Midtown Market Shifts to More Balanced Conditions

The number of condo sales in the midtown condo market took a slight dip in July, as did sales prices – a clear sign that buyers and sellers are now in more balanced positions. Fewer bidding wars mean less competition among buyers and more flexibility in sales price; the average selling price for a midtown condo came in at $629,908, a decrease from the $661,987 average in June. These conditions represent the best opportunity for buyers in recent years. Demand for midtown condos in the third quarter will likely continue to reflect the softening that typically occurs over the summer months, followed by renewed strength in the final quarter of the year.

In the midtown C10 area there were 25 condo sales in July, as compared with 32 units that were sold in July of last year. The supply of resale condos has decreased slightly month-over-month, with 49 units for sale as of the beginning of August, as compared with 54 units that were for sale at the beginning of July. There were almost as many units available on the market in July as there were at the same time last year, when there were 52 units for sale, and the number of sales is down year-over-year – yet selling prices have increased by 19%.

The number of days on market (DOM) for units sold in July ranged from 6 days to 86 days – a significantly larger margin as compared to the range of DOM last month.

Midtown condo selling prices varied in the higher bracket, with selling prices ranging from 94% to 122% of asking price (a majority of units sold for under asking, confirming a shift in recent trends). The range in selling prices during the same time last year was almost identical, at 93% to 122%. This emphasizes the new position that buyers now find themselves in, as they begin to take advantage of the newly balanced conditions of the market.

Looking at condos on Merton Street, there were 2 sales last month, and 5 units are currently for sale as of the beginning of August.

Five signs you are ready to take the home-buying plunge

It may seem obvious, with today’s low interest rates, high rents and a strong housing market: If you’ve got the money, buy now.

But how to know when you are truly ready to make the leap? Not everyone who would like to buy is actually prepared, financially and emotionally. Real estate experts have recognized signs that indicate when someone is, and meeting those criteria can make the difference between frustration and success.

You’re taking financial steps

The first sign, of course, is the financial foundation upon which a potential buyer can build.

“If they have already started saving toward a down payment, that is a great sign,” said Jeffrey Baker, a real estate agent with Sutton Group in Montreal. “They have either been saving aggressively over a certain length of time and given themselves a target for the amount that will be their down payment. Or they will have had a meeting with a financial adviser or bank, who has shown them the amount they can realistically spend.”

They also should meet with a mortgage broker and gain pre-approval. Although, as Austin Keitner of Keller Williams Realty in Toronto pointed out, “pre-approval doesn’t mean they’re actually looking at your credit rating but asking questions about your income, expenses and getting to know your ratios a little bit.”

A buyer may not get the final approval if his or her credit rating is not up to snuff. But, nonetheless, “if they don’t have that done by the time they are talking to me, I encourage them to do that. Especially in this market, you want to be ready. You want to be able to act fast,” Mr. Keitner said.

You are plotting your spending

Ability to budget is key. “A well-educated first-time buyer needs to know their budgets to know where they stand,” said Russell Westcott, vice-president of Vancouver-based Real Estate Investment Network.

The move itself as well as the fees and taxes and the costs of properly maintaining a house can add considerable amounts to the down-payment and mortgage. Apartment dwellers might not think about these expenses. Whether it’s a lawn mower or a new roof, Mr. Westcott said, “they have to figure out how much their housing expenses are going to be.”

Does the new house need renovations? “As a general rule, renovation projects will take three times longer than you thought they would,” Mr. Baker said, “and cost at least twice as much as you had budgeted.”

You know what you want

Is it a condo, a townhouse or a big, fully detached home? You should decide that before you start browsing the listings.

“Until you have looked at your budget, and talked to your mortgage broker, you can’t really even determine what type of property you should be looking at,” Mr. Westcott said. “And, does it fit with your lifestyle?”

Knowing the neighbourhood where you want to be is another part of that process. It may be trendy or offer great views, but does it mean a longer commute to work, for example, or have the services – schools, supermarkets and transport links – you need?

“The buyer should ideally know what community they want to be in,” said Mr. Keitner, who has on occasion been asked by clients whether they can lease a property for a year, instead of buying it outright, to see whether it’s the right fit for them.

Otherwise, your location choice might come back to bite. “If you end up leaving the house after a couple of years, you’re going to lose money on it,” he said. “Because after your moving costs, legal costs and so on, its sale is not going to compensate you through market growth.”

