Baby, we got a bubble!?

[marsh]

Why the latest mortgage war was months in the making
grant robertson — BANKING REPORTER
From Thursday's Globe and Mail
Published Wednesday, Mar. 14, 2012 7:54PM EDT
Last updated Wednesday, Mar. 14, 2012 8:38PM EDT
Before it waded back into the market with deeply discounted mortgage rates last week, Bank of Montreal (BMO-T58.43-0.19-0.32%) sought to give policy makers in Ottawa a heads-up that it was about to shake up the housing market again.
The bank had also spent months amassing a stockpile of cheap funding in the bond market to backstop the discounted mortgages, a strategy designed to ensure the cut-rate loans would not lose the bank money.
The parallel moves show the strategic manoeuvring that has gone on behind the scenes to set the stage for Canada’s latest price war on mortgages. Most major lenders are now locked in battle, offering historic low rates.
After reports Ottawa was uncomfortable when the bank began offering record-low mortgage rates in January, amid ongoing warnings of household debt, BMO signalled another price cut was coming in an effort to explain its rationale, sources said.
That was before BMO’s announcement last week that it would reintroduce five-year fixed rate mortgages at 2.99 per cent, after testing them in January, and 10-year mortgages at 3.99 per cent. The move cascaded through the sector, causing a flurry of price-matching by rival banks.
It has also spawned mudslinging between the country’s biggest lenders. Royal Bank of Canada has taken out ads across the country to combat BMO’s publicity push, pointing out fine-print restrictions on BMO’s mortgage offers compared to its own. That prompted a flurry of rebuttal ads from BMO.
Meanwhile, CIBC has launched a cash-back campaign hoping to lure customers of other banks to switch lenders.
In an interview, Bank of Montreal chief executive officer Bill Downe said his bank took steps to ready itself for the attack on prices. “We were able to plan for that offer in a way that preserved our margins,” Mr. Downe said.
The bank has been stockpiling cheaper funding in the bond market over months, which it planned to unleash in advance of the spring mortgage season. The move has left rival banks with little choice but to introduce comparable rates on a variety of offerings, even though some are facing unattractive margins.
Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and a host of others, including credit unions, have put similar mortgage promotions in the market, usually involving 4-year fixed rates and 30-year amortizations, as opposed to BMO’s offer of 25-years and a five-year rate.
Mr. Downe would not comment on discussions BMO may have held with Ottawa. However, after reports that policy makers were uncomfortable when the bank began offering record-low mortgage rates in January, BMO is said to have signalled to Ottawa that another price cut was coming.
At a time when government and regulators are trying to warn Canadians about the perils of rising household debt levels, the bank’s goal was to explain to policy makers that the discounts aren’t risky or irresponsible from a lending perspective.
But market watchers suggest the reason behind BMO’s high-profile push on mortgages is to regain market share the bank has lost since 2007, when it decided to stop using mortgage brokers.
BMO wanted to increase margins by bringing mortgage sales inside its branches, rather than use commissioned middlemen to sell the products. Branch sales also allow the bank to cross-sell customers on other products.
Since 2007, BMO has seen its market share on mortgages fall significantly, to about 6.5 per cent from more than 9 per cent as a result. In a $1.1-trillion mortgage market, that drop is worth billions to the loan book. It also comes at a time when profit margins have also shrunk, due to low interest rates, putting added strain on the balance sheet.
“You can see that [BMO] are really aggressive in the market right now. And at 2.99 per cent, their spreads are tight and getting tighter,” said Robert McLister, a mortgage adviser in Vancouver and author of the Canadian Mortgage Trends blog. “So they’re obviously trying to get their name in headlines and start to get their market share going in the right direction.”
The drop in market share at BMO in the past four years is a key risk for CIBC, as it looks to potentially exit the mortgage broker channel in search of fatter margins. CIBC confirmed last week that it is looking to sell its FirstLine mortgage broker business to “put more emphasis on branch mortgage originations.”
Analysts are now concerned that CIBC will see a significant drop in market if the strategy backfires. BMO, for example, grew its mortgage book 2 per cent in 2011, which was well behind its peers who used brokers to push more sales.
“The execution risk inherent to [CIBC’s] bold decision to exit the mortgage broker distribution channel in Canada warrants a discount” on the stock price, National Bank Financial analyst Peter Routledge said in a research note.
At BMO, Mr. Downe said his bank has held talks with policy makers in Ottawa about the bank’s strategy of promoting shorter amortizations, something Ottawa favours.
“For the past two years, we have been advocating publicly for shorter amortizations and we have shared this point of view with government,” Mr. Downe said. “We have structured our offering based on maintaining margin,” he said.

