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Jane Chen
Sales Representative

RE/MAX Realtron Realty Inc.
Independently owned and operated

Phone: 905-470-9800  Fax: 905-470-7770  Mobile: 416-418-9568

Moderation—not correction—on tap for Canadian housing markets in 2013, says RE/MAX

November 14, 2012 - Updated: November 14, 2012

Mississauga, ON (November 14, 2012) -- Canadian real estate markets demonstrated remarkable resilience in 2012—with home sales up or on par in 65 per cent of major centres—despite considerable headwinds in terms of tighter financing and economic uncertainty abroad.  The trend is expected to continue, with home-buying activity propped-up by low interest rates and an improved economic picture in 2013, according to a report released today by RE/MAX.


The RE/MAX Housing Market Outlook 2013 examined trends and developments in 26 major markets across the country.  The report found that the number of homes sold is expected to match or exceed 2011 levels in 65 per cent of markets (17/26) in 2012, led by strong activity in Western Canada, including Calgary (up 13.5 per cent) and Regina (eight per cent).  Eighty-one per cent (21/26) of markets are set to experience average price increases by year-end 2012, with Regina the country’s frontrunner at eight per cent, followed by Hamilton-Burlington, Greater Toronto, and Fredericton at seven per cent and Saskatoon at 6.5 per cent.  The forecast for 2013 shows the upward trend moderating, but values still ahead of 2012 levels in 85 per cent (22/26) of centres.   Stability is forecast to characterize Canadian real estate in the new year, with sales above or on par with 2012 levels in 81 per cent (21/26) of markets.



Greater Toronto Area

Greater Toronto’s residential real estate market could best be described as a tale of two cities in 2012—with single-detached homes experiencing solid momentum throughout the year, while demand for condominium apartments softened. The disparity between the housing types became increasinglypronounced with each passing month, with sales of detached, semi-detached, attached/row and freehold townhouse properties up two per cent in the first three quarters of the year (47,056 vs. 46,309) and condominium apartments down eight per cent (15,889 vs. 17,310) during the same period.At the start of the year, new condominium projects and developments totalled close to 150—the highest level in North America—raising serious concerns regarding the number of units coming on-stream and the potential for a glut of inventory.



The number of investors in the new condominium marketplace—estimated to be as high as 60 per cent on some downtown projects—also increased the vulnerability of the housing type. Yet, by the time that the federal government made its third round of changes to CMHC mortgage rules and regulations, the market for new product had softened considerably, with the resale condominium market following in lock-step. Condominium apartments and townhomes dropped from approximately 32.3 per cent of total residential sales to 30.6 per cent in the fi rst three quarters of 2012, despite theaffordability factor and vacancy rates for rental accommodations at 1.3 per cent. Fewer sales overall were reported at entry-level price points for all housing types, with sales under $400,000 falling to 45.3 per cent of activity—compared to 51.9 per cent one year prior. While condominiums represented the vast majority of sales under $400,000 price point, some detached properties east, west, and north of the city were impacted. In direct contrast, sales of luxury product priced in excess of $1.5 million comprised a larger segment of the market in 2012, representing 1.9 per cent of total residential sales, up from 1.5 per cent in 2011. Heated demand, particularly in the first and second quarters of the year spurred strong activity in the upper-end, with the number of homes sold upapproximately 24 per cent over 2011 levels. The central core was particularly robust, with sales of upscale homes in blue-chip neighbourhoods such as Rosedale, Forest Hill, Lawrence Park, Hogg’s Hollow, and the Bridle Path reaching new heights. The Beach to the east and the Kingsway, Princess Ann Manor, Lorne Park, and Oakville to the west also experienced brisk activity at the top end. After a strong start to the year, the GTA housing market has returned to more normal levels of activity. The feeding frenzy of early 2012—characterized by limited inventory levels, bidding wars, and bully offers—has given way to more balanced conditions.



In some instances, frustrated homebuyers took matters into their own hands, delivering unsolicited letters of interest to homeowners, even if the subject property was not currently listed for sale. While sellers of detached homes remain firm in the driver’s seat, purchasers are not prepared to throw caution to the wind. Existing homeowners who price their homes above fair market value will find their listings will stagnate—especially as more homes hit the market. By year-end, 85,000 properties are expected to change hands, down five per cent from last year’s heated pace of 89,099 units.Average price is forecast to climb seven per cent to $498,000, up from $465,412 in 2011. Canada’s financial capital continues to experience growth, with GDP expected to climb by 2.6 per cent this year and accelerate once again in 2013. Ranked the fourth most livable city in the world by the Economist Magazine in 2012, the Greater Toronto Area remains the top destination for new immigrants to the country, with more than 30 per cent of all newcomers settling in the area. In 2011alone, the city welcomed close to 78,000 permanent and temporary residents. Infrastructure spending remains strong in the GTA, with the $8.4 billion TTC expansion leading the way. The film production industry continues to show strong momentum in the city and the province. Production volume of film and television projects in Ontario climbed to a record $1.26 billion last year, an increase of 31 per cent since 2010. Commercial /offi ce development has also factored into the equation, with at least 15 of the 150 cranes dotting the skyline representing that segment of the market. With multi-unit rentalstarts running at a 20-year high, it’s expected that a large percentage of condominiums currently underway will eventually filter into the rental pool, helping to alleviate some of the tight conditions that exist as a result of low vacancy rates.


After an extended lull, historically low interest rates are predicted to once again kick-start homebuying activity in the Greater Toronto Area. Move-up buyers taking advantage of solid equity gains will account for the vast majority of residential sales in the year ahead, while first-time buyers take a back seat. Tighter lending criteria introduced mid-2012 will continue to impact entry-level purchasers. Condominium apartments, in particular, will feel the pinch, with sales tapering in that segment of the market. The balanced conditions that emerged in the final quarter of 2012 are expected to remain in place—with thesupply of homes listed for sale meeting demand. By year-end, home sales are forecast to climb to 85,000 units, a figure on par with year-ago levels. Average price is expected to experience a nominal increase, rising two per cent to $510,000 in 2013— reflecting a greater number of sales in the upperend of the market.















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