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President's Toronto SUN Column

TREB President's Column as it appears every Friday in the Toronto Sun's Resale Homes and Condos section.

New Mortgage Rules Won’t Hurt Affordability

July 13, 2012 -- Greater Toronto REALTORS® reported 9,422 home sales through the TorontoMLS system in June 2012. The number of transactions was down by 5.4 per cent in comparison to June 2011. The year-over-year decline was largest in the City of Toronto, where sales were down by 13 per cent compared to June 2011. Sales in the rest of the Toronto Real Estate Board (TREB) market area were comparable to a year ago.

Buyers continue to face the substantial upfront cost associated with the City of Toronto’s unfair Land Transfer Tax. Recent polling by TREB suggests that many households are considering home purchases outside of the City of Toronto to avoid paying the Land Transfer Tax. This goes a long way in explaining the disproportionate decline in sales in the City versus surrounding regions.

The average selling price in June was $508,622 – up by 7.3 per cent compared to June 2011. The mortgage payment associated with the average priced home in June, assuming five per cent down and a five-year fixed rate mortgage amortized over 25 years, would account for approximately 35 per cent of the average household’s income in the GTA after adding property tax and utility payments.

I asked Jason Mercer, TREB’s Senior Manager of Market Analysis to provide some commentary on the monthly stats, and the recent news of new lending guidelines.

“According to new mortgage lending guidelines set out by Finance Minister Jim Flaherty, the GTA housing market remains affordable. The share of the average household’s income going toward major home ownership payments for the average priced home remains below the 39 per cent ceiling recently announced by Mr. Flaherty,” said Mr. Mercer,.

“The average household in the GTA continues to benefit from a considerable amount of flexibility to account for higher interest rates moving forward,” continued Mercer.

As for the commercial market, TREB’s Commercial Division Members reported almost 3.5 million square feet of total leased space in the second quarter of 2012. This figure represented a decline of 22 per cent compared to 4.4 million leased square feet in Q2 2011. While the amount of space leased was down year-over-year, average lease rates were up for industrial, commercial/retail and office properties.

Industrial properties accounted for close to 80 per cent of total leased space through the TorontoMLS system in the second quarter, with deals completed for over 2.7 million square feet of industrial space – down by seven per cent compared to Q2 2011. The average lease rate for industrial properties transacted on a per square foot net basis and for which pricing was disclosed was $4.92, representing a 13 per cent increase year-over-year.

I asked TREB’s Commercial Division Chair Cynthia Lai to provide further insight.

“Given the degree of economic uncertainty that has characterized the Canadian economy this year, it is not surprising that the amount of space leased was down in the second quarter compared to the same period in 2011. With this said, while some firms may have temporarily taken a step back from further real estate investment, we continued to see enough demand for average lease rates to remain buoyant over the past year,” commented Ms. Lai.

Sales of industrial and commercial properties, with 98 and 95 transactions respectively, were down in comparison to the second quarter of 2011. There were also 50 office transactions representing a slight increase over Q2 2011. Changes in average selling prices compared to last year were mixed. The average price per square foot for sold industrial properties was up substantially on a year-over-year basis, whereas the average selling prices for commercial/retail and office properties were down.

“Price change can often be driven by a change in the composition of sales from one year to the next. This was certainly the case for industrial transactions in the second quarter. Last year, larger industrial properties, which generally sell for less on a per square foot basis, accounted for a much greater share of transactions compared to 2012. This compositional shift was the main driver of the jump in the average industrial selling price,” continued Lai.

Ann Hannah is President of the Toronto Real Estate Board, a professional association that represents 34,000 REALTORS® in the Greater Toronto Area.

