You can sleep well tonight, Toronto. House prices are dropping, more so than they have in the last eight years. Could the provincial government's cooling measures be working?
Our weekly round-up of real estate news in Toronto, across Canada and the world for the week ending July 7, 2017.
Toronto
Toronto Home Sales Drop Most in Eight Years (Bloomberg)
Toronto’s housing market is losing steam after a series of government measures and the prospect of higher interest rates boosted listings and sparked the biggest sales decline in more than eight years last month.
Home sales in Canada’s largest city slid 37 percent to 7,974 in June from the prior year, the third straight month of declines and the largest drop since January 2009, the Toronto Real Estate Board said in a statement Thursday. Deals for single-family homes fell 45 percent in the period. Meanwhile, average prices for all housing types rose just 6.3 percent to C$793,915 ($612,000) the smallest annual increase since January 2015. Owners flooded the market with properties, with listings up 16 percent to 19,614.
More first-time home buyers putting purchases on hold after Ontario introduces new measures (Toronto Star)
First-time home buyers appear to be delaying their purchases in the wake of the province’s new policies intended to cool the housing market.
At the same time, consumers buying new construction homes are overwhelmingly opting for lower-priced condo apartments and stacked townhouses.
Speed-dating event helps people find their match in Toronto real estate heaven (Canoe.com)
About 30 people gaze into each other’s eyes in the basement of a Toronto pub. But none of them are here in the hopes of falling in love.
At a recent speed-dating event for potential co-homeowners, guests who range from millennials to seniors have come to find The One — a match made in real estate heaven.
Canada
Foreign buyer activity in Ontario market at about 5%, government says (Global News)
TORONTO – Newly released figures show nearly five per cent of home purchases in Ontario’s Greater Golden Horseshoe region were made by non-residents since the Liberal government announced a foreign buyer tax.
The 15 per cent tax is imposed on buyers in that area — stretching from the Niagara Region to Peterborough — who are not citizens, permanent residents or Canadian corporations.
Why a national real estate crash isn’t in the cards (Canadian Business)
Ottawa didn’t handle the near bankruptcy of Home Capital Group Inc. all that well.
The authorities behaved like it was 1996, the last time a Canadian financial institution failed. They said little in public, while reportedly doing all sorts of prudent things behind the scenes. Meanwhile, flimsy parallels to America’s housing meltdown spread through international markets via Twitter; the instant-messaging functions on Bloomberg data terminals; and the financial press, which appeared a tad too eager to cover a crisis.
Home affordability in Canada reaching acute levels, latest bank research suggests (Property Wire)
Soaring home prices in Toronto and its surrounding region are making Canada’s national housing affordability acute, hitting record levels in some locations, according to new research.
Indeed, the housing affordability measure reached record levels in Toronto at 72% in the first quarter of 2017, up from 69.2% in the previous quarter and exceeding the previous peak of 70.6% in 1990.
USA
Fixed Mortgage Rates in U.S. Hits New 2017 Low (World Property Journal)
According to Freddie Mac's latest Primary Mortgage Market Survey, the average 30-year fixed mortgage rate in the U.S. dropped to a new 2017 low in late June.
Sean Becketti, chief economist of Freddie Mac said, "The 30-year mortgage rate fell 2 basis points to 3.88 percent this week. However, the majority of our survey was conducted prior to last Tuesday's sell-off in the bond market which drove Treasury yields higher. Mortgage rates may increase in next week's survey if Treasury yields continue to rise.
Two major lending changes mean it's suddenly easier to get a mortgage (CNBC)
Two major changes in the mortgage market go into effect this month, and both could help millions more borrowers qualify for a home loan. The changes will also add more risk to the mortgage market.
First, the nation's three major credit rating agencies, Equifax, TransUnion and Experian, will drop tax liens and civil judgments from some consumers' profiles if the information isn't complete. Specifically, the data must include the person's name, address, and either date of birth or Social Security number. A sizeable number of liens and judgments do not include this information and have subsequently caused some misrepresentations and mistakes.
Median Home Prices Rose Faster Than Wages in 87 Percent of Local Markets (World Property Journal)
Based on ATTOM Data Solutions' latest Q2 2017 U.S. Home Affordability Index, the U.S. median home price of $253,000 in the second quarter of 2017 was at the least affordable level since Q3 2008, a nearly nine-year low in affordability.
The national home affordability index was 100 in the second quarter of 2017, the lowest national affordability index since Q3 2008, when the index was 86, and meaning the share of average wages needed to buy a median-priced home nationwide was on par with its historic average.
International
Government announces £2.3 billion fund to prepare the way for 100,000 new homes (Property Wire)
The British Government has announced a £2.3 billion fund which could unlock 100,000 new homes in areas of high demand in England.
According to Communities Secretary Sajid Javid the investment will help to fund vital physical infrastructure projects like the building of roads, bridges, energy networks and other utilities, the absence of which continues to hold house building back.
A generation is stuck in a rent log jam in England and Wales, unable to afford to buy (Property Wire)
A shortage of affordable housing in England and Wales is leaving a generation stuck in a rental log jam as they cannot afford to buy a home, new research suggests.
Some 14% of tenants are spending more than half of their total income on rent in stark contrast to just 2% of home owners spending that amount on their mortgage, according to the study from the Local Government Association (LGA).
Ireland Enjoys €770 Million of Property Investment in First Half of 2017 (World Property Journal)
According to global real estate consultant JLL, over €770 million of Irish property was traded in the first 6 months of 2017. Although this is down from H1 2016, last year was an exceptional year, and was in fact the second strongest year ever recorded in the investment market.
Half-year volumes of €770 million are in-line with the activity for a more 'normal' market. The 15 year average H1 take-up volume is €760 million, which includes the peak years when volumes achieved as high as €2.8 billion in the first half of the year.According to global real estate consultant JLL, over €770 million of Irish property was traded in the first 6 months of 2017. Although this is down from H1 2016, last year was an exceptional year, and was in fact the second strongest year ever recorded in the investment market. Half-year volumes of €770 million are in-line with the activity for a more 'normal' market. The 15 year average H1 take-up volume is €760 million, which includes the peak years when volumes achieved as high as €2.8 billion in the first half of the year.
