Real estate chill; Trouble signs are there: Hot market finally slowing down
The Toronto Sun
Fri 22 Feb 2008
Blame Mayor David Miller's municipal land transfer tax. Blame one of the harshest winters on record. Blame skyrocketing property taxes. Blame a high dollar and gouging energy costs which are killing Ontario's golden goose.
And blame bonehead politicians who believe anyone who scrimps and saves to buy a home is fair game for higher taxes.
Here it comes: Finally, signs our hot real estate market that's been rockin' and rollin' since 1997 is slowing down.
In its latest report released yesterday, real estate giant Re/Max -- Ontario/Atlantic Canada, describes the last decade as one of the best ever with sales up 57% since 1997 to more than half a million sales last year, as more Canadians bought into the dream of home ownership.
PRICES ALMOST DOUBLED
Across the country, average prices almost doubled rising from $154,606 in 1997 to $307,265 in 2007. That's a decent 7.1% annual return on investment, even though there were some tumultuous events, like the high-tech meltdown, 9/11, SARS, mad cow disease and a blackout.
Returns were especially sweet out West, where record oil prices sparked a gusher of economic growth. Edmonton led the country with a whopping 203% spike in average home prices.
Calgary's prices were up 188.9%. And in Vancouver, home to the highest prices in the country, values were up 98.8%.
Even the GTA saw incredible growth, with prices up 78.1% to $376,236.
According to the Toronto Real Estate Board (TREB), price gains continue this year, with an average GTA home at $385,735 by mid February, up 7% from a year ago. And in the City of Toronto, they're up 11% year over year to $434,657.
But, cracks are showing with GTA sales down 14% to 3,240 homes changing hands in the first two weeks of February, compared to a year ago.
Hit hardest was the City of Toronto, where Miller's hated municipal land transfer tax kicked in Feb. 1 and where sales plunged 18% to only 1,066 homes sold. Meanwhile, in the 905 suburbs, where there is no municipal land transfer tax, sales were off by only 11%.
TREB president Maureen O'Neill blames a brutally harsh winter for a slump in sales and inventory.
"If you can't get buyers out to your open house, then you are less inclined to list. And fewer listings means less appealing products for the potential homebuyers. It's a compound effect," she said.
O'Neill is still predicting a strong spring market based on strong economic fundamentals. Re/Max is also optimistic predicting "healthy activity" across the country, even though the pace will moderate.
But yesterday, economists at Scotiabank downgraded Ontario's outlook warning we'll only see 1.4% growth in 2008, while Canada's economy shrinks to 1.9% growth, down from 2.6% in 2007.
But again, it's best out West with 3% growth.
A GREAT DECADE
Here's how average prices increased in housing markets from 1997 to 2007:
CITY - 1997 PRICE - 2007 PRICE - % CHANGE
VANCOUVER - $287,094 - $570,795 - 98.8%
VICTORIA - $218,398 - $466,974 - 113.8%
KELOWNA - $178,525 - $497,322 - 178.6%
CALGARY - $143,305 - $414,066 - 188.9%
EDMONTON - $111,587 - $338,636 - 203.5%
SASKATOON - $98,270 - $232,754 - 136.9%
WINNIPEG - $86,040 - $187,456 - 117.9%
BARRIE - $140,569 - $258,999 - 84.3%
TORONTO GTA - $211,307 - $376,236 - 78.1%
HAMILTON-BURLINGTON - $151,538 - $268,857 - 77.4%
LONDON-ST. THOMAS - $131,382 - $202,908 - 54.4%
KITCHENER-WATERLOO - $141,387 - $252,429 - 78.5%
SUDBURY - $108,521 - $182,536 - 68.2%
KINGSTON - $124,123 - $222,300 - 79.1%
OTTAWA-CARLETON - $143,866 - $277,058 - 92.6%
HALIFAX-DARTMOUTH - $109,827 - $216,339 - 97.0%
PRINCE EDWARD ISLAND - $86,403 - $133,457 - 54.5%
ST. JOHN'S - $92,226 - $149,258 - 61.8%
SAINT JOHN - $86,171 - $140,544 - 63.1%
SOURCE: CREA, local boards and RE/MAX