TORONTO, March 30, 2009 - With Toronto City Council scheduled to debate and vote on the City’s proposed 2009 Operating Budget tomorrow, public opinion poll results, released today, show that 65 per cent of Torontonians believe that the Toronto Land Transfer Tax should be repealed.
The poll was conducted by the Environics Research Group Ltd. for the Toronto Real Estate Board. “REALTORS® strongly believe that Toronto City Council should scrap the Toronto Land Transfer Tax, and the public agrees,” said Maureen O’Neill, President of the Toronto Real Estate Board. “The Toronto Land Transfer Tax is not a fair tax and is hurting Toronto’s economy.”
The poll also found that 57 per cent of Torontonians believe that the Toronto Land Transfer Tax is hurting the real estate market and 62 per cent believe that the City has not taken adequate action to help stimulate the economy. “Torontonians want more action from the City on the economy, and they understand that the Toronto Land Transfer Tax is having a negative impact,” said O’Neill. “One of the best ways that the City can take action to help with the current economic situation is to roll back the Toronto Land Transfer Tax.”
A recent study conducted by the C.D. Howe Institute and Economics Professors from the University of Toronto determined that the Toronto Land Transfer Tax is having a significant impact on Toronto’s real estate market, reducing housing sales by 16 per cent and values by 1.5 per cent in 2008 alone. A separate recent study, conducted for the Canadian Real Estate Association, found that one out of every 100 jobs depends on spending associated with re-sale housing sales, on things like renovations, furniture, and appliances. This means that approximately 14,000 jobs in Toronto depend on re-sale housing transactions. TREB believes that, by impacting the real estate market, the Toronto Land Transfer Tax is risking these jobs.
The Environics poll also found that 60 per cent of Torontonians think that the City is not being run as efficiently as possible. REALTORS® are calling on City Councillors to focus their budget efforts on options recommended over a year ago by an independent blue-ribbon panel of business and labour representatives, appointed by Mayor Miller.
“Over a year ago, the Mayor’s Fiscal Review Panel identified, literally, hundreds of millions of dollars in savings and efficiencies that the City could be taking advantage of,” said O’Neill. “The City’s budget efforts should be focusing on fair options, like those recommended by the Mayor’s Fiscal Review Panel.”
The poll of 500 Toronto residents aged 18 years or over was conducted by telephone between March 12 and March 15, 2009, and is considered accurate to within +/- 4.5%, 19 times out of 20.
You can find great local Toronto, Ontario real estate information on Localism.com Frank Bott is a proud member of the ActiveRain Real Estate Network, a free online community to help real estate professionals grow their business.
Monday, March 30, 2009
Is US Housing on the Mend?
The following was written by Peter G. Hall, Vice-President and Chief Economist, Export Development Canada.
Three cheers! US housing starts rose 22% in February, the first monthly increase since June, 2008. In a market hungry for good news, this was well-received, fuelling hopes that the industry where the global recession began is finally bottoming out. Is this leading sector on the mend?
Without question, the last 30 months have been quite a ride for US housing. Starts of new dwelling units tumbled in mid-2006, falling from 2 million units to the 1.5 million-unit level in just 5 months. At this point, it seemed that the market might stabilize. However, following a 9 month hiatus, activity dropped again, hitting the 1 million level. Following a small jump last June, markets went into freefall, bottoming out in January at a paltry 480,000 units. It is from this base that February starts surged, hitting a higher-than-expected 580,000 units. Hardly cause for a party.
You can’t blame the builders. They are simply following sales activity, which is similarly pathetic. Sales of new and existing homes have declined consistently for over three years, hitting a new low in January that is 44% below the mid-2005 peak. Prices also tell the tale. The median price of a new home fell to $200,000 in January, fully erasing the gains realized in the bubble years. Existing home prices have fallen further, notching just $170,000 in January.
Compounding the current weakness is the level of inventories. New construction may be low, but the number of units up for sale – many of them foreclosures – remains high. There is currently just under 10 months’ supply of new and existing homes on the market, well over double the “stable market” level. Put another way, there are now roughly 5.7 million excess units on the marketplace. That is down from the 7.9 million-unit peak last April, but at the current rate of work-down, the market will be well into 2010 before conditions are more balanced.
