From the Desk of Faisal - Real Estate News for the Week of Oct 22nd - Oct 28th

Welcome to Properties Ontario’s weekly update. Our team goes through numerous articles and summarize them for you! Please do not hesitate to contact me if there are any topics you would like to discuss further. If you have any questions about buying, selling, or leasing residential or commercial space, we’re the team for you. For current listings in the marketplace, check out our website www.propertiesontario.com 

US Sales Slowing Down

Sales of existing homes in the United States fell 3.4% month over month and 4.1% year over year. The current rolling average for the year is 5.37 million (SAAR). Inventory levels rose annually as well since homes are taking longer to sell due to rising interest rates and increasing home prices. The annual median price gain was 4.2%. In the long term price acceleration is to slow down as inventory piles up but at the moment demand is overwhelming.

Sales to New Listings Ratio Across Canada

The sales to new listings ratio (SNLR) is a comparison of the number of sales in a particular period of time in relation to new listings that have come on the market. This ratio helps determine how quick the market is moving which ultimately describes if it is a buyer or seller market, or a balanced market. For the month of September, the highest ratio was London which was at 76.8, then Ottawa (68.7) and in third place was Montreal (68). Although London had a very high SNLR, it did not improve from the September 2017. Therefore, only Ottawa and Montreal had an improvement of its SNLR when compared to the same time last year. The lowest ratios were Edmonton (46), Calgary (47.6), Toronto (49) and then Vancouver (50.7). It is important to note that even the lowest SNLR figures still represented a balanced market. Once the ratio falls below 40, it is deemed a buyer’s market.

Avison Young Canada Commercial Report

Avison Young Canada Inc reported $1.2 billion investment in multi-residential apartment buildings in Toronto for the 3^rd quarter of 2018. Overall commercial property investment saw $4 billion in Q3. This moved the total for 2018 up to $12.3 billion which is a 10% increase from Q1 to Q3 2017. Office sales went up 25% on a quarter over quarter basis ($888 million) but were lower than last year. Retail sales posted $572 million during Q3 2018, reaching $1.9 billion for the year to date.

Canadian Consumer Confidence Index

The weekly Bloomberg/Nanos Research Canadian Confidence Index increased to 57.43 from 55.65 over the last four weeks. Sentiment around personal finances and job security edged lower (60.85 from 61.45 four weeks ago). However, sentiment increased for the economy and real estate prices (54.01 vs 49.86 four weeks ago). The share of respondents who are very confident in real estate prices stands at 41.41 (37.76 four weeks ago) and is above average of 2018 (40.45) and the 10-year average (37.86). Overall, Canadians have confidence in the economy but a large factor was the trade agreement being finalised with the US and Mexico.

Luxury Home and Condo Sales Statistics

Luxury condos priced between the $1 to 2 million range had a sales increase of 2% annually in Toronto and 6% annually in Vancouver. This was driven by Baby Boomers downsizing and upgrading into the luxury market. The single detached market was the complete opposite with homes priced between $1 to $3 million falling 37% annually in Toronto and 31% in Vancouver. Single detached homes priced $3 million and above dropped 44% in sales annually in Toronto and 45% annually in Vancouver. Therefore, condo investment has produced more fruitful figures for users and investors.

New Construction September Report

The Building and Land Development Association (BILD) reported 1,747 new home sales in September 2018, up from 974 in August. Condo sales were down 20% to 1,494 and were also 20% below the 10-year average. Single-family detached sales were down 28% to 253 which is also 77% below 10-year average. New condos inventory currently stands at 8.820 units which is 6.06% lower than last year. This represents approximately five months of inventory if no new projects came to the market. The current inventory of single-family homes is at 5,135, up 96.96% on an annual basis. Benchmark prices for condo apartments increased to $789,643, 19.4% higher than the same time last year. On the other hand, the single-family home benchmark price fell to $1,119,533, representing a 7.1% annual decrease. The sales to active listings is at 12.52% but keep in mind this is a different calculation of sales to new listings ratio. For sales to active listings, anything below 12% represents a buyer’s market while 20% and above is a seller’s market. Anything in between would indicate a balanced market.

CMHC Housing Market Assessment

The Canadian Mortgage and Housing Corporation published its Housing Market Assessment for the rest of 2018. The crown corporation used market data as of June 2018 but used market intelligence as of September 2018 for 15 metropolitans. The report states that overvaluation still prevails in Canada especially in Toronto, Vancouver, Victoria, and Hamilton but overall prices are getting closer to fundamentals. What the CMHC means by fundamentals is income, mortgage rates, and population growth.  The overvaluation has persisted for the 9^th consecutive quarter but prices are easing due to tighter mortgage rules, rising interest rates, and weaker growth in inflation adjusted disposable income. Overbuilding remains high in Edmonton, Calgary, Saskatoon, Regina and Winnipeg making the degree of vulnerability at moderate. The areas with a low degree of vulnerability are Ottawa, Quebec City, Moncton, Halifax and St Johns as prices continue to follow fundamentals there. Meanwhile the Montreal resale market is overheating, creating significant upward pressure on prices. An interesting figure that was revealed in the survey is that 49% of first-time buyers were between the age of 25 to 34.

Non-Farm Payroll Increasing

Non-farm payroll wages increased to a weekly average of $1,006 in August 2018 which is 0.6% higher than July and 2.9% increase from August 2017. Gains were seen in 6 out 10 sectors with retail trade gaining the most percentage wise, sitting at $613 or 9.7% higher than the 12 months before. Those working in professional, scientific and technical services grew 6.5% to $1,401 while those in food and accommodation services grew 5.3% to $408. Construction workers’ wages rose 5.2% to $1,275, mostly driven by Ontario and BC construction. Earnings were little changed in manufacturing, educational services, health care and social assistance, and administrative and support services.