Investors may want to avoid this property type – or should they?

Big bank sounds the alarm about one popular real estate investment, according to multiple media sources, but is there more to the picture?

The answer is, as usual, yes.

Both the Globe and Mail and CBC sparked worry among Torontonians and investors across the country with their respective coverage of a Royal Bank of Canada report, released last week.

“Canada's biggest bank has sounded the alarm about overbuilding in Toronto's condo boom, saying the level of new units coming online coupled with existing ones that are yet to sell have the market in 'high risk' territory,” the CBC reported.

The Globe countered with its own (similar) take.

“Royal Bank of Canada economists are fretting over the condo construction boom,” the Globe wrote. “They’re flagging other issues, as well, notably that of housing affordability in Vancouver and Toronto.”

And RBC did indeed say there is a risk of condo overbuilding, particularly in Toronto.

“There were 5.7 multi-unit dwellings per 1,000 population under construction in Canada in Q1/16 or just shy of the decades-high of 5.8 units reached during 2014,” RBC economists Craig Wright and Robert Hogue wrote in their report, entitled Canadian Housing Health Check. “This level is well into the ‘high risk zone’ (4.5 units or higher).”

However, the pair also claimed the condo market has heretofore been operating at a “healthy” level.

“Healthy condo absorption has mitigated risks that arose following a spike in condo completions in early 2015,” they wrote.

“According to the Toronto Real Estate Board, condo rental activity has surged in recent years. Yet strong supply has been met with equally strong rental demand,” the pair continued. “So far, there is little evidence that condo investors who rent their units have overestimated rental demand.”

Still, there is a chance that demand will peter out and lead to an excess of units.

"The prospects for high levels of condo completions in the period ahead in markets such as Toronto, Montreal and Calgary maintain above-average absorption risks," the Wright and Hogue wrote.





Source: http://www.canadianrealestatemagazine.ca/news/investors-may-want-to-avoid-this-property-type--or-should-they-208053.aspx

Real estate optimism close to 2-year high

Canadians are confident that real estate prices will continue to rise for the rest of 2016. Bloomberg/Nanos Canadian Confidence Index reached a new 2016 high in the week ending May 20^th and real estate prices were a key factor in the gain.

“Positive sentiment on real estate has almost reached highs last touched in July 2014 and confidence scores in British Columbia have hit their highest level since Nanos started tracking sentiment in 2008,” said Nanos Research Group Chairman Nik Nanos.

Although there were fewer positive responses on the Canadian economy; there were rises for personal finances including mortgages, job security and real estate.
Ontario was the only region that showed lower overall confidence and nationally, homeowners were more optimistic than renters.



Source: http://www.canadianrealestatemagazine.ca/market-update/real-estate-optimism-close-to-2year-high-207930.aspx

CMHC releases Q2 housing market outlook

The Crown Corporation released its long-term economic and housing forecast Wednesday morning.
It expects housing starts to slowly decrease over the coming years.

“On an annual basis, housing starts are expected to range from 181,300 units to 192,300 units in 2016 and from 172,600 units to 183,000 units in 2017, a slight upward revision from our previous outlook, but a slowdown compared to 2015 when there were 195,535 starts,” CMHC said in the report.
Home sales, meanwhile, are expected to moderate or increase in 2016 over last year’s total and decrease next year.

“There were 505,673 Multiple Listing Service® (MLS®) sales recorded in 2015,” CMHC said. “Sales are expected to range from 501,700 units to 525,400 units in 2016, but are expected to be in a lower range of 485,500 units to 508,400 units in 2017.”

The average Canadian home price is expected to continue to increase in the next two years, meaning CMHC doesn’t expect any sort of wide-scale correction.

“The average MLS® price is forecast to be between $474,200 and $495,800 in 2016 and between $479,300 and $501,100 in 2017. These levels are higher than the 2015 average price of $442,999,” CMHC said.

When assembling its outlook, CMHC said it looks at global as well as Canadian-specific economic conditions.

While the global economic growth is expected to slow this year before rebounding in 2016, CMHC predicts Canada’s growth is expected to accelerate in 2016, led by manufacturing exports and increased public spending.

Employment, however, is expected to increase to 7.2% this year before dropping to 7% in 2017.

“As the economy adjusts to lower oil prices and with the announcements of higher public spending, employment trends are projected to improve in 2017,” CMHC said.







Source: http://www.canadianrealestatemagazine.ca/news/cmhc-releases-q2-housing-market-outlook-207566.aspx

Market boom helping investors get rich

Investors continue to cash in, with this red hot market continuing to break records.

"Housing demand is exceptionally strong across the southern regions of the province,” Cameron Muir, BCREA Chief Economist, said in a release. “Consumers appear to be particularly active in the Vancouver Island, the Fraser Valley and the Thompson/Okanagan regions.”