How did the excess get so high in the first place? Simply put, building levels were far higher than basic demographic requirements. The level of household formation in the US suggests that a sustainable pace of construction would be somewhere between 1.5-1.6 million units per year. The marketplace was generally in balance until 2002, when easy credit terms and a strong economy boosted sales, igniting prices and setting off a building frenzy. From 2003 through mid-2006, housing starts averaged a stunning 2 million units annually.
The good news in today’s numbers is that the huge excess is being worked off. Building activity is now well below fundamental requirements, and although levels are appallingly low, it stands that the lower the level of activity, the quicker markets will rebalance. Deep price discounting, evident in all sub-markets, should spark an even speedier return to balanced conditions. Also, recent substantial interest rate cuts and other stimulus measures will soon filter through to homebuyers. A key obstacle is the job market. Recent monthly job losses in the 600,000+ range weigh against restored balance in housing markets, and we can only hope that layoffs will abate soon.
The bottom line? It is still far too early to celebrate a turnaround in the US housing market. But we can take solace in the fact that the market has responded quickly, and is clearing. The sooner, the better, given housing’s role as a key bellwether of US, and by extension global, recovery.
Three cheers! US housing starts rose 22% in February, the first monthly increase since June, 2008. In a market hungry for good news, this was well-received, fuelling hopes that the industry where the global recession began is finally bottoming out. Is this leading sector on the mend?
Without question, the last 30 months have been quite a ride for US housing. Starts of new dwelling units tumbled in mid-2006, falling from 2 million units to the 1.5 million-unit level in just 5 months. At this point, it seemed that the market might stabilize. However, following a 9 month hiatus, activity dropped again, hitting the 1 million level. Following a small jump last June, markets went into freefall, bottoming out in January at a paltry 480,000 units. It is from this base that February starts surged, hitting a higher-than-expected 580,000 units. Hardly cause for a party.
You can’t blame the builders. They are simply following sales activity, which is similarly pathetic. Sales of new and existing homes have declined consistently for over three years, hitting a new low in January that is 44% below the mid-2005 peak. Prices also tell the tale. The median price of a new home fell to $200,000 in January, fully erasing the gains realized in the bubble years. Existing home prices have fallen further, notching just $170,000 in January.
Compounding the current weakness is the level of inventories. New construction may be low, but the number of units up for sale – many of them foreclosures – remains high. There is currently just under 10 months’ supply of new and existing homes on the market, well over double the “stable market” level. Put another way, there are now roughly 5.7 million excess units on the marketplace. That is down from the 7.9 million-unit peak last April, but at the current rate of work-down, the market will be well into 2010 before conditions are more balanced.
How did the excess get so high in the first place? Simply put, building levels were far higher than basic demographic requirements. The level of household formation in the US suggests that a sustainable pace of construction would be somewhere between 1.5-1.6 million units per year. The marketplace was generally in balance until 2002, when easy credit terms and a strong economy boosted sales, igniting prices and setting off a building frenzy. From 2003 through mid-2006, housing starts averaged a stunning 2 million units annually.
The good news in today’s numbers is that the huge excess is being worked off. Building activity is now well below fundamental requirements, and although levels are appallingly low, it stands that the lower the level of activity, the quicker markets will rebalance. Deep price discounting, evident in all sub-markets, should spark an even speedier return to balanced conditions. Also, recent substantial interest rate cuts and other stimulus measures will soon filter through to homebuyers. A key obstacle is the job market. Recent monthly job losses in the 600,000+ range weigh against restored balance in housing markets, and we can only hope that layoffs will abate soon.
The bottom line? It is still far too early to celebrate a turnaround in the US housing market. But we can take solace in the fact that the market has responded quickly, and is clearing. The sooner, the better, given housing’s role as a key bellwether of US, and by extension global, recovery.
Wednesday, March 11, 2009
Housing Market Getting Better
Confidence appears to be seeping back into the housing market, with young Canadians the most optimistic that now is a good time to buy, according to the Royal Bank of Canada's annual homeownership survey.
Thirty-year-old David Morris, who owns a condominium in downtown Vancouver, is among those actively planning to purchase a home. He's looking to sell his condo and trade up to a house in Vancouver's trendy Kitsilano or North Shore districts – a move that would have been out of his reach in the overheated real estate market of recent years. Falling prices, low interest rates – and the fact that he is getting married at the end of this year – have factored into Mr. Morris' decision to buy.
