North York (C14, with 26 rentals).
As noted previously, rents in all categories of leased property increased during the May to August period. For example, bachelor apartments increased to $1,216 per month, from the $1,167 per month recorded in the middle portion of 2007, a four per cent rise. Three-bedroom townhouses saw a significant increase, up seven per cent to $1,780 per month from last year’s $1,661 figure.
See full Toronto rentals report »
October 7, 2008
From Boomtown to Bustville
For more than 12 years, real-estate prices soared and gentrification swept across Toronto. Now the party’s over. Do Toronto denizen have a clue how to survive the crumbling housing market?
The month of August marked the tipping point for Toronto real estate, and the rules of the game are now changing beneath everyone’s feet. After more than twelve years of rising real-estate values in this city, prices dropped in August by one per cent, from an average of $381,681 to $377,990. The September figures, were even worse, with prices falling six per cent from of an average of $420,182 last year to $393,647.
More telling, total home sales for August fell by 22 per cent, from 8,059 last year to 6,318 this year, and the total number of listings ballooned, from 19,145 to more than 25,000. The decline continued in September, though not as sharply. Homes sales were down 11 per cent.
This new market reality isn’t just an economic shift, it’s a cultural one as well, and everyone involved in real estate – from buyers and sellers to house-flippers and home stagers – will have to adjust.
Real estate almost everywhere in Canada has enjoyed sustained rising prices, but in Toronto, market forces seemed to be let off the leash.
As buyers flooded every neighbourhood of the city, sellers began pitting them against one another in “bid-night auctions,” where buyers were kept in the dark as they named their prices. Soon many homes were drawing 10 bidders or more, and many couples were bidding on 10 homes before finally making a purchase.
The bull market lasted so long, many of the practices turned into orthodoxy. Among the commandments of Toronto real estate: Sellers should price their homes low to attract more bids. For every additional bidder, the price will balloon by $10,000. Buyers without pre-approved financing will be ignored. Any offer conditional upon a home inspection is an automatic loser.
It was a market based upon pure desire — and greed, one in which actual physical value had nothing to do with the purchase. The price of a home was based solely on how desperately buyers wanted a particular house, and what they were prepared to do to get it.
But those days are over.
“The balance of power has now shifted from sellers to buyers,” says Sally Cook of Re/Max Hallmark Realty on Kingston Road. “Buyers have figured this out, but sellers are reluctant to acknowledge it. They are still pricing their homes aggressively, still trying to create bidding wars. They still think they dominate the market, and they don’t.”
But as punishing as the new market will be be for sellers, it’s agents that will have to make the biggest adjustment. “For the past several years it’s been hard to tell the difference between a good agent and a bad one,” says agent Sandra Pate of Postcard Homes.
Because there was no shortage of bidders for every home, says Ms. Pate, working in real estate was like working at Tim Hortons, with agents serving the next person in line. “It’s been basically an order-taking scenario,” says the 27-year veteran of the business. “The market’s been going up for 13 years. That means you can be an agent with 12 years of experience in this city and you’ve still never seen a down market. A lot of people have no idea what’s coming.”
If lower prices and fewer sales become a long-term trend, it will come as no surprise if agents start leaving the profession in droves. In the last five years, the membership ranks of the Toronto Real Estate Board have swelled by 10,000 agents, to a total of 28,089. Given that many agents who work in greater Toronto aren’t TREB members, the actual number is probably higher.
All told, half of all agents in Ontario earn their living in the Greater Toronto Area, and it’s doubtful the market can sustain any more. According to the Ontario Real Estate Association, since 2006 an average of 5,000 new agents per years have entered the profession – far beyond the more typical 1,400 agents per year back in 2000 and 2001. There are now 50,827 individual agents and brokers in the province.
No one keeps track of the number of professional home stagers in the city, but it’s a near-certainty that their ranks will thin as well. Home stagers Bonnie Dell and Marty MacPhail, who teach a course titled Home Staging 101 at Centennial College, say they’ve adjusted their class discussion to account for the new market.
“We used to put the emphasis upon getting maximum value from your home,” Mr. MacPhail says. “Now the emphasis is on selling it. The home staging itself hasn’t changed, but the expectations have.” Mr. MacPhail says that sellers used to be able to expect a return on their home-staging investment of about three or four to one. Today, home staging is marketed more defensively – as a means of ensuring your home doesn’t end up in the growing bargain bin of unsold properties.
Welcome to the new reality of Toronto real estate.
October 3, 2008
Toronto Real Estate Sales Down 6% in September
GTA Resale Housing Price and Sales Measured in September
Toronto Real Estate Board Members reported 6,424 sales of single family dwellings in September, down about six per cent from the 6,866 sales recorded during September of last year, Toronto Real Estate Board President Maureen O’Neill announced today.
However, the 6,424 sales reported for September 2008 is down just three per cent from the 6,622 figure recorded in September 2006. To keep in perspective, September 2007’s 6,866 sales was the second best figure ever recorded for that month.
The overall transaction figure for September masks significant regional differences. Within the City of Toronto sales registered 2,546, down 11 per cent from the 2,854 figure recorded in September of 2007 but down five per cent from the 2,680 recorded during the same month in 2006. In the 905 suburbs, the 3,878 sales that went through TorontoMLS were down three per cent from last year’s 4,012 sales, and down two per cent over the 2006 total of 3,942 sales.
Overall, GTA prices declined three per cent from their year-ago levels to an average of $368,549 from the September 2007 figure of $380,132. As with sales, the GTA’s regions fared quite differently on average price during the month. The average within The City of Toronto, at $393,647, fell six per cent from September 2007’s $420,182 but rose six per cent from the $371,682 recorded in the same month of 2006. Meanwhile prices in the 905 districts, at $352,071, rose marginally from the $351,641 recorded in 2007, and was up five per cent from 2006 September figure of $333,818.
Breaking down the total, 2,539 sales were reported in TREB’s 28 West districts and averaged $352,249; 1,067 sales were reported in the 14 Central districts and averaged $464,397; 1,220 sales were reported in the 23 North districts and averaged $407,424; and 1,598 sales were reported in TREB’s 21 East districts and averaged $300,772.
NEIGHBOURHOOD CORNER
East York
In the first nine months of 2008, 1,017 sales have been recorded in East York (E03). These 1,017 sales averaged $370,622, up six per cent over last year’s $348,881.Detached homes averaged $437,724, up eight per cent over the $404,314 price recorded during the first nine months of 2007. Semis averaged $412,378, up six per cent from the $388, 595 recorded during the January to September 2007 period.