 

[daveto]

Obviously, by not actually replying to his point directly you've conceded it, but if you go back through the thread there are multiple discussions and comparisons re: Toronto's condo situation to Miami's going back as far as 2009

Great stuff. Would you have the post numbers? (so I can compare them to Eug's post, and therefore respond appropriately, rather than responding to a strawman argument or one predicated on semantics). Thx

1)
Now that question about knowing with certainty about a 20% climb or a 20% pullback? To be honest, I think that's a meaningless question, because nobody knows with certainty what's going to happen

Hmmm...according to Jeff316, "obviously, by not actually replying to his point directly you've conceded it".

 

[jeff316]

Great stuff. Would you have the post numbers? (so I can compare them to Eug's post, and therefore respond appropriately, rather than responding to a strawman argument or one predicated on semantics). Thx

You can find those if you're interested enough. Seach the topic with Google. I did and it comes up at least three or four times. You're good with Google when it suits your purposes

When people say "it's different this time" and "it's different here" sarcastically they're either ignorant or lazy. Your posts are always intelligent, if not neessarily always accurate, so it's obvious that you were the latter. And that's ok, we all get lazy from time to time. Happens to the best of us.

 

[Eug]

dave, you're making up a hypothetical scenario that doesn't have a basis in reality. You can't guarantee anything more than I can. The reality here is that there is no such guarantee when predicting the future of the real estate market. If one says his stated opinion of the future of the real estate market is a guarantee, then either he's lying or is just foolish. Fortunately, most people buying homes are smart enough to realize that.

In our cases, we weighed the possibility of a pullback vs. our desires to get out of smaller homes or to get out of renting, and made the choice to buy... in a sellers market, when prices were at record highs.

Those of us who bought in 2007? In retrospect we've done reasonably well. Those of us who bought in 2011 or 2012? That's less clear, but that's OK for the people I know who bought, because they needed a place to live, didn't want to rent, and plan to stay in their homes for the long term.

Eug, I'm confused.

I've looked back over the thread, and I don't see anyone comparing TO to the Miami or Las Vegas RE market. Which post you are referring to?

The Search Thread function is at the top of the page, but I've done it for you. Here is just one example.

http://urbantoronto.ca/forum/showthread.php/10523-Baby-we-got-a-bubble!?p=475570#post475570

Man housing is going to crash HARD. I hate to be someone who just bought a 350K / 600 sq ft condo in Toronto, LOL. That baby will drop easily $50K/year. So by year 3 you'll be at about 200K prop value & a 330K mortgage LOL. Maybe even worse, like those idiots in Miami and vegas who still have $300K mortgages on $50K condos LOL.

BTW, one of your posts was on the same forum page as that post, so we know that you were actually around at the time.

 

[interested]

1) Me: I bought a detached house in 2007 thinking the market could pull back 15%. I was already a townhouse condo owner downtown, but felt my place was too small for the two of us. Refused to get involved in a bidding war, and got the place for well under asking (motivated seller).

2) Friend: Bought in 2007. Wondered what the market was going to do, and considered the possibility of a downturn. But, they had moved from Calgary, and were sick of rentals so they bought a semi-detached. I don't think they were in a bidding war, but I don't know if they would have entertained the idea of one if it had come to that. I don't know if it was under asking or not, but I seem to recall it was reasonably priced.

3) Sis: Bought in 2011. Not sure what the market was going to do, but wondered if the market was on the high side. Still, she was moving to Toronto for work, so she needed a place to live, so she bought a place to live. Refused to get involved in a bidding war, and got the place for well under asking (motivated seller).

4) Mom: Bought in 2 weeks ago. Worries about money because she's a worrywart, but wanted to be in Toronto with her kids so she bought a condo in Toronto. Her kids refused to allow her to get into a bidding war (not that she likely would anyway), and she got the place for well under asking (motivated seller).

Now that question about knowing with certainty about a 20% climb or a 20% pullback? To be honest, I think that's a meaningless question, because nobody knows with certainty what's going to happen.

So, back to me: I predicted a 5% - 15% pullback from 2007 pricing. The reality is that prices have gone up well over 20% since then. Oh and when I bought that pre-construction townhouse unit in 1999, I already felt the market was high, but realized in retrospect this was not the case in 1999 when I finally moved in two years later. And again, the reason I bought the place in 1999 was because I was sick of renting.