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July 6 It’s all about growing along with our clients
June 29 A look at Mortgage Lending Guideline Changes
June 22 Expect Number Of New Listings To Increase
June 15 Working To Repeal The Land Transfer Tax
June 1 TREB Announces Commercial Building Awards
May 25 Serving Others Is The Highest Honour Of All
May 18 Standing up for Homeowners’ right to privacy
May 4 REALTORS® offer key to a better life
April 20 Affordable Homeownership Benefits Us All
March 30 Keep Your Home Insurance Costs In Line
March 2 It Pays To Lower Your Expectations
February 24 Homes Continue To Sell Quickly
February 17 New Tool Measures Price of Home
February 10 New Building Awards Will Benefit Our City
January 27 Tightening market will mean higher prices
January 13 Expect demand to be strong in 2012
December 30 Finishing the year on a high note
December 8 It’s Time to Lend a Helping Hand
November 25 Helping those less fortunate
November 18 Building up to National Housing Day
October 28 First-Time Buyers Have Lots Of Options
October 21 Using A Realtor To Buy A New Home
October 14 Celebrating Many Years Of Service
October 7 Renovation Rebate Would Benefit Homeowners
September 30 Land Transfer Taxes Unfair to Home Buyers
September 23 Energy Rebates Should Be A Priority
September 16 Tell City Hall to Target Waste, Not Home Buyers
September 2 Realtors ride for a great cause
August 26 Strong economy sees numbers boosted
August 19 New Web Site Easy to Use
August 15 Learn to keep termites at bay
August 9

