This weeks top stories include how home sales increased slightly from February to March but sales were still down 15% year over year, how the competition bureau lost their five year battle with the Toronto Real Estate Board over a technicality, how Royal LePage and Google have teamed up to provide a new property listing service for home buyers, how Canada has lost it’s status as an economic superstar in the world’s eyes, how the Bank of Canada left it’s overnight lending rate unchanged yet again, how Canada’s housing market is drawing big money from foreigners and how the condo market is still to hot for majority of the banks.
March saw home sales increase from the previous month slightly in quite a few major cities across Canada but purchases were still down year over year by a whopping 15.3%, according to the Canadian Real Estate Association (CREA).
Average sale prices rose 2.5%, which is dismal compared to previous increases. This was the lowest gains on record for the past two years. The softening of the market is being attributed to tighter mortgage lending guidelines implemented last year with low mortgage interest rates not being enough to currently sway buyers. CREA president Laura Leyser commented, “National sales have been holding fairly stable since last summer. We’ll be watching closely as the spring market picks up to see whether the March sales increase marks the beginning of an improving trend.”
CREA went further and noted that some of the decline could also be attributed to the Easter weekend that gave an extra weekend day at the end of the month but I don’t think that this was a major factor in the numbers. New listings also increased 3.2% in the month of March, with Toronto leading the uptick in listings. What do you think of the latest numbers? Are they good or bad in your eyes? Please comment below.
After a long enduring battle, the federal Competition Tribunal has finally dismissed the case regarding access to the MLS database on the basis of a technicality. The federal Competition Tribunal went further and has also awarded damages to the Toronto Real Estate Board (TREB).
The decision was released on Monday of this week when the tribunal ruled that the Toronto Real Estate Board (TREB) was not liable for anti-competitive behaviour as the case was initiated under the wrong section of the Competition Act. The decision came as a surprise to many after the grueling battle, which lasted for roughly five years, came to a close.
TREB is the trade association for roughly 35,000 realtors across the Toronto region. The goal of the battle was to force real estate boards across Canada to provide more open online access to MLS data. TREB’s stance was that they were protecting clients privacy along with the proprietary Multiple Listing Service (MLS) system. The door is still open to refile the complaint. Do you think that the Competition Bureau should refile? Please comment below.
Royal LePage, one of Canada’s largest real estate marketing firms, has teamed up with Google to try and provide home buyers with more information about the properties that they are looking to purchase. This was the latest news released on Tuesday of this week as Royal LePage and Google both work with the industry’s national association to get the end result they desire.
According to Royal LePage, the new website will integrate data that is currently shared through the Canadian Real Estate Association (CREA), while utilizing web and mobile technology to create an environment where data is easily accessible to all. Google will use their assets, Google Maps and Streetview, to add to the neighbourhood information and provide images to display properties with the requested information. What do you think? Is this something you would consider using? Please comment below.
The International Monetary Fund (IMF) is now continuing to advise the policy makers in Canada to watch their step as the IMF’s new forecast for the economy continues to be weak and exceptionally vulnerable to shocks. The IMF noted that the economy will slow to 1.5% this year, which was only 1.8% last year, and will pick up steam in 2014 with gross domestic product (GDP) reaching 2.4%.
The IMF also stated that these numbers could easily be downgraded if the European crisis worsens. The IMF was noted as stating, “The main challenge for Canada’s policy-makers is to support growth in the short term while reducing the vulnerabilities that may arise from external shocks and domestic imbalances. Although fiscal consolidation is needed to rebuild fiscal space against future shocks, there is room to allow automatic stabilizers to operate fully if growth were to weaken further.”
The news that stands out in my mind about the IMF’s comments were directed at the Bank of Canada (BoC). The IMF stated directly to the BoC that they should not even consider tightening monetary policy until the economy begins to show signs of improvement and strength. The IMF commented, “The current monetary policy stance is appropriately accommodative and the beginning of the monetary tightening cycle should be delayed until growth strengthens again.”
BoC governor Mark Carney, as of recently, has stopped making comments suggesting that interest rate increases were right around the corner but all signs point to higher interest rates in the near future. Seven of nine analysts currently feel that the overnight lending rate should stay at 1%, with the other two stating that we require an additional quarter point decrease. All analysts felt it was time for Mr. Carney to stop the talk of raising interest rates and adopt a more neutral stance that rates won’t rise until next year. What do you think? Please comment below.
As predicted, the Bank of Canada (BoC) left the overnight lending rate unchanged yet again. Canada’s economy continues to be closely tied to the U.S. and our economic fate rests strongly on what happens south of the border.
If the U.S. has a solid recovery, we can expect exports to rise and growth to expand. The BoC now estimates that the Canadian economy will expand by 1.5% this year, which is down from the 2% they previously anticipated. The economy is poised to expand by 2.8% next year and has surpassed the previous expectation of only 2.7%.
The U.S. economy continues to expand at a modest pace. The U.S. is expected to expand by 2% this year and 3.1% next year, which should help boost Canada’s economy. The BoC’s stance on interest rate hikes is still the same. They’ve advised that interest rates will rise in the near future but I think our interest rate hikes are going to be tied directly to what the Federal Reserve does. What do you think? Please comment below.
It seems that Syrians, Europeans and Egyptians have caught the Canadian housing bug with more and more coming to Canada to put their money into a more stable investment. Area’s like Oakville and North Toronto have seen an increase in Europeans.
Montreal has seen an increase in Syrians and Egyptians looking to settle in the exclusive area of Westmount. Many originally planned to move to the U.S. but have found that Canada may provide a better style of living than our U.S. counterparts and have decided to stay here.
Andy Taylor of Sotheby”s Toronto office commented, “The lack of inventory is a big problem in the high end market” so agents are having to find their own properties rather than look to the MLS system.” Sotheby’s stated that it has done more international business in the last 18 months than it has in the last six years.
“What we are seeing is very wealthy high-net worth individuals who see the Canadian real estate market as undervalued in their world, in terms of what else they are looking at and what else they own. They see this as a stable country. They love our currency. And they see cities that have changed dramatically in the last 20 years and are much more appealing to an international buyer.” What do you think of these comments and the new surge of buyers? Please comment below.
Canada’s condo market may be cooling, but it’s still too hot for the Bank of Canada’s (BoC) comfort. Even though in April’s Monetary Policy Report, the bank noted that home building had declined significantly during the first quarter of this year but condo’s continue to be a major concern for the BoC.
“Despite the recent moderation in the rate of new housing construction, there are still signs of overbuilding, particularly of multiple-unit dwellings in some urban areas.” the bank wrote. “The resale housing market has shown some signs of stabilization in recent months, following the easing in both activity and prices from the high levels reached between the latter part of 2011 and early 2012.”
Still, valuations in some segments of the housing market remain Back in December of last year, we had the Bank of Canada (BoC) make comments that the Toronto condo market was out of control as investors caused over construction beyond the demographic demand for it. This would lead to a sudden correction in prices, according to the BoC.
If the condo bubble were to burst, it would create a downward spiral that could affect many aspects of the Canadian economy. The supply of new high rise units hit 21,262 in the month of February. This was roughly 34% more than during the same period the previous year. This almost surpassed the previous record set in October of last year where new high rise units had reached 21,696, according to numbers released by RealNet Canada Inc.
There are currently roughly 61,000 new units under construction, which is the most on record ever in the history of condo development in Canada. This could be the reason why we have seen condo developers abandon current projects and sit on the sidelines to see what happens. After all, sales of high rise homes in Toronto have declined 34% since 2011 with prices down 5.5% over the past two years. What are your thoughts? Please comment below.
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