Any regrets? Yes. I don't like shoveling snow off a big driveway, but I'm too cheap to hire a snow removal service. I'm glad I cheaped out this year, because probably I've spent about 2 hours this entire winter doing that. In future years I may succumb though and hire a snow shoveling service.

Eug,
from this post it is clear that your family are very disciplined. assuming that all the purchases were made at a true discount to market value as opposed to a discount to an inflated asking you have done very well and exercised judegement.
The concern for most of us is that the bidding wars going $200K above value indicates the opposite behaviour. The question of course is: how many buyers are in your camp vs. those viewing the market as still with potential for going up. Ifr the numbers start to favour your camp....prices will halt or drop. If the numbers favour those willing to buy at these prices (for reasons of necessity(lodging); need to down/upsize; investment or speculate) then it will be difficult to exercise the judgement you have done unless one has a lot of time (something some people don't) and one is willing to accept a fair amount of compromise, something I gather a number of people are not willing to do.

 

[Eug]

Eug,
from this post it is clear that your family are very disciplined. assuming that all the purchases were made at a true discount to market value as opposed to a discount to an inflated asking you have done very well and exercised judegement.

I think all were discounted vs inflated asking, but with IMO the discounts being greater than the amount of overpricing.

In my case I bought from an organization that owned the house, and they had no prior offers. I got the place for > 6% under asking. I thought fair price was around 3% under asking.

In my sis's case she bought from a family that had tried to sell the place with a not-so-cooperative tenant in it. When that didn't work they moved the tenant out, but still priced the place too high. I thought it was priced about 4% too high, and it was a higher priced unit than most Toronto condos so the potential pool of buyers is smaller, so that meant that it sat on the market for months. However, my sister played hard ball, much to the distress of her real estate agent. She gave them a take-it-or-leave-it offer, and they took it - significantly under what I thought was fair price. I was impressed, because her take-it-or-leave-it price was lower than what I was recommending as a starting price for negotiation.

For my mom, it was an estate sale. I thought the asking price was about 4% over fair market price, which again mean it had been sitting for a few weeks. We got it for 8% below asking.

The concern for most of us is that the bidding wars going $200K above value indicates the opposite behaviour. The question of course is: how many buyers are in your camp vs. those viewing the market as still with potential for going up. Ifr the numbers start to favour your camp....prices will halt or drop. If the numbers favour those willing to buy at these prices (for reasons of necessity(lodging); need to down/upsize; investment or speculate) then it will be difficult to exercise the judgement you have done unless one has a lot of time (something some people don't) and one is willing to accept a fair amount of compromise, something I gather a number of people are not willing to do.

Well, the crazy bidding wars are not actually the norm, so that is encouraging. They're just the most notable. I posted that case of the ugly Beach home that went for $400000 over asking too. I went to visit it and it looked like it'd likely need significant work, even just looking at the exterior. However, these are just isolated cases.

If you follow the TREB data, you'll see that home pricing averages go from about 98% to 102% of asking. Real estate agents usually realize that it's in their best interest to fairly price a home, or in the times where bidding wars are feasible, to slightly underprice a home to ensure that there is enough foot traffic coming to the home to ensure that one bidder that would bid 100% or 104% of fair price actually sees the place.

 

[OolloO]

Interesting read from cbc news today. Somewhat anecdotal, but still interesting.

Questions that I would like to know
Are we being "vancouverized"?
Will we enter a state like other major cities where buying is unheard of?


http://www.cbc.ca/news/canada/story/2012/03/14/real-estate-overseas-investors.html

Offshore buyers pricing Canadians out of housing market
Toronto bungalow sells for $421,800 over asking price in market's 'new reality'
By Prithi Yelaja, CBC News Posted: Mar 15, 2012 6:53 AM ET Last Updated: Mar 15, 2012 9:52 AM ET

Overseas investors are snapping up properties in Canada's largest cities, driving up prices and pushing ordinary Canadians out of the housing market, observers say.

Real estate experts call it the "new reality," and the high price paid for a north Toronto bungalow is the latest evidence.

This month, the three-bedroom bungalow, circa the 1960s and without much updating, sold for $421,800 over the asking price, creating a buzz among agents and other buyers.

Located in Willowdale, where similar detached houses typically sell for just short of $900,000, the bungalow at 300 Dudley Ave. was listed at $759,000.

The winning bid of $1,180,800 came from a university student whose parents live in China and own a business in San Francisco. There were four other bids of more than $1 million.

