Toronto real estate in January 2012

     Canadian housing starts unexpectedly retreated in the first month of 2012 as a result of considerable decline in urban single units and slowdown in multiples. The seasonally adjusted annual rate of starts decline 1 percent to 197,900 units in January from 199,900 units a month earlier, Canada Mortgage and Housing Corp. reported today. From a year earlier, Canadian dwelling starts increased 18.3 percent in January 2012 compared to a gain of 20.6 percent in December 2011.

       The pace of housing starts slowed slightly in January but remained robust during an unseasonably warm winter, according to data from Canada Mortgage and Housing Corp. Strong homebuilding activity will likely to be a boon to the Canadian economy in the short term, but could also signal overbuilding that could wreak havoc in the longer term, economists warned Wednesday.

     The seasonally adjusted annual start rate — which smooths monthly variations — was 197,900 units in January, down from 199,900 units in December, the CMHC reported. "While housing continues to surprise on the upside, we caution that this pace of homebuilding is unsustainable," said TD economist Diana Petramala.

     January's one per cent decline was mainly because of sharp decreases in Quebec and Atlantic Canada — regions that posted big gains in the month before. Builders have been able to continue construction during the winter season, which has been noticeably warmer and largely snow-free in many parts of the country.

      Low borrowing rates — tied to persistent economic uncertainty — appear unlikely to rise any time soon, which has propped up demand for homes. At the same time, home prices have risen sharply as buyers rush in to take advantage of those low mortgage rates and compete for homes, making ownership less affordable for some. Senior government officials have issued repeated warnings about the implications of taking on too much debt when mortgage rates inevitably rise.

      Still, the January report was good news for Canada's economy because the housing sector makes up a sizable portion of GDP and an influx of building has contributed to a run up in construction jobs in the latest jobs report.

      Based on the high level of building permits approved in December, construction could trend even higher in the months ahead, said David Madani of Capital Economics. "The large amount of work under construction is broadly consistent with the elevated level of construction employment as a share of total employment. This is a stark reminder of just how important strong housing investment is for the broader economy."

      The report is a good indication that housing activity will continue to support GDP growth in the first quarter of 2012, said TD economist Diana Petramala. However, overall weakness in the job market since July —the unemployment rate now sits at 7.6 per cent —could put a damper on demand later this year and the market appears to be "slightly overbuilt and overpriced," she warned.

      In line with a recent trend, January's strength was concentrated in the multi-unit, or condo sector, which has been identified as most at risk of a downturn because of a potential glut of supply that could outpace demand. Multi-unit starts increased 0.4 per cent, while single family home starts fell 7.8 per cent — their lowest level since May.

      Housing construction is outpacing the levels demanded by demographic fundamentals such as the level of new household formation — especially in the condo market. "The result has been a large over hang of newly built and unoccupied multiple units, putting significant downside risk to home building once interest rates begin to rise," Petramala said.

      Madani also said he remains concerned about overbuilding and the "rising likelihood of a housing slump down the road." Given that developers usually begin construction with only about 60 to 70 per cent of units sold, the recent strength in multi-unit starts suggests there could be a glut of newly completed, unoccupied condo units, he said. "This is just one sign of a housing investment boom that has gone too far."

      While January's figures reflect that construction is settling into a healthy pace, there were some specific regional and sectoral trends that underlie the data, BMO economist Robert Kavcic said. Most prominent of those trends is the booming Ontario market, where condo building has been strongest in the past few months, the level of multi-unit building is just slightly below the all-time high set in late 2008, he said.

      The CMHC data showed the seasonally adjusted annual rate of urban starts decreased by 2.8 per cent to 176,600 units in January, with single starts down by 7.8 per cent and multiple starts up 0.4 per cent.

Urban starts decreased by 35.4 per cent in Atlantic Canada and by 34.4 per cent in Quebec on a seasonally adjusted annual rate. Those sharp declines followed particularly robust gains in those regions in December. From GlobalEdmonton.com

Toronto real estate. HOME DECORATING

A well-watered tree, carefully placed candles, and carefully checked holiday light sets will help prevent the joy of the holidays from turning into a trip to the emergency room or the loss of your home. This is easily the busiest time of year, but it's important to make time for safety while celebrating the holidays. By committing a few minutes each day to safety, many accidents can be avoided and your holidays will be memorable for all the right reasons.

• Buy a live tree that is fresh and green with needles that are difficult to pull from the branches. The needles should not break when bent. The bottom of a fresh tree is sticky with resin and, when tapped on the ground, the tree should not lose many needles.
• Set up the tree at home out of traffic and away from doors and from heat sources, such as fireplaces, vents, and radiators. Heated rooms dry out live trees, so be sure to keep it watered daily. The tree stand always should be filled with water.
• If it's an artificial tree look for a "fire resistant" label. It's not a guarantee the tree won't burn, just that it is resistant to igniting.
• When small children are about, avoid sharp, weighted, or breakable decorations. Keep trimmings with small removable parts out of the reach of children to keep them from swallowing or inhaling small pieces. Avoid trimmings that resemble candy or food that can tempt a child.
• Keep burning candles within sight. Extinguish all candles before you go to bed, leave the room, or leave the house.
• Burn candles on a stable, heat-resistant surface away from where kids and pets can reach and knock them over. Place lighted candles away from items that can catch fire and burn easily, such as trees, other evergreens, decorations, curtains and furniture.
• Use only lights - indoor and out - tested for safety by a nationally recognized testing laboratory, such as UL. On most decorative lights available in stores, UL's red holographic label signifies that the product meets safety requirements for indoor and outdoor usage. UL's holographic label, with the green UL Mark, signifies it meets requirements for only indoor usage.
• Check outdoor lights for labels showing that the lights have been certified for outdoor use, and only plug them into a ground-fault circuit interrupter- (GFCI) protected receptacle or a portable GFCI.
• Check new and old light sets for broken or cracked sockets, frayed or bare wires, or loose connections. Throw out damaged sets. Do not use electric lights on a metallic tree.
• Be sure each extension cord is rated for its intended use.
• Use care with "fire salts," which produce colored flames when thrown on wood fires. They contain heavy metals that can cause intense gastrointestinal irritation and vomiting if swallowed. Keep them away from children.
• Don't burn wrapping papers in the fireplace. A flash fire may result as wrappings ignite suddenly and burn intensely.
• Don't use older wood-burning fireplaces and stoves on regional Spare the Air Days, when weather conversion patterns trap larger particulates nearer Earth's surface and create breathing problems for some people.
Happy Holidays!

