Randy Miller

Broker Of Record

Urban Avenue Realty Ltd., Brokerage

Whitby & Brooklin Real Estate

Office 905-430-1800

Direct 905-430-9444

Email: randy@randymiller.ca

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Rising house prices

Housing markets across much of province could be boosted by slumping oil and improving U.S. economy, economist predicts.

Toronto’s record house prices could soar a further 17 per cent by the end of 2017 as the lack of supply in the face of unrelenting demand continues to drive prices far beyond the rate of inflation, says the chief economist of Central 1 credit union.

Long-time housing watcher Helmut Pastrick says those who caution that Toronto’s market is in bubble territory and about to burst are based on “inadequate models” that ignore some key basics.

“The principal drivers of home prices are market demand and supply fundamentals. Toronto’s population is growing and supply is limited. Prices will keep rising until the next economic recession, whenever that is.”

Barring any unforeseen global crises, that’s at least two years off, predicts Pastrick, who’s studied the housing market for 40 years, 18 years as chief economist with Credit 1, the umbrella organization for about 130 credit unions in Ontario and B.C.

Ontario housing markets, with the exception of Toronto, have largely underperformed since 2001. But that’s now likely to change in the face of the “economic seismic shift” of slumping oil prices that may be a drag on the Canadian economy but a boon for Ontario exporters and manufacturers, says the economic forecast being released Thursday.

He anticipates that Toronto home prices, which averaged $573,183 in 2014 could soar to $670,000 by the end of 2017. Ontario house prices, which averaged $430,984 in 2014, could hit $496,000 during the same time.

Southwestern Ontario, and especially communities with a strong manufacturing base such as Windsor and Sarnia, are likely to see an uptick in jobs and economic growth which could play out in strong house sales and above-inflation price increases to the end of 2017, he adds.

Regional markets around the GTA — such as Kitchener-Waterloo, Barrie, Hamilton and the Niagara Peninsula — could also see a surge in sales partly as a result of Toronto’s tight market. That could translate into house price gains in the 16 per cent range over the next three years, says Pastrick.

The Canadian Real Estate Association recently predicted that low oil prices could result in a 1.1 per cent decline in national home sales through 2015, but a 2 per cent increase in average prices.

Read the full article: http://www.thestar.com/business/2015/03/25/torontos-record-house-prices-to-rise-further-by-2017.html By: Susan Pigg Business Reporter, Published on Wed Mar 25 2015

To learn more about local real estate market conditions in Whitby, Brooklin, Ajax, Pickering, Oshawa, Courtice and Bowmanville, please contact me.

Randy Miller
Broker of Record

Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

 

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San Francisco’s housing market is strong for many of the same reasons as Toronto’s:

- Migration, which is adding 10,000 new residents each year
- Low levels of unemployment which support prices
- Surging stock markets that make people feel wealthier
- High rents which make ownership attractive
- Low interest rates

Source: Paragon Real Estate Group

If Toronto’s housing market comes under pressure, the experience of San Francisco may offer some clues about what might happen. How far might prices fall? How long would the pain last and what would a recovery look like?

Even though GTA house prices have been predicted to fall in each of the past 10 years, they keep hitting new highs. The average price of a home in the GTA rose 7.5 per cent in January, year over year, bringing the average to $552,575.

The housing stakes are particularly high in the GTA, says TD Bank deputy chief economist Derek Burleton. He says a healthy real estate market is critical to the region’s overall fortunes and since the GTA is Canada’s economic engine, the rise or fall of housing carries a national weight.

As an example of what can happen, Burleton says the oil price shock is paralyzing Calgary’s housing market. Average prices are down 10 per cent from their highs and more is likely in store. Listings are rising, but buyers are few and far between.

“They’re saying, ‘Why buy now when you can wait and it will be cheaper?’ ” he says.

Burleton says GTA house prices are 10 to 15 per cent higher than they should be relative to rents and income growth. But that doesn’t mean a crash is coming now, or later. That number is a calculation and not necessarily the way people behave.

“Prices may be higher than they should be, but that can be sustained for years,” he says.

Burleton says it would take a huge economic shock, “a global event” to cause the kind of drop seen in the U.S. post-2008, where prices fell by an average 35 per cent over three years. But even that number is misleading because the experience in overbuilt Sunbelt states like Arizona and Florida was far more painful than big urban centres with real economies.