Michael Adelson represented the seller of the Willowdale bungalow. (Michael Adelson)
"The initial response was quite vociferous," said Michael Adelson, a Re/Max agent who represented the seller and received several phone calls about the deal after it was done.

"There's a lot of anger among Canadians who earn money here that they've been priced out of the market. There is some degree of anxiety about how people are going to compete with these hyper-inflated prices."

'Outrageous and borderline bizarre'
Adelson declined to discuss the specifics of the Willowdale deal, citing client confidentiality.

But CBC business commentator Michael Hlinka called the deal "outrageous and borderline bizarre."

The strong reaction to the price likely stems from how it changes the vision of affordability for average Canadians, he said.

Property markets in other large cities, such as Vancouver and Calgary, are undergoing similar pricing shocks, he said.

“We’re looking at this through a prism of our expectations growing up in Canada in the 1950s, '60s and '70s, when part of the Canadian dream was that you would own your own single-family home," Hlinka said. "But as Canada matures, we’re going to be looking at a new reality, where that may be out of reach. And I don’t think you can turn back the clock.â€

Brad Lamb says people who live in downtown Toronto will have to be rich or settle for condos. (Brad Lamb Real Estate)
Toronto real estate mogul Brad Lamb said Canadians' home-buying expectations have to change, but he doesn't believe that overseas investors are to blame.

The scarcity of the product — in this case, single detached homes — is key, he said. And as the Toronto population grows and land available for new houses becomes scarce, the competition for these homes will become even more intense.

Condos are the alternative. Already, they're the norm for families wanting to live in the central cores of cities such as New York and Chicago, he said.

"It's an illusion for people to think they can live in downtown Toronto in a detached home and not be wealthy," Lamb said. "Ordinary people can't live in central London or central Paris or central New York.

"If you want to live in central Toronto, you're going to have to live in a condo or be a millionaire. That's the reality. ... It's not a bad thing. It's the way cities evolve."

Steve Matthews, a Re/Max agent in Toronto, says inflated prices make it harder for ordinary Canadians to buy houses. (Steve Matthews)
Inflated prices, such as the price fetched by the Willowdale bungalow, do make it difficult for ordinary Canadians to get into the market, no matter who buys the house, said Steve Matthews, a Re/Max agent in north Toronto.

"It skews the market. Now, the person who lives next door and the person who lives down the street think they should get that price, too. It also generates resentment because it makes it tougher for everyone — buyers, agents, banks — so there is a ripple effect that goes beyond the immediate sale."

Foreign students drive market
As more people get exposure to Canada as an offshoot of globalization, the overseas investor market will rise, Hlinka said. As an instructor at George Brown College in Toronto, he has seen an explosion in the number of foreign students.

“When their parents come to visit, they get an idea of what real estate costs here, and they can’t believe how cheap it is. They want to buy because they think it’s a bargain.â€

In addition to China, investors pouring money into real estate are flocking to Canada from the Middle East, Korea, Russia, India and the Philippines as well, said Tony Ma, who owns HomeLife Landmark Realty in Markham.

Tony Ma, owner of HomeLife Landmark realty, says buyers from China find Canadian housing prices low, compared with what they pay at home. (Tony Ma)
About 65 per cent of Ma’s agents are Chinese and the bulk of his business comes from Chinese clients. Most are new immigrants to Canada, but about 20 per cent are foreign investors, including parents overseas who buy on behalf of their children studying in this country.

Fewer than five per cent are pure investors with no ties to Canada, said Ma, a former neurosurgeon who moved to Toronto from Zhengzhou, China, in 1998.

"Most of our buyers are part of Canadian culture. I don’t think they are going to push local Canadian people out of the market. When immigrants come to Canada today, they have money, not like when I came to Canada 20 years ago. I didn’t have money."

Last year, buoyed by his strong ties to the mainland China market, Ma’s agency sold 263 homes priced at more than $1 million, with about 40 per cent of those being all-cash deals with no conditions attached.

Chinese drawn to Canada
Canada’s stable government and banking system and the relatively low prices draw investors, he said, pointing out that while condos in downtown Toronto can sell for $800 per square foot, in Beijing, the price is $2,000 per square foot and in Hong Kong it's double that.

Moreover, to control prices, the Chinese government allows each family there to bank finance only two properties — one to live in and one to invest in — and buyers must pay 100 per cent cash for anything above the two-property limit, Ma said.

Not only are prices in Canada more affordable, homes and condos are a better value proposition, since they come ready to move into, unlike in China, where buyers get a concrete shell they have to pay to finish, he said.