“We have made the decision to move forward. It's not a situation where we're going to force it, but if we can find the right house for the right price, we have made the decision to get serious about it,” said Mr. Morris, a commercial real estate broker.
“From a buyer's perspective, it's encouraging …Now is a good time to come in and find a home that you love, that isn't going to break the bank.”
In a survey of 2,026 Canadian consumers, conducted in the second week of January, the Royal Bank found that 65 per cent of respondents believe it is a buyers' market now.
Of those surveyed, 9 per cent said it is “very likely” they will purchase a home or condominium in 2009 or 2010, and another 18 per cent rated the prospect of purchasing a new home as “somewhat” likely.
“Additionally, almost half indicate it makes sense to buy a home now versus waiting until next year.”
Young adults and renters are most likely to spark an upsurge in home sales, Royal Bank said in releasing its survey results.
“In the under-35 group, 48 per cent said they plan to buy, which is up sharply from 36 per cent last year. Renters also appear to be saying they are tired of paying someone else's mortgage payment, with 38 per cent planning to become homeowners in the next two years.”
Although this optimism is not reflected in the most recent sales statistics – the volume of sales in the Toronto area, for instance, was down 47 per cent year-over-year in January – Royal Bank predicts that lower prices will lure a growing percentage of Canadians back into the housing market in the next two years.
Toronto real estate agent Geon van der Wyst noted that consumers do not always follow through on their intentions – although it is encouraging that more Canadians appear to be thinking about buying homes.
“Intention is the step prior to making an educated decision… and I'm sure a lot of those people with intentions will move forward with purchases, it's just a matter of finding the right time,” Mr. van der Wyst said.
Karen Leggett, the Royal Bank's head of home equity financing, said low mortgage rates “and favourable housing prices are influencing home purchase intentions this year and may be the reason why more Canadians are poised to purchase over the next two years.”
Ms. Leggett said the poll, conducted for the Royal Bank by Ipsos Reid, found that the vast majority of Canadians believe that the purchase of a home is a good investment. “The current economic environment does not appear to have dampened Canadians' overall confidence in the housing market,” she said.
Mr. van der Wyst said there are good deals to be had, from the buyers' standpoint.
However, he added, many prospective buyers – particularly first-time buyers – are still uncertain about the best time to plunge into the market.
“We tend to hand-hold these first time-buyers, nervous first-time buyers, especially around here where they know the prices are starting to dip – and who knows where they will continue to dip before the recovery starts?”
Mr. van der Wyst said that, especially in the current economic environment, he screens prospective buyers carefully before taking them to look at properties. He noted that the banks are also “pretty stringent” in qualifying consumers for mortgages.
“Interest rates are at historic lows and borrowing money is very, very affordable. If you have steady employment and you have some financial responsibility along with a good interest rate, now is a really, really good time to purchase a property,” said Mr. van der Wyst, an agent with Royal LePage.
“At this time, employment stability is very important. It would be really unfortunate to see someone lose their job just as they were about to close on a property,” he said.
A number of leading Canadian economists have observed that Canada's rising unemployment rate has eroded consumer confidence, and other recent housing forecasts have been less upbeat than the Royal Bank survey.
Canada Mortgage and Housing Corp. projects that, in spite of falling prices, the volume of existing home sales is expected to drop by 14.6 per cent in 2009, and then rise by 9.3 per cent in 2010.
Average home prices are forecast to fall 5.2 per cent to $287,900 in 2009. Next year, prices are expected to remain flat, according to the federal housing agency's forecast. Ms. Leggett said Royal Bank is not forecasting “a huge housing rebound, by any stretch,” but there are reasons for cautious optimism that the market will start to recover later this year and next year.
Following the overheated market and bidding wars of the past few years, housing is once again becoming more affordable and there are good buying opportunities for consumers “who have good solid certitude around their job prospects and have the financial picture to be able to get into the market,” Ms. Leggett said.
“Buying intentions are one thing. Whether they translate into actual purchases, obviously time will tell,” she said. “But, anecdotally, we are hearing that there is heightened activity …and interest in the marketplace overall.”