There are things we can conclude from the way cities like San Francisco coped with the crash. Bay Area prices tumbled by an average 27 per cent between 2008 and 2011 as part of the subprime mortgage lending collapse. By the end of 2014, they were 15 per cent above the 2008 peak.

San Francisco is similar in many ways to the GTA. The Bay Area includes Oakland and San Jose, the home of Silicon Valley. It has a metro population of 7.7 million. It attracts creative talent and offers high paid jobs.

The GTA has a population of about six million. Toronto is the head office capital of Canada as well as a centre for banking, investing and finance. Like San Francisco, the GTA attracts migration from other parts of the country, as well as investment from abroad. Both cities are social and cultural centres.

“When people talk about the most desirable places in North America to live, Toronto and San Francisco are usually on the list,” says Patrick Carlisle, chief market analyst with the Paragon Real Estate Group, one of San Francisco’s largest realtors.

Carlisle says the causes of the U.S. housing crash were unique. Ultralow rates following Sept. 11 supercharged mortgage lending. When that was combined with “refinance insanity and degraded loan underwriting standards” you set the table for disaster. He says criminally lax lending rules meant unemployed people, with no sources of income, were being qualified for mortgages worth hundreds of thousands of dollars. Those loans became assets on the books of banks and other lenders. Once these “homeowners” started defaulting, things quickly fell apart.

Home Price Index San Francisco
(Source: Paragon Real Estate Group)


Carlisle has looked at 30 years of San Francisco housing data that includes three corrections. One in 1991 lasted three years and led to an average 11-per-cent drop in prices. A one-year sell off in 2001 caused by the dot-com bust and Sept. 11 also saw prices fall 11 per cent. The third, averaging 27 per cent over three years, was the latest.

He says the broad cycle is consistent: price retreats for two or three years, a bottoming out for a couple more and then a quick climb. The cycles can be short or long, but are tied to economic well-being. Once recovery starts, prices quickly accelerate “as if somebody turned on a switch.”

San Francisco Housing Market Cycles
(Source: Paragon Real Estate Group)

Lawrence Yun, chief economist with the National Association of Realtors, a Washington, D.C., lobby group, agrees with Carlisle.

“One difference between Canada and the U.S. is that the U.S. had lax underwriting standards. The Canadian market has been fuelled by low rates and good underwriting standards that keep payments at manageable levels.”

Yun believes our housing market will stay intact as long as the economy is creating jobs.

“San Francisco is strong because the job market is strong. If you can hang on to jobs in Toronto, then prices will hold up,” he says “But if the economy goes into a mild recession home prices will decline.”

Yun says housing is affected by local economic conditions which is why prices rose in Dallas-Fort Worth during the worst of the bust. The oil industry was booming. These days, prices are falling in Dallas, as they are in Calgary.

Meanwhile, Boston has joined San Francisco in surpassing its 2008 price peaks, while Chicago, another city often compared with Toronto, has not.

The bigger point is that whatever happens will not be world ending, but part of a cycle that has repeated itself many times since the Dutch Tulip mania of the 1600s.

“While future cycles will vary in their details, the causes, effects and trends are often quite similar,” Carlisle says, adding in a recent research note: “Up, Down, Flat, Up Down, Flat . . . Repeat.”

Source: by Adam Meyers, The Star http://www.thestar.com/business/personal_finance/2015/02/18/if-gta-housing-unravels-how-it-might-unfold-mayers.html

Durham’s housing market off to a great start with a promising forecast for 2015

Within Durham Region price growth is anticipated to continue into 2015 and with low borrowing rates, housing remains affordable. For more insight into Durham Region's housing market, contact me!  

Randy Miller
Broker of Record

Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800


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Toronto

Toronto realtors look at it this way: Home prices may be considerably higher, but borrowing costs are lower.

In a mid-month report released today, the Toronto Real Estate Board said sales in the region surged almost 15 per cent in the first two weeks of February from the same period last year.

The average price, meanwhile, jumped 10.3 per cent to $602,110, while new listings rose at a slower pace of 3.5 per cent.

“While home prices are higher compared to this time last year, borrowing costs are lower,” the group’s president, Paul Etherington, said in releasing the report.