Public and Businesses See Eye-to-Eye on Municipal Finance Issues

July 22 Know when it's time to renovate
July 8 Treat first-time buyers fairly
June 17 Time To Repeal The Land Transfer Tax
June 10 Take a tour of the virtual office
June 3 Parking red tape should be streamlined
May 27 Helpful Advice Is Keystrokes Away
May 20 Taking a walk through REALTOR® QUEST
May 13 The social side of real estate
May 6 Staying on top of municipal issues
Apr. 29 Expect demand to remain strong
Apr. 22 Know what to look for in a condo
Apr. 15 Choosing between new and resale
Apr. 8 Learn to use the tools of the trade
Apr. 1 Expect demand to remain healthy
Mar. 25 City needs to cut parking red tape
Mar. 11 Select the right neighbourhood
Mar. 4 Consider investing in a fixer-upper
Feb. 25 Expect homes to remain affordable
Feb. 18 REALTORS® help clarify parking rules
Feb. 11 Learn the benefits of going online
Feb. 4 Increase the value of your resale
Jan. 28 Know the value of a REALTOR®
Jan. 21 Move is on to repeal an unfair tax
Jan. 14 Choose a home that fits your style
Dec. 17 Working Hard to Make a Difference
Nov. 19 Sorting out HST misconceptions
Nov. 12 Give more thought to going green
Nov. 5 All signs point to a healthy market
Oct. 29 Green your home and save money
Oct. 15 Keeping your best interest in mind
Oct. 8 All signs point to a healthy market
Oct. 1 Condos have become a way of life
Sept. 24 Setting the HST record straight
Sept. 17 Coming to 'Terms' with Real Estate
Sept. 10 Growing Up and going green
Sept. 3 Keeping your best interest in mind
July 16 Charity begins and ends at Home
July 9 Saving the HST with Resale Housing
July 2 Recognizing Our Volunteer Efforts
June 25 Getting to know all your options
June 18 Embracing Diversity in the GTA
May 28 REALTORS® need to know quite a lot
May 14 April transactions nearly met record
May 7 Shopping for the best deal in Town
Apr. 30 The Hidden costs of moving
Apr. 23 Knowing all the local options
Apr. 16 Many ways to cut energy costs
Apr. 2 It pays to renovate before you sell
Mar. 26 Working in your best interests
Mar. 12 Growing Tax burden is taking its toll
Mar. 5 A Professional Touch
Feb. 26 Registry links buyers to homes
Feb. 19 Mitigating the HST tax threat
Feb. 12 Expect strong start to 2010 to continue
Feb. 5 Helping those in desperate need in Haiti
Jan. 29 Having a green home provides savings and peace-of-mind
Jan. 22 REALTORS® assist with Rentals Too
Jan. 15 REALTORS® Give Back
Jan. 8 Why our REALTORS® are the envy of the world
Dec. 11 Making the jump to home ownership
Dec. 4 Your kind of town, Toronto is
Nov. 27 Emerging Neighbourhoods
Nov. 20 Mid-Month market report: The economic recovery continues
Nov. 13 There's More to us than MLS
Nov. 06 Fix-up Frenzy
Oct. 30 A Taxing Issue: Let's call on future mayor to roll back LTT
Oct. 23 Where to buy
Oct. 16 Value Added
Oct. 10 Market report
Sept. 25 NO sense of harmony
Sept. 18 Vertical City - The GTA is growing up and going green
Sept. 11 Go Site-seeing
Sept. 04 A changing shade of grey
August 28 Gateway to the World
August 21 Vertical City – Toronto is Growing Up
August 14 A new way to hunt for homes
August 7 Home Away from Home
July 31 The Canadian Dream
July 24 Move or Improve
July 17 Weathering the Storm
July 10 Mid-year market report
June 26 Making the Right Connections
June 19 Condo City
June 12 More co-op on grow ops
June 5 Investing in Real Estate
May 29 The News is Good
May 22 Ownership Housing Plays Important Role
May 15 REALTORS® Invest Time to Improve
May 8 REALTORS® take message to Ottawa
May 1 REALTOR® Education
Apr. 24 Community Spirit Alive
Apr. 17 Tech tools of the trade
Apr. 10 Public Wants Toronto Land Transfer Tax Repealed
Apr. 03 Invest In Future
Mar. 27 Agents of Change
Mar. 20 Harmonized Sales Tax Would Hurt Home Buyers
Mar. 13 Actions Speak Louder than Words on Affordable Housing
Mar. 06 Market review: 2009 so far
Feb. 20 Scholarships offered by real estate board
Feb. 13 Make Home Owners Priority of City Budget
Feb. 06 Federal Budget Helps Home Buyers and Owners
Jan. 30 January's Resale Housing Market Report
Jan. 23 TREB to Feds: More help to Homebuyers
Jan. 16 Lifestyles in the 416 and 905
Dec. 19 Be prepared for closing costs
Dec. 12 Toronto Land Transfer Tax Costs City's Economy $170 million
Dec. 5 Understand your privacy and rights
Nov. 28 Seasons of Real Estate
Nov. 21 Setting the Stage for a Sale
Nov. 14 The Ins and Outs of Inspections
Nov. 7 Outlook still good for GTA
Oct. 31 Taking Advantage of Taxes
Oct. 24 The Ins and Outs of Insurance
Oct. 17 Fighting Back Against Fraud
Oct. 10 Local Market Holds Steady
Oct. 3 Show Good Form During a Deal
Sept. 26 Using Equity to Your Advantage
Sept. 19 Choices Abound but Choose Carefully
Sept. 12 GTA Housing Market Stable
Sept. 5 Points to Ponder This Fall
Aug. 29 Don't Take This For Granted
Aug. 22 A Helping Hand
Aug. 15 A Market Report for July
Aug. 8 A Primer on Attracting Buyers
Aug. 1 Returns on RENOs
July 25 New Federal Mortgage Rules
July 18 Revitalizing the Big Smoke
July 11 Condos Changing the GTA
July 4 Feeding the City's Future
June 27 Recognizing Volunteers
June 20 Buyers, Be Aware of the New Rules
June 13 The Market Remains Healthy
June 6 Reasons to Pick a REALTOR®
May 30 The Power of MLS
May 23 Greening Up Resale Homes
May 16 A Quest for Knowledge
May 9 Lobbying Goes a Long Way
May 2 Toronto Compared
Apr. 25 Beware of Hidden Development Charges
Apr. 18 From the President
Apr. 11 Guarding Against Grow-Ops
Apr. 4

The Importance of the Budget

Mar. 28 Another Way to Invest in Real Estate
Mar. 21 Federal Budget Misses Opp
Mar. 14 Prepare Now for a Spring Move
Mar. 7 Remember to Budget for City's Budget
Feb. 29 From the President