Thirty-year-old David Morris, who owns a condominium in downtown Vancouver, is among those actively planning to purchase a home. He's looking to sell his condo and trade up to a house in Vancouver's trendy Kitsilano or North Shore districts – a move that would have been out of his reach in the overheated real estate market of recent years. Falling prices, low interest rates – and the fact that he is getting married at the end of this year – have factored into Mr. Morris' decision to buy.
“We have made the decision to move forward. It's not a situation where we're going to force it, but if we can find the right house for the right price, we have made the decision to get serious about it,” said Mr. Morris, a commercial real estate broker.
“From a buyer's perspective, it's encouraging …Now is a good time to come in and find a home that you love, that isn't going to break the bank.”
In a survey of 2,026 Canadian consumers, conducted in the second week of January, the Royal Bank found that 65 per cent of respondents believe it is a buyers' market now.
Of those surveyed, 9 per cent said it is “very likely” they will purchase a home or condominium in 2009 or 2010, and another 18 per cent rated the prospect of purchasing a new home as “somewhat” likely.
“Additionally, almost half indicate it makes sense to buy a home now versus waiting until next year.”
Young adults and renters are most likely to spark an upsurge in home sales, Royal Bank said in releasing its survey results.
“In the under-35 group, 48 per cent said they plan to buy, which is up sharply from 36 per cent last year. Renters also appear to be saying they are tired of paying someone else's mortgage payment, with 38 per cent planning to become homeowners in the next two years.”
Although this optimism is not reflected in the most recent sales statistics – the volume of sales in the Toronto area, for instance, was down 47 per cent year-over-year in January – Royal Bank predicts that lower prices will lure a growing percentage of Canadians back into the housing market in the next two years.
Toronto real estate agent Geon van der Wyst noted that consumers do not always follow through on their intentions – although it is encouraging that more Canadians appear to be thinking about buying homes.
“Intention is the step prior to making an educated decision… and I'm sure a lot of those people with intentions will move forward with purchases, it's just a matter of finding the right time,” Mr. van der Wyst said.
Karen Leggett, the Royal Bank's head of home equity financing, said low mortgage rates “and favourable housing prices are influencing home purchase intentions this year and may be the reason why more Canadians are poised to purchase over the next two years.”
Ms. Leggett said the poll, conducted for the Royal Bank by Ipsos Reid, found that the vast majority of Canadians believe that the purchase of a home is a good investment. “The current economic environment does not appear to have dampened Canadians' overall confidence in the housing market,” she said.
Mr. van der Wyst said there are good deals to be had, from the buyers' standpoint.
However, he added, many prospective buyers – particularly first-time buyers – are still uncertain about the best time to plunge into the market.
“We tend to hand-hold these first time-buyers, nervous first-time buyers, especially around here where they know the prices are starting to dip – and who knows where they will continue to dip before the recovery starts?”
Mr. van der Wyst said that, especially in the current economic environment, he screens prospective buyers carefully before taking them to look at properties. He noted that the banks are also “pretty stringent” in qualifying consumers for mortgages.
“Interest rates are at historic lows and borrowing money is very, very affordable. If you have steady employment and you have some financial responsibility along with a good interest rate, now is a really, really good time to purchase a property,” said Mr. van der Wyst, an agent with Royal LePage.
“At this time, employment stability is very important. It would be really unfortunate to see someone lose their job just as they were about to close on a property,” he said.
A number of leading Canadian economists have observed that Canada's rising unemployment rate has eroded consumer confidence, and other recent housing forecasts have been less upbeat than the Royal Bank survey.
Canada Mortgage and Housing Corp. projects that, in spite of falling prices, the volume of existing home sales is expected to drop by 14.6 per cent in 2009, and then rise by 9.3 per cent in 2010.
Average home prices are forecast to fall 5.2 per cent to $287,900 in 2009. Next year, prices are expected to remain flat, according to the federal housing agency's forecast. Ms. Leggett said Royal Bank is not forecasting “a huge housing rebound, by any stretch,” but there are reasons for cautious optimism that the market will start to recover later this year and next year.
Following the overheated market and bidding wars of the past few years, housing is once again becoming more affordable and there are good buying opportunities for consumers “who have good solid certitude around their job prospects and have the financial picture to be able to get into the market,” Ms. Leggett said.
“Buying intentions are one thing. Whether they translate into actual purchases, obviously time will tell,” she said. “But, anecdotally, we are hearing that there is heightened activity …and interest in the marketplace overall.”
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