“Strong employment growth is helping underpin consumer confidence.”

According to the British Columbia Real Estate Association (BCREA), a record 12,969 residential sales were reported in April – a 30.3% increase year-over-year.

Total sales reached $9.64 billion in April, a 52.7% hike. To date, sales volume increased 64.3% this year to $31.2 billion. Total residential sales increased 36.2% to 28,028 units.

The average price, meanwhile, increased 17.2% year-over-year, reaching $743,640.

The BC economy added 78,000 jobs this year, representing a 3.5% year-over-year increase in job creation.

“Strong employment growth is helping underpin consumer confidence,” Muir said.

New home prices up for 12th straight month

The cost of new homes has risen again, the 12th consecutive rise, according to Statistics Canada. Nationally, the cost of new housing rose 0.2 per cent in March, the same as in February.

Ontario and British Columbia saw the largest overall gains in new home prices with the combined Toronto/Oshawa region and Vancouver advancing 0.4 per cent. The metro with the largest gain was London, up 0.8 per cent.

Windsor and Winnipeg were both up 0.3 per cent but there were declines for Saskatoon (down 0.4 per cent) and St John’s (down 0.1 per cent) while 11 of the 21 surveyed metros saw no change.

On an annual basis, new home prices were up 2 per cent from March 2015.



Source: http://www.canadianrealestatemagazine.ca/market-update/new-home-prices-up-for-12th-straight-month-207333.aspx

Millennials set to drive change in real estate market

They have the potential to be the biggest home-buying cohort in history — even bigger than their baby boomer parents.

But where Canada’s millions of millennials will end up living, and how they will impact the real estate market, has just started to play out.

The first wave — boomers’ kids who range in age from 15 to 34 and make up about one-quarter of Canada’s population — are just moving into their prime home-buying years. Many live in Toronto and Vancouver, where job growth has become a major magnet.

Already, those fortunate enough to find a decent, dependable job, rather than just contract work, have been helping drive competition for starter condos and single-family homes.

“Affordability will play a huge factor in who buys what,” says Dana Senagama, principal GTA market analyst for Canada Mortgage and Housing Corp., which has surprisingly little data so far on how the might of the millennials is being felt so far.

“They’re going to be a force to be reckoned with over the next decade, especially as they move into their prime child-rearing years and will need more space.”

Even the Toronto Real Estate Board, which assesses the state of the GTA resale market twice a month, seems to know little about the buying intentions of millennials. It’s set to launch surveys of the sector in the new year.

One thing is clear so far: Millennials have had a huge impact on the GTA rental sector because of their willingness to pay a hefty price — on average about $1,800 a month — to rent sky-high new glass-and-granite condos an easy walk from work.

That’s helped fuel the unprecedented condo boom in the GTA, especially in the downtown core where, despite thousands of new suites on the market, the rental vacancy rate remains below 2 per cent.

With the average resale price of even a Toronto condo now inching toward the $500,000 mark, developers are starting to shift their sights to building rental units, anticipating that many millennials will be renters for life.

“Millennials have much less of an attraction to owning a single-family home and a car. They’ve got much more of an attraction to a lifestyle and a job,” says James McKellar, director of the real estate and infrastructure program at York University’s Schulich School of Business.

“And many of them, especially in the United States, have become skeptical of this notion of a house as an investment.”

But with 1.5 million millennials in the GTA region alone, they’re likely to keep sending shock waves through the housing market, just as their parents did before them.

“There’s a shifting sensibility around how we define home,” says Toronto developer Mazyar Mortazavi, whose company, Tas DesignBuild, is now focusing on midrise condo projects in neighbourhoods just outside the core.

“Millennials and the subset before them, the late 30-somethings, are probably the first generation of people who are living their early adult life in urban centres. For them, home has more to do with being part of a complete community than it did in their parents’ generation, when it was about having a backyard, a picket fence and a two-car garage.”

 

Source:https://www.thestar.com/business/real_estate/2016/01/02/millennials-move-up.html

Kitchener-Waterloo realtors report strong April sales

Sales in the Kitchener-Waterloo region in April continued the strength seen in the market this year. Sales through the Kitchener-Waterloo Association of Realtors MLS were up 9.5 per cent from a year earlier. The 667 sales figure was 19.5 per cent above the 5-year average for April.

“We’re seeing record setting sales activity this month, but it’s a different story on the inventory side,” commented Charlotte Zawada, KWAR president. New listings were down 29.4 per cent on a year earlier at 1,272.

The average sale price of all residential sales increased 2.9 per cent to $367,444 compared to April 2015.




Source: http://www.canadianrealestatemagazine.ca/market-update/kitchenerwaterloo-realtors-report-strong-april-sales-206837.aspx