Market According to Mercer October 2012

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Here is a great presentationo by the Toronto Real Estate Board's Jason Mercer for October 2012.

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Market According to Mercer October 2012

  1. 1. Market According to MercerMarket Overview & Outlook: 2012/2013 October 2012
  2. 2. Presentation Outline 1. Economic Overview/Outlook 2. Trends and Outlook for TorontoMLS Sales 3. Trends and Outlook for TorontoMLS Average Selling Price 4. Rental Market Overview 5. SummaryToronto Real Estate Board Market According to Mercer, October 2012 1
  3. 3. GDP growing slowly Canadian Real GDP, Quarterly Annualized Quarter-Over-Quarter Per Cent Change 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% Source: Statistics CanadaToronto Real Estate Board Market According to Mercer, October 2012 2
  4. 4. Slow/uncertain jobs recovery GTA Unemployment Rate14%12%10% 8% 6% 4% 2% 0% Jan-12(F) Jan-13(F) Jan-88 Jan-90 Jan-91 Jan-94 Jan-95 Jan-97 Jan-98 Jan-01 Jan-02 Jan-04 Jan-05 Jan-08 Jan-09 Jan-11 Jan-89 Jan-92 Jan-93 Jan-96 Jan-99 Jan-00 Jan-03 Jan-06 Jan-07 Jan-10 Source: Statistics Canada (Historic); TREB (Forecast)Toronto Real Estate Board Market According to Mercer, October 2012 3
  5. 5. Income growth creeping above inflation Annual Growth Rate for Average Weekly Earnings 5% 4.7% 4% 4.4% 4.2% 3.6% 3% 3.2% 3.0% 2% 2.5% 2.5% 0.8% 2.1% 2.1% 2.0% 1.6% 1.3% 1.5% 1% 0%-1% -1.0%-2% Source: Statistics Canada (Historic); TREB (Forecast)Toronto Real Estate Board Market According to Mercer, October 2012 4
  6. 6. Income growth creeping above inflation GTA Household Income $120,000 $100,000 $106,500 $104,000 $80,000 $60,000 $40,000 $20,000 $0 Source: Statistics Canada; TREB ForecastToronto Real Estate Board Market According to Mercer, October 2012 5
  7. 7. Little or no movement from Bank of Canada Consensus Outlook for the Bank of Canadas Target for the Overnight Lending Rate 7% Bank of Canada Target for the Overnight Rate 6% 3-Month T-Bill (Forward Rates) 5% 4% 3% 2% 1% 0% Source: Bank of Canada, Toronto Real Estate BoardToronto Real Estate Board Market According to Mercer, October 2012 6
  8. 8. Five-year mortgage could increase Outlook for the Average Five-Year Fixed Mortgage Rate 10% 9% 8% 7% 6% 5% 4% Source: Bank of Canada, Toronto Real Estate BoardToronto Real Estate Board Market According to Mercer, October 2012 7
  9. 9. Presentation Outline 1. Economic Overview/Outlook 2. Trends and Outlook for TorontoMLS Sales 3. Trends and Outlook for TorontoMLS Average Selling Price 4. Rental Market Overview 5. SummaryToronto Real Estate Board Market According to Mercer, October 2012 8
  10. 10. Government Intervention Changes to Mortgage Lending Guidelines Recent Changes Include: • Reduction of maximum amortization period to 25 years • Maximum GDS set to 39 per cent • Lower maximum borrowing amount when refinancing (80% vs. 85%) City of Toronto’s Land Transfer Tax • