10 2017_OCT_Market Stats JD-1

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GTA REALTORS® Release October Stats

November 2, 2017 — Toronto Real Estate Board President Tim Syrianos reported 7,118 residential sales through TREB’s MLS® System in October 2017. This result represented an above-average increase between September and October of almost 12 per cent, pointing to stronger fall market conditions.

On a year-over-year basis, October sales were down compared to 9,715 transactions in September 2016. Total sales reported through the first 10 months of 2017 amounted to 80,198 – down from 99,233 for the same time period in 2016.

“Every year we generally see a jump in sales between September and October. However, this year that increase was more pronounced than usual compared to the previous ten years. So, while the number of transactions was still down relative to last year’s record pace, it certainly does appear that sales momentum is picking up,” said Mr. Syrianos.

The MLS® Home Price Index Composite benchmark price was up by 9.7 per cent on a year-over-year basis in September. Annual rates of price growth were strongest for townhouses and condominium apartments. The average selling price for October transactions was $780,104 – up by 2.3 per cent compared to the average of $762,691 in October 2016.

“The housing market in the GTA has been impacted by a number of policy changes at the provincial and federal levels. Similar to the track followed in the Greater Vancouver Area, it appears that the psychological impact of the Fair Housing Plan, including the tax on foreign buyers, is starting to unwind,” said Jason Mercer, TREB’s Director of Market Analysis.

November 2017 TREB Market Watch

OSFI extends ‘stress test’ to all new mortgages

This update is provided courtesy of TD Mortgage Specialist, Victoria De Brun

TD Economics

Data Release: OSFI extends ‘stress test’ to all new mortgages

  • The Office of the Superintendent of Financial Institutions (OSFI) released revised “B-20” guidelines for residential mortgage underwriting at federally regulated financial institutions. As was widely expected, the updated ‘stress test’ will be applied to all new mortgages beginning in January 1, 2018. Currently the test applies only to mortgages requiring insurance (i.e. those with low down payments) and those whose term is less than five years.
  • This change requires that borrowers qualify for mortgages at the greater of the Bank of Canada’s five-year benchmark rate or the contracted rate plus 200 basis points. For reference, as of this morning, the Bank of Canada posted rate was 4.89%. It should be noted that OSFI will not apply the more stringent requirements in the case of mortgage renewal.
  • While the extension of qualification guidelines will likely draw the most attention, OSFI introduced two other changes:
    • Loan-to-value limits must be established and lenders will be required to ensure that they “are reflective of risk and are updated as housing markets and the economic environment evolve”
    • Lending arrangements designed to get around loan-to-value limits are restricted with the updated guideline explicitly forbidding ‘co-lending’ or ‘bundling’ arrangements.

Key Implications

  • As expected, OSFI has expanded the scope of the ‘stress test’ to include anyone taking out a mortgage at a federally regulated institution regardless of term and whether they are insured. Perhaps underscoring the logic behind the change, OSFI bank data for August of this year showed insured mortgages (which were already subject to the stress test) were down 4.5% year-on-year, while uninsured mortgage credit grew 17.3%. While this is partly related to the rising prices of Canadian real estate, with more and more of it priced above the insurance caps, it also likely reflects the skew stemming from the past stress test requirements. As such, today’s change, alongside the explicit guidance around co-lending arrangements, will together help address the shift as far as those borrowing from federally regulated institutions.
  • As discussed in our regional housing outlook, broadening the stress test will likely further slow housing activity, depressing demand by 5% to 10% once implemented, with some pull-forward of activity likely to take place ahead of the January 1st implementation date. Price growth will also be impacted, with these changes expected to exert a drag of between 2% and 4% over 2018. On balance, these changes should help enhance the resilience of the Canadian banking system in a rising interest rate environment.

Brian DePratto, Senior Economist

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GTA REALTORS® Release September Stats

October 4, 2017 –Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORS® reported 6,379 sales through TREB’s MLS® System in September 2017. This result was down by 35 per cent compared to September 2016.

The number of new listings entered into TREB’s MLS® System amounted to 16,469 in September – up by 9.4 per cent year-over-year.

“The improvement in listings in September compared to a year earlier suggests that home owners are anticipating an uptick in sales activity as we move through the fall. Consumer polling undertaken for TREB in the spring suggested that buying intentions over the next year remain strong. As we move through the fourth quarter we could see some buyers moving off the sidelines, taking advantage of a better-supplied marketplace,” said Mr. Syrianos.

The average selling price in September 2017 was $775,546 – up 2.6 per cent compared to September 2016. The MLS® Home Price Index (HPI) composite benchmark was up by 12.2 per cent on a year-over-year basis. A key reason for the difference in annual growth rates between the average price and the MLS® HPI composite is the fact that detached homes – the most expensive market segment on average – accounted for a smaller share of overall transactions this year compared to last.

“With more balanced market conditions, the pace of year-over-year price growth was more moderate in September compared to a year ago. However, the exception was the condominium apartment market segment, where average and benchmark sales prices were up by more than 20 per cent compared to last year. Tighter market conditions for condominium apartments follows consumer polling results from the spring that pointed toward a shift to condos in terms of buyer intentions,” said Jason Mercer, TREB’s Director of Market Analysis.

October 2017 TREB Market Watch

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GTA REALTORS® Release August Stats

September 6, 2017 — Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORS® reported 6,357 home sales through TREB’s MLS® System in August 2017. This result was down by 34.8 per cent compared to August 2016.

The number of new listings entered into TREB’s MLS® System, at 11,523, was down by 6.7 per cent year-over-year and was at the lowest level for August since 2010.

“Recent reports suggest that economic conditions remain strong in the GTA. Positive economic news coupled with the slower pace of price growth we are now experiencing could prompt an improvement in the demand for ownership housing, over and above the regular seasonal bump, as we move through the fall,” continued Mr. Syrianos.

The average selling price for all home types combined was $732,292 – up by three per cent compared to August 2016. This growth was driven by the semi-detached, townhouse and condominium apartment market segments that continued to experience high single-digit or double digit year-over-year average price increases.

The MLS® Home Price Index composite benchmark, which accounts for typical home types throughout TREB’s market area, was up by 14.3 per cent year-over-year in August. The fact that MLS® HPI growth outstripped average price growth, points to fewer high-end home sales this year compared to last.

“The relationship between sales and listings in the marketplace today suggests a balanced market. If current conditions are sustained over the coming months, we would expect to see year-over-year price growth normalize slightly above the rate of inflation. However, if some buyers move from the sidelines back into the marketplace, as TREB consumer research suggests may happen, an acceleration in price growth could result if listings remain at current levels,” said Jason Mercer, TREB’s Director of Market Analysis.

September 2017 TREB Market Watch