“So they see an $8 million house here, they see the quality, they see the finishes and they think it’s cheap," Ma said. "They can move in today.â€

Vancouver tops the list with Chinese investors because of the city’s temperate climate and proximity to their homeland, he added.

Janet Sinclair of Re/Max Hallmark Realty Ltd. in the Beaches neighbourhood of Toronto, routinely deals with foreign investors.

“They have driven prices up," she said. "Whenever we launch a new condo downtown we get a number of Hong Kong investors and a lot of people coming over from England. People want to put their money in Canadian real estate because they think it’s safe.â€

Sinclair recently dealt with a Hong Kong investor representing a dozen buyers, who happened to be family members from back home. They snapped up units in a new waterfront condo building and are now interested in another project in the Beaches.

She also recently sold a penthouse condo in downtown Toronto to Swiss investors for $1.25 million.

“They didn’t bat an eye at the price. They said in comparison to what they pay in Switzerland, these prices are nothing. Our prices are not scaring them at all."

Builders tearing down old houses
The Willowdale buyer who paid the premium price is stinging from the negative reaction to the sale and declined to be interviewed.

Adelson said the Yonge Street corridor between Highway 401 and Finch Avenue is in demand because of the subway and its proximity to York University and Seneca College. Along with a thriving retail strip and a planned new Whole Foods, 10 new condominium projects are in the works.

The area is a magnet for certain ethnic groups, including people from the Middle East and China, Adelson said.

"It's a cultural thing. Their communities are already there. If you go down to the Danforth, their stores are not there, so that's not as attractive a location for them."

The area is also rife with redevelopment as builders tear down older homes and replace them with monster houses or two smaller units.

That’s just what a buyer from China, who recently bought a tear-down bungalow in the area for $720,000, plans to do, said Al Sinclair, the Hallmark Realty sales representative who sold him the property.

The buyer became familiar with the area through visiting his daughter, a doctor who lives there. He plans to rent out the house for two years until his building plans are approved, then tear it down and build several townhouse units.

“He thinks the Toronto real estate market has a long way to go," Sinclair said. "He’s right."

Only pockets of Toronto are of interest to overseas investors, including North York and the downtown core and not areas like Leslieville in the east end, Adelson said. Although that neighbourhood is considererd hot and the property values are rising, it has not experienced the overheated bidding wars seen farther north.

 

[Kenny]

Why the latest mortgage war was months in the making

TLDR: BoM decided to cut the middle man (mortgage brokers) in 2007 which lead to a loss of business over the last 5 years (6.5% down from 9% of the total). In order to compete, they've decided to cut rates to get headlines and get new business. CIBC is thinking about doing the same thing.

All in all, I'm all for banks competing for our mortgages. Their smaller margins translates to discounts for customers. That being said, I think the BoC has to raise rates soon, or else the banks will start targeting people who really can't afford the mortgage over the long term. We could start seeing the same sub prime crap that went on down in the U.S.

 

[Eug]

“He thinks the Toronto real estate market has a long way to go," Sinclair said. "He’s right."

Only pockets of Toronto are of interest to overseas investors, including North York and the downtown core and not areas like Leslieville in the east end, Adelson said. Although that neighbourhood is considererd hot and the property values are rising, it has not experienced the overheated bidding wars seen farther north.

I too have noticed this. It's definitely true that it's harder to buy in certain pockets than others. Willowdale is very popular but I am having trouble figuring out why. Perhaps it's the proximity to Yonge restaurants and proximity to subway are reasons, but to be honest I'm not enamoured with the area. I mean I like the area, but it's not as if it'd be my first choice, even if usual prices were $100000 lower. But clearly my opinion here is not the same as others.

Similarly, a colleague is having difficult finding a decent home for what he considers a decent price in Lawrence Park. There are a lot of rebuilds with packed in homes, and that's not what he's really interested in.

OTOH, in other areas, there are lots of homes for sale, and for the sub $500000 condo market, lots of those too, so it's possible to pick and choose.

Ironically, it seems if you want to save time it may almost make sense only to look at overpriced homes that have been sitting for a few weeks, if my experience above is any indication. After a while, sellers get frustrated, and may be more likely to deal. In fact, there was an overpriced home on the next street over that got an offer in the first week for under asking but relatively close to asking (which I thought was too much), but the seller got cocky and said no. It sat for a very long time then eventually sold for well under asking because the seller got desperate. IIRC, my sis's place also got a somewhat low offer early on for their overpriced unit, but the sellers didn't want to deal... until later after the place had been sitting for months and my sis came along and gave them a solid (but low) offer.