Behind the price surge are developments such as bidding wars.

“With tight market conditions continuing to prevail in most parts of the Greater Toronto Area, especially where low-rise home types are concerned, it is no surprise that we continue to see strong competition between buyers leading to robust annual rates of price growth,” said Jason Mercer, the group’s director of market analysis.

In the full month of January, Toronto sales rose 6.1 per cent, and the average price 4.9 per cent.

Canada’s housing market isn’t so much a national market, but rather a string of regions.

And, as The Globe and Mail’s Tamsin McMahon reports, the nature of those regions is changing markedly amid the oil slump.

Calgary, for example, which sits in the heart of Canada’s oil patch, was not that long ago the hottest market in the country.

But sales there are plunging now – down 35 per cent in January – along with the price of oil.

National sales fell 3.1 per cent last month from December. But if you strip out Calgary and Alberta, sales rose by 1.9 per cent.

Having said that, sales in certain other parts of Canada weren’t “especially hot either,” as 15 of the 26 markets measured saw no increase or an outright drop in January from a year earlier, noted chief economist Douglas Porter of BMO Nesbitt Burns.

“Canada’s housing market is cooling notably, largely because of the sudden deep chill in the previously hottest cities,” Mr. Porter said.

“However, there is still plenty of regional variation churning below the surface. We suspect that with borrowing costs still plumbing the depths and many provincial economies holding up, any housing correction will be a specific regional affair.”

In a new report released today, Mr. Porter's colleague at BMO, senior economist Sal Guatieri, said he expects house prices across Canada to rise 2 per cent this year, as the increases in Toronto and Vancouver overshadow the troubles of Calgary.

“However, rising interest rates in 2016 will restrain prices in these two cities,” he added.

When you strip out Vancouver and Toronto, Mr. Guatieri said, home prices “appear reasonable,” meaning less chance of a “severe” national correction.

But the fast pace of gains in Vancouver and Toronto, he warned, “raise the odds of a correction if economic conditions turn for the worse.”

Source: by Michael Babad, The Globe and Mail, Toronto’s housing surge: Prices jump 10%, borrowing costs ease

Randy Miller
Broker of Record

Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

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low mortgage rates

Nearly half of Canadians are planning to buy a home in the next five years, survey says. More than 15 per cent are saying cheaper mortgage rates will allow them to make the purchase sooner than expected.


On 1 February 2015 The Globe and Mail reported: Younger Canadians, who are struggling with far more debt than their parents did at the same age, are the most likely to respond to falling rates. More than a fifth of millennials told a Bank of Montreal home buyers survey that they have shortened their time-frame for buying a home because of lower rates and 75 per cent said they were planning on making a purchase within the next five years.

Regionally, the demand among buyers is strongest in Ontario and Atlantic Canada, where the combination of low interest rates and cheaper oil prices are poised to put more money in the pockets of consumers. Nearly a fifth of residents told pollsters that they would speed up their home purchase because of low interest rates.

In contrast, just 13 per cent of residents in Quebec and 12 per cent in Alberta said lower rates were having an impact on their buying decisions. Plunging oil prices have made Alberta consumers more cautious about jumping into the housing market this year, while a high vacancy rates and a glut of newly built condos in Quebec is pushing more potential first-time buyers into the rental market, according to Desjardins Group.

Mortgage rates have been falling since last week, when the Bank of Canada shocked markets by cutting interest rates by 25 basis points ( a basis point is a hundredth of 1 per cent.) Lenders soon followed, with major banks dropping five-year fixed rates mortgages to as low as 2.84 per cent and this week cutting their prime rates by 15 basis points, which quickly pushed variable-rate mortgages among the Big Six banks as low as 2.25 per cent.

Many analysts had predicted that interest rates would rise this year, so the central bank’s unexpected decision to slash rates is widely expected to reignite the country’s cooling housing market. “Given the negative impact of lower oil prices on the Canadian economy, interest rates are likely to remain low for some time, supporting home sales, especially in Vancouver and Toronto where affordability is an issue”, said BMO senior economist Sal Guatieri.

But with mortgage rates falling only slightly and more Canadians telling the BMO survey they were planning to use lower rates to pay down their debt rather than load up on new ones, cheaper rates are expected to have a modest impact on the housing market.