Toronto real estate. Heated housing activity throughout 2009 lends little air to bubble theory in the GTA, says RE/MAX

Despite limited inventory levels in the Greater Toronto Area (GTA) in the latter half of the year, double-digit price appreciation failed to materialize in the single-detached housing category in 2009, says RE/MAX Ontario-Atlantic Canada.

     In fact, an in-depth analysis by RE/MAX of 63 districts within the Toronto Real Estate Board found that detached housing values in 27 per cent of districts remained slightly off 2008 levels, while 57 per cent reported price appreciation of less than five per cent in 2009. Sixteen per cent of districts recorded an increase in average price in excess of five per cent. No double-digit gains were noted.

     "There is simply no evidence of a housing bubble," says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. "While sales were up considerably over one year ago - and supply was tight in many of the city's hot pocket areas - the expected surge in average price did not occur. Buyers remained cautious in their pursuit of homeownership - with most unwilling to overpay for the privilege. "

      While one quarter of all TREB districts saw prices in the detached housing category soften in 2009, just over half declined by less than two per cent. Those that saw prices fall by more than two per cent were primarily upper-end neighbourhoods - the vast majority located in the central core - which were slower to rebound once the market regained momentum. By year-end, however, sales in all of these areas posted double-digit growth - a fact that clearly indicates a greater number of transactions at the lower end of the price spectrum. Inventory may have also played a role as sellers held off listing their luxury properties until market conditions improved.

     Leading the GTA in terms of price appreciation was South Pickering (E12) where the average has risen 9.4 per cent to $358,493; Malvern, Hillside, Rouge (E11) takes second place with a 7.3 per cent upswing to $368,095; North Pickering (E13) was ranked third with values climbing 7.2 per cent to $396,973; fourth spot goes to Port Credit (W12) in Mississauga where values have climbed seven per cent to $614,144; and rounding out the top five - the lone downtown Toronto district - was Riverdale, Leslieville (E01) where prices escalated 6.7 per cent to $522,017. Ballantrae, Cedar Valley (N13) ranked sixth with a reported 6.4 per cent increase to $662,268. In seventh place is Richmond Hill - North End (N05) with a 6.3 per cent increase in average price to $574,642. The Applewood, Rathwood neigbhourhoods (W14) in Mississauga ranked eighth in terms of price appreciation, rising 6.1 per cent to $505,994, while Markham (N10) claimed ninth spot with a 5.3 per cent escalation in detached housing values, bringing the average to $510,268. Bathurst Manor, Armour Heights (C06) in the city's north end secured tenth place with a 5.1 per cent upswing in average price to $597,025.

      The East clearly dominated the top five and affordability factored in heavily, with single-detached homes in both Pickering districts and Malvern, Hillside, Rouge, priced under $400,000. Young families - most buying their first home - were attracted to communities like Riverdale and up-and-coming Leslieville, while move-up buyers looked to Port Credit, which has steadily increased in popularity in recent years.

      "First-time buyers were a driving force throughout much of the year, but their role was most noticeable in early 2009," says Polzler. "Almost one in every two homes sold was priced under $400,000 in the first quarter of the year. An entirely different picture emerged in the final quarter when just one-third of homes moved under the $400,000 price point."

     As the move-up segment swelled, so too did demand for more upscale properties across the board. Yet, despite the upswing, average price registered only a small percentage increase. In the central core, for example, where the average price ranges from $572,529 in Don Mills to as high as $1,717,190 in Rosedale, overall values rose one per cent to $919,838, compared to 2008. Unit sales in C-district jumped 31 per cent to close to 4,000 units.

      The number of homes sold in the city's north end saw the greatest percentage increase at 32 per cent to 8,843 units. Average price in North district, which ranges from $398,864 in Newmarket to $700,499 in King City, rose two per cent overall to $555,616. Housing sales climbed in the west, where values range from $298,136 in Brampton to $790,060 in the Kingsway, by close to 19 per cent to 12,453 units. West district's average price rose a nominal 1.5 per cent to $467,227. The increase in sales was more moderate in the East End (including Scarborough and Pickering, Ajax), where values range from $325,393 in Bendale, Woburn to $691,128 in the Beach. The number of detached homes sold increased 15 per cent year over year to 6,690. Average price in East Toronto rose 2.6 per cent overall to $400,813.

     "After a dismal start, the stats confirm that 2009 returned to the healthy, upward trajectory that we have followed for much of the last decade," says Polzler. "We see detached homes continuing on that course in 2010, with moderate gains expected. The detached housing category continues to be a solid gauge of the market's overall performance, accounting for approximately half of the activity in GTA."

If you want to know more about Toronto real estate, call sales representative and mortgage agent Alexandre (Alex) Malkhassiants, Right at Home realty,  with all your questions: (416) 723-9383 (cell).