cdr108
Senior Member
Resale market improving in GTA, but analysts don't see a recovery in short term
http://www.yourhome.ca/homes/article/630264
May 7, 2009
Tony Wong
BUSINESS REPORTER
After a frigid winter that saw existing home sales plunge dramatically, the Toronto-area housing market continues to experience a fragile spring thaw.
The Toronto Real Estate Board reported 8,107 sales yesterday for April, down 7 per cent from a year ago, but less than the 47 per cent free fall experienced in January.
"Conditions in the resale housing market have improved markedly this spring," TREB president Maureen O'Neill said.
Improved affordability, mostly because of lower mortgage rates and a drop in home prices, have brought out buyers in greater numbers than expected.
The average price of a GTA home in April was $385,641, down 3 per cent from April of last year.
"The rate of average price decline continued to diminish last month," said Jason Mercer, senior manager of market analysis for the board. "This is due in large part to a tightening in the resale market."
New listings were down by 30 per cent, suggesting that some homeowners may have decided this was not an opportune time to list, creating less competition and less choice for buyers.
Meanwhile, a Desjardins Bank study released yesterday showed affordability was up sharply nationwide, helping to buoy the spring market.
"Toronto's market became affordable primarily due to another 1.5 per cent price decrease in the first quarter," said the bank.
Average disposable income in the Toronto area was 29 per cent higher than the income mortgage lenders require to finance the purchase of a residence, compared with a long term average of 18.4 per cent, according to the bank.
"Although the deteriorating economy will leave its mark on the housing market this year, the rise in affordability is easing concerns of a deep slump," Desjardins economist Louis Gagnon said.
There was more good news on the Canadian development front, with building permits up 23.5 per cent in March compared with February, the first increase after five consecutive monthly declines, according to figures released by Statistics Canada.
This was all due to non-residential building in provinces such as Ontario, however, as residential building permits continued to fall.
In the Toronto market, building permits showed an even more dramatic surge of 61 per cent in March to $917 million, due to government and commercial building.
Residential permits fell by more than 16 per cent, while non-residential showed a more than 200 per cent increase.
"On balance, these data are certainly impressive when looked at in isolation," Charmaine Buskas, senior economics strategist at TD Securities, stated in a note.
"However, given the recent downward trend in overall building activity and the fact that levels of activity are soft overall, one cannot hang too much optimism on these numbers."
Like the TD Bank, most analysts do not see a significant recovery of the market in the short term.
"We still feel there is more downside than upside risk to home sales and prices," Scotiabank economist Adrienne Warren wrote in a report this week. "The significant deterioration in domestic labour markets in recent months suggests little prospect for a major resurgence in demand near-term."
Warren and other economists stressed this week that they do not see the market crashing as it has in the United States.
Industry Minister Tony Clement said yesterday the housing reports are "good news."
http://www.yourhome.ca/homes/article/630264
May 7, 2009
Tony Wong
BUSINESS REPORTER
After a frigid winter that saw existing home sales plunge dramatically, the Toronto-area housing market continues to experience a fragile spring thaw.
The Toronto Real Estate Board reported 8,107 sales yesterday for April, down 7 per cent from a year ago, but less than the 47 per cent free fall experienced in January.
"Conditions in the resale housing market have improved markedly this spring," TREB president Maureen O'Neill said.
Improved affordability, mostly because of lower mortgage rates and a drop in home prices, have brought out buyers in greater numbers than expected.
The average price of a GTA home in April was $385,641, down 3 per cent from April of last year.
"The rate of average price decline continued to diminish last month," said Jason Mercer, senior manager of market analysis for the board. "This is due in large part to a tightening in the resale market."
New listings were down by 30 per cent, suggesting that some homeowners may have decided this was not an opportune time to list, creating less competition and less choice for buyers.
Meanwhile, a Desjardins Bank study released yesterday showed affordability was up sharply nationwide, helping to buoy the spring market.
"Toronto's market became affordable primarily due to another 1.5 per cent price decrease in the first quarter," said the bank.
Average disposable income in the Toronto area was 29 per cent higher than the income mortgage lenders require to finance the purchase of a residence, compared with a long term average of 18.4 per cent, according to the bank.
"Although the deteriorating economy will leave its mark on the housing market this year, the rise in affordability is easing concerns of a deep slump," Desjardins economist Louis Gagnon said.
There was more good news on the Canadian development front, with building permits up 23.5 per cent in March compared with February, the first increase after five consecutive monthly declines, according to figures released by Statistics Canada.
This was all due to non-residential building in provinces such as Ontario, however, as residential building permits continued to fall.
In the Toronto market, building permits showed an even more dramatic surge of 61 per cent in March to $917 million, due to government and commercial building.
Residential permits fell by more than 16 per cent, while non-residential showed a more than 200 per cent increase.
"On balance, these data are certainly impressive when looked at in isolation," Charmaine Buskas, senior economics strategist at TD Securities, stated in a note.
"However, given the recent downward trend in overall building activity and the fact that levels of activity are soft overall, one cannot hang too much optimism on these numbers."
Like the TD Bank, most analysts do not see a significant recovery of the market in the short term.
"We still feel there is more downside than upside risk to home sales and prices," Scotiabank economist Adrienne Warren wrote in a report this week. "The significant deterioration in domestic labour markets in recent months suggests little prospect for a major resurgence in demand near-term."
Warren and other economists stressed this week that they do not see the market crashing as it has in the United States.
Industry Minister Tony Clement said yesterday the housing reports are "good news."
