There's lots of bad news and more job losses in store, but a recent real estate panel organized by Bank of Montreal in Toronto had positive things to say about the housing market in Toronto and elsewhere.
Broker Brad Lamb, one of four experts, identifies December - the month his office phones stopped ringing - as the Toronto market bottom.
As evidence, he points to the diminishing decline in Toronto Real Estate Board resale volume numbers: In November 2008, they were down 45 per cent from a year earlier; in December, down 55 per cent; January, 45 per cent; February, 31 per cent; and March, only 7 per cent.
Then, he highlights the decline in the average number of days a property is on the market before being sold: 39 days in March versus 45 days in February.
"That's taking into consideration the $200,000 studio apartment, and it takes into consideration a $10 million Bridle Path home. That's an astonishing, confident number."
Lamb also says multiple offers have returned.
"Believe it or not, in the month of March, 20 per cent of all the MLS (Multiple Listing) sales had more than one offer at the same time."
Given those figures, "I can't believe we're in it, but there is evidence we are returning to a sellers' market." Mind you, he tempered his bullish comments, noting he was a "100 per cent glass-full kind of guy," who's never negative.
Even in Toronto's condo sector, where projects with more than 32,000 units will be completed this year and next, Lamb does not expect a supply glut or price declines, as unsold inventory and investor-purchased units go up for sale. In fact, he predicts a shortage in 2011 and resulting price increases, because of the lack of new projects.
"There hasn't been a successful condo launch since August '08, and there won't be until spring 2010," the condominium specialist said with confidence. "So you're taking about 25,000 sold units out of the construction starts."
Bank of Montreal senior economist Sal Guatieri laid on the bad economic news of 357,000 job losses nationwide since October and 200,000 yet to come, along with another six months of declining economic activity. He expects unemployment to rise to 9.5 per cent next year from 8 per cent, but that's below the 12 to 13 per cent of earlier downturns.
Canadian home sales and starts have plunged 40 per cent, and house prices, an average 14 per cent. On the upside, affordability is now in line with long-term norms, given lower prices and interest rates that have cut mortgage payments on average homes by one-third.
Guatieri expects interest rates to continue low into next year, spurring increased home sales in 2010. Some long-term mortgage rate cuts may still lie ahead, and it will be well into next year before borrowing costs trend upward.
"We're expecting the housing market to correct further this year, but not crash as per the U.S. and several other countries," was Guatieri's assessment.
Phil Soper, president of Brookfield Real Estate Services, offered his Canadian outlook: "I don't foresee a sharp recovery in home prices over the next six months. Prices should stabilize on a year-over-year basis by the second half of this year."
He expects only moderate price rises on a national basis at "a very slow snail-like pace for the next couple of years."
Of course, there will be exceptions. He points to a 15 per cent increase in house prices in St. John's in this year's first quarter, because of supply issues.
Both Soper and Century 21 Canada Limited Partnership president Donald Lawby commented on strength in first-time buyer activity. "There seems to be significant activity in entry-level real estate across this country," Lawby observed. "They're reacting to the current interest rates."
Soper describes the first-time buying uptick as "astonishing." Carrying costs now make home ownership enticing compared to renting, and public policy - increases in the amount first-time buyers can withdraw from registered retirement savings, closing cost credits and land transfer tax rebates - also helps sustain this part of the market, which is crucial to the health of the entire housing sector, he says.
Overseeing the businesses of Royal LePage and Johnson & Daniel, Soper describes the current downtrend as a normal, cyclical correction that was broadsided by the global financial crisis. He maintains the Canadian housing market turned negative in 2007, and we're now six quarters (18 months) into the decline.
"The longest period of housing market correction in the last 30 years has been seven quarters," he points out. "So we're coming up on the longest correction in this industry. It's not nearly as severe as previous ones, although we have this really dangerous backdrop."
As for Lawby, he reminded the audience of the high unemployment and interest rates of earlier recessions. Mortgage rates hit 12 3/4 in the 1989 market crash and an unbelievable 25 per cent in the early 1980s. Now five-year fixed rates are below 5 per cent.
"I would say, looking at it, considering the size of the (worldwide) economic meltdown, that the impact on the housing market has been quite minimal," he said.
SOURCE: THE TORONTO STAR - YOURHOME.CA