cdr108
Senior Member
http://www.yourhome.ca/homes/article/593025
February 25, 2009
Tony Wong
BUSINESS REPORTER
The days of multiple offers when buying the house you were bidding on was like winning the lottery are over, says Phil Soper, president and CEO of Royal Lepage Real Estate Services.
Instead, standard offers with conditions attached are making a comeback.
"It's all about having a home inspection, approval of financing, things that were disregarded during a sellers market," said Soper, speaking at the Scotiabank real estate outlook conference in Toronto today.
Scotiabank is forecasting that Canadian housing starts will fall to 155,000 units this year, below long term replacement demand, and far below the 211,056 units registered in 2008.
"The housing boom is clearly over, and if anything, that's an understatement," said Scotiabank economist Adrienne Warren.
Soper said the Canadian market has in the past been driven by Generation X and first time buyers who have "largely checked out."
"This is a generation that has been much more comfortable than their parents with mortgages," said Soper at the conference. "But they have checked out in large numbers. They're living at home, they're renting, they don't have to buy."
Meanwhile, the federal government's renovation tax credit for households may not give the much needed lift to the construction industry and the overall economy that Canadians may be hoping for, says Scotiabank.
"It certainly has the potential to provide a boost, but overall the opportunity for it to provide a significant boost to offset the construction gap are fairly limited," said Warren.
Ottawa plans to give a 15 per cent renovation tax credit on expenditures between $1,000 and $10,000 completed prior to February 2010.
The renovation industry was worth $39 billion in 2008, or more than double the value of resale housing transactions.
However, the main factors behind the boom in recent years, including recording existing home sales, rising home equity, high new home prices, record ownership rates, an aged housing stock and strong job and income growth "are no longer supportive," says Warren.
"If you've got rising house prices you're a lot more confident about putting in that granite countertop."
Still, some planned projects will likely be brought forward and some underground spending will be "pulled up" by the initiative, said Warren.
In a separate meeting today, commercial real estate industry executives heard that downtown Toronto and Calgary are the two Canadian cities that face the most "significant challenges" with millions of square feet of office space set to be developed right during one of the worst economic downturns in history.
"Toronto class A development will hit 4.6 million square feet of development at a time of weakening demand," said John O'Bryan, vice chair of realty firm CB Richard Ellis in a market forecast at the Metro Toronto Convention Centre. "The effect on occupancy levels in the affected towers is significant and it does not appear that large tenancies will be able to quickly fill the void."
Toronto currently has three new "Class A" office towers (considered the best buildings) each in the million square foot range with the first tower to be completed starting at the end of this year.
The new supply will cause vacancy rates to spike possibly into the double digits according to the realty firm. Vacancy rates over 10 per cent are considered to be a tenant's market. More supply means there will be pressure on rental rates to decrease.
February 25, 2009
Tony Wong
BUSINESS REPORTER
The days of multiple offers when buying the house you were bidding on was like winning the lottery are over, says Phil Soper, president and CEO of Royal Lepage Real Estate Services.
Instead, standard offers with conditions attached are making a comeback.
"It's all about having a home inspection, approval of financing, things that were disregarded during a sellers market," said Soper, speaking at the Scotiabank real estate outlook conference in Toronto today.
Scotiabank is forecasting that Canadian housing starts will fall to 155,000 units this year, below long term replacement demand, and far below the 211,056 units registered in 2008.
"The housing boom is clearly over, and if anything, that's an understatement," said Scotiabank economist Adrienne Warren.
Soper said the Canadian market has in the past been driven by Generation X and first time buyers who have "largely checked out."
"This is a generation that has been much more comfortable than their parents with mortgages," said Soper at the conference. "But they have checked out in large numbers. They're living at home, they're renting, they don't have to buy."
Meanwhile, the federal government's renovation tax credit for households may not give the much needed lift to the construction industry and the overall economy that Canadians may be hoping for, says Scotiabank.
"It certainly has the potential to provide a boost, but overall the opportunity for it to provide a significant boost to offset the construction gap are fairly limited," said Warren.
Ottawa plans to give a 15 per cent renovation tax credit on expenditures between $1,000 and $10,000 completed prior to February 2010.
The renovation industry was worth $39 billion in 2008, or more than double the value of resale housing transactions.
However, the main factors behind the boom in recent years, including recording existing home sales, rising home equity, high new home prices, record ownership rates, an aged housing stock and strong job and income growth "are no longer supportive," says Warren.
"If you've got rising house prices you're a lot more confident about putting in that granite countertop."
Still, some planned projects will likely be brought forward and some underground spending will be "pulled up" by the initiative, said Warren.
In a separate meeting today, commercial real estate industry executives heard that downtown Toronto and Calgary are the two Canadian cities that face the most "significant challenges" with millions of square feet of office space set to be developed right during one of the worst economic downturns in history.
"Toronto class A development will hit 4.6 million square feet of development at a time of weakening demand," said John O'Bryan, vice chair of realty firm CB Richard Ellis in a market forecast at the Metro Toronto Convention Centre. "The effect on occupancy levels in the affected towers is significant and it does not appear that large tenancies will be able to quickly fill the void."
Toronto currently has three new "Class A" office towers (considered the best buildings) each in the million square foot range with the first tower to be completed starting at the end of this year.
The new supply will cause vacancy rates to spike possibly into the double digits according to the realty firm. Vacancy rates over 10 per cent are considered to be a tenant's market. More supply means there will be pressure on rental rates to decrease.