 

[Kenny]

Only pockets of Toronto are of interest to overseas investors, including North York and the downtown core and not areas like Leslieville in the east end, Adelson said. Although that neighbourhood is considererd hot and the property values are rising, it has not experienced the overheated bidding wars seen farther north.

That's the most interesting part of the article. It seems to imply that the surging prices outside of the core and Willowdale are not due to foreign interest.

 

[Kenny]

I too have noticed this. It's definitely true that it's harder to buy in certain pockets than others. Willowdale is very popular but I am having trouble figuring out why.

Despite what these surging prices seem to imply, Asians are generally risk averse. Willowdale is popular because lots of rich Asian people already live there. They started moving into the area in large numbers back in the 80s. Now we're getting newer rich Asians moving into the city. Despite the high cost, it's considered more of a sure thing to follow the herd.

There's also the sense that you'll experience less racism if you aren't the only Asian on the block.

 

[Eug]

Despite what these surging prices seem to imply, Asians are generally risk averse. Willowdale is popular because lots of rich Asian people already live there. They started moving into the area in large numbers back in the 80s. Now we're getting newer rich Asians moving into the city. Despite the high cost, it's considered more of a sure thing to follow the herd.

I do realize that, but why specifically Willowdale? That's something I never quite understood, but I wasn't living in Toronto in the 80s.

BTW, in the GVA, rich immigrant Asians are starting to move out to places like White Rock, etc. presumably because they're starting to get more acclimatized to Canadian life, and because a lot of nice Vancouver-proper neighbourhoods no longer have much stock left of large lot teardowns.

I guess the one thing about Willowdale now is there are still a lot of teardown properties.

 

[daveto]

Here is just one example.

http://urbantoronto.ca/forum/showthread.php/10523-Baby-we-got-a-bubble!?p=475570#post475570

Quote Originally Posted by paperchopper View Post
Man housing is going to crash HARD. I hate to be someone who just bought a 350K / 600 sq ft condo in Toronto, LOL. That baby will drop easily $50K/year. So by year 3 you'll be at about 200K prop value & a 330K mortgage LOL. Maybe even worse, like those idiots in Miami and vegas who still have $300K mortgages on $50K condos LOL

.
BTW, one of your posts was on the same forum page as that post, so we know that you were actually around at the time.

Great, thanks for the reference. But I'm confused - why are you only now responding to a quote from Dec 2010?

I'm just trying to understand why you are suddenly rebutting a comparison of Toronto to Miami/Las Vegas price decreases, and addressing that rebuttal to me?

 

[Eug]

Great, thanks for the reference. But I'm confused - why are you only now responding to a quote from Dec 2010?

I'm just trying to understand why you are suddenly rebutting a comparison of Toronto to Miami/Las Vegas price decreases, and addressing that rebuttal to me?

It should have been obvious but since you're feigning ignorance... I'm not responding to a specific quote from 2010. I'm responding to the refrain by the sky-is-falling types in this thread over the years, a refrain you have repeated. You, like this misguided soul, were trying use the US as an example of what to expect for Toronto.

 

[KA1]

Home sales rise
From The Globe and Mail-- a short while ago.


Home sales in Canada climbed 1.4 per cent in February from a year earlier, winning back some earlier slippage and indicating a fairly balanced market. But for what BMO Nesbitt Burns dubbed the "Toronto tornado."


"A rebound in new listings in Toronto and Montreal, Canada’s two most active markets, offset a retreat in new listings in Vancouver, Canada’s third-largest market," CREA said.

The regional differences are being noted by economists. Toronto has been pumped by a condo boom, while sales of pricey Vancouver homes has ebbed.

"While sales activity was solid last month, mild weather and the extra day likely pumped the figures," said Douglas Porter, the deputy chief economist at BMO Nesbitt Burns.

"With the notable exception of Toronto, price increases are lukewarm, the market looks well balanced, and is broadly moderating on its own accord," he said in a report.

"Just three cities have posted double-digit price increases in the past year (while two have seen drops), but one of those three happens to be Toronto at +10.6 per cent," he added. "... The flip side of Toronto’s strength is the ongoing moderation in Vancouver. The 18.1-per-cent year-over-year drop in sales there is by far the largest in the country, and is the mirror image of massive gains a year ago."

According to the Toronto Real Estate Board, sales in the Greater Toronto Area were up 16 per cent in February from a year earlier, though there was an extra selling day last month, and average prices up 11 per cent