You know what you actually need

For Mr. Westcott, the fourth sign that new home buyers are ready to make a serious commitment is when they have “put the focus on what they need, not what they want. Three bedrooms, two bathrooms and an attached garage – those are needs,” he said. “A want would be high-end fixtures, granite countertops or a wine cellar.”

Would-be buyers are sometimes seduced by the “bling,” he added, “and all of a sudden the budget gets thrown out the window.”

Conversely, ignoring properties that meet all your needs but not your whims will only make the already complicated process of buying a new home more challenging.

You have tempered your expectations

The final sign you are ready to take the big step is when you realize that, as Mr. Keitner put it, “there is no such thing as a perfect house. I’ve never really seen a eureka moment where it’s, ‘Oh my God, this is the place where I need to live.’” Rather, he said, the home you buy and make your own becomes the home you love.

“You have to be prepared, as a first-time homebuyer, to temper your expectations,” Mr. Westcott agreed. “You are not going to get what you want and, if you are young, you’re not going to get the style and the quality of living that your parents have.”

What’s more, Mr. Keitner said, “there’s a risk that if people don’t act on properties that they can make work, prices continue to go up. So a decision based on emotion, rather than practicalities, can cost tens of thousands of dollars.”

However, losing a home that, in retrospect, would have been the right buy is also part of the education of home buying.

“My experience with first-time buyers,” Mr. Baker said, “is that they have to live the experience of a place getting away from them to realize that sometimes the market won’t wait for them.”

Buying your first house is probably one of the most difficult decisions you will ever make. But understanding the signs of the well-prepared homebuyer will go a long way in ensuring that it’s the right one.

This article was re-posted from Augusta Dwyer of The Globe and Mail.

 

Low Mortgage Rates Showing Signs of Turning Around Housing Market

Forecasters are hiking their expectations for Canada’s housing market amid signs low mortgage rates are energizing sales, construction and prices.

The revised predictions come at a time when many economists thought that the growth in the market would be stalling. But now many experts believe the recent strength is more than simply compensation for a slow winter, although most still think the market will lose some steam eventually.

Canada Mortgage and Housing Corp. said Wednesday it expects the average price of houses sold over the Multiple Listing Service (MLS) to rise 4.5 per cent this year to $399,800. Less than three months ago, CMHC was expecting a 3.5-per-cent gain this year to $396,000, and back in June, 2013, it forecast that the average sales price this year would be just $377,300.

Its new outlook came as the latest Teranet-National Bank house-price index reading suggested that prices rose 1.1 per cent in July from June. That marked the first time in five months that prices rose by more than the historical average for that month, and the eighth month in a row that prices rose.

“Mortgage rates have hit new lows since March adding fuel to housing demand,” Toronto-Dominion Bank economic analyst Admir Kolaj wrote in a research report. “Over the medium term, we are still of the view that the housing market is bound to see a soft landing on the back of gradually rising interest rates and a moderate employment picture. In addition, there are a record number of new homes under construction, which once completed will increase supply and help alleviate some of the price pressures.”

Indeed, CMHC said it now expects that roughly 184,800 new homes will begin construction this year, up from its May forecast of 181,100.

“Recent trends have shown an increase in housing starts, which is broadly supported by demographic fundamentals,” CMHC chief economist Bob Dugan stated in a press release. “However, our latest forecast calls for starts to edge lower as builders are expected to reduce inventories instead of focusing on new construction.”

CMHC also said that it expects that about 463,600 homes will change hands over MLS this year, up from its May forecast of 457,900.

While it’s widely feared that too many condos are being built in Toronto, the city’s condo market is so far holding up better than expected.

The Conference Board of Canada on Wednesday boosted its forecast for condo resales and prices in Toronto. It now anticipates that 20,083 condos will sell over MLS in the city this year (a year ago, the Conference Board expected that number to be 19,080) at a median price of $316,744 (it previously expected that to be $310,242).

The Conference Board also raised its forecasts for resale condo prices in Calgary, Edmonton, Vancouver and Victoria, but ratcheted down its expectations slightly for condos prices in Quebec City, Montreal and Ottawa.

This article is re-posted by Tara Perkins, Real Estate Reporter for The Globe & Mail.