Shortly before the Bank of Canada cut its target overnight lending rate, more than half of Canadians told an earlier BMO poll that cheaper rates would make them more likely to buy a home, though most said the drop would need to be 10 per cent or more to have a significant impact on their buying plans.

Source: Tamsin McMahon, The Globe and Mail

If a move is in your future, let’s sit down and talk about your plans. Contact me today!

Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby
905-430-1800


Visit my blog: https://whitbybrooklinhomes.wordpress.com/

Whitby Brooklin Homes

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Rent vs Own

According to a survey of 1,300 millennials released this week by EliteDaily and Millennial Branding, nearly six in 10 millennials (59%) say they’d rather rent a home than buy one, with just one in four saying they are either very or completely likely to purchase a home in the next five years. A decision that could cost them more than $700,000 over the course of their lives.

(This anti-home-buying trend can already be seen: Currently, only about one in four millennials own a home, down from about one in three in the mid-70s and early 80s, according to data from the Demand Institute.) That’s “bad news for the real estate industry,” the report concludes.

The reasons for this sentiment are many. More than six in 10 feel they simply can’t afford it, the survey revealed (whether or not they actually can’t afford it is another question entirely). Plus, millennials tend to marry and have children later (two events that often inspire home purchases) and are a generation that doesn’t like feeling stuck in one place, says Dan Schawbel, the founder of Millennial Branding.

Whatever the reason, this decision may be a costly one. “In most markets it is still cheaper to buy than to rent [each month]” — even when you factor in the insurance and property tax payments, in addition to the mortgage payments, says Daren Blomquist, vice president of RealtyTrac. And because interest rates are so low, now is a good time to buy in many markets — at least if you plan on staying in the home over the long term (Blomquist says that, as a very rough rule of thumb, if you don’t plan on staying in the home you are buying for at least five years, it may make sense to rent instead of buy).

Plus, you’re working toward owning an asset when you buy — that’s not the case when you rent. Considering that the median home in America costs $190,000 and historic annual home price appreciation is around 3%, according to data from RealtyTrac, a millennial who bought an average home today (and put $19,000 — that’s 10% — down) with a 30-year fixed rate mortgage at 4% would outright own a home worth $426,000 in 2045, and pay a total of roughly $373,000 for it (mortgage, taxes and insurance included) — a difference of $52,000. Plus, after 30 years, the person could live rent-free — a compelling prospect for retirement.

If that same millennial rented — let’s assume he pays $1,312 a month in rent this year (which is the average fair market rent for a three-bedroom nationwide, according to RealtyTrac) — and his rent appreciates at a rate of 2.7% a year (the average increase over the past decade, RealtyTrac says), he’ll end up shelling out nearly $717,000 in rent over that 30-year period — all without an asset to show for it in the end. Of course, he can cut that by having roommates, but at some age, he’s probably going to want out of the roommate game, unless it’s a spouse or love interest.

That said, many millennials will likely rent now but buy a home down the road. But waiting to buy has its costs, too — interest rates and median home prices are likely to rise down the road. At current rates of appreciation, in 10 years the average home (now priced at $190,000) would be selling for about $249,000. If interest rates return to their historical norm (from over the past 15 years) of 5.6%, a monthly house payment (including mortgage, taxes and insurance) on a $249,000 home would be $1,574 a month, a 52% increase over the $1,037 house payment for a median priced home now; plus, over that 30 years, you’d pay a total of $566,640 (assuming you put 10% down) for a home worth $558,356 at the end of that period. “In this scenario you wouldn’t come out positive on your investment in the property until a year after the mortgage was paid off, in 2056 — at which point the home would have a projected value of $573,608,” explains Blomquist.

Of course, there are some compelling reasons to rent. You have more flexibility when renting, as you aren’t tied to a mortgage payment, and savvy investors can likely get higher than 3% annual returns elsewhere. And, quite frankly, “if you can’t afford it, don’t buy,” says Blomquist; you don’t want to end up in a situation where you have to foreclose on a home.

By Catey Hill, marketwatch.com

If you are thinking of buying a home in Whitby or Brooklin, or other areas within Durham Region, let me be your personal guide on your journey to home ownership. My priority is to provide outstanding service to you and make you happy by finding the perfect home for you! Contact me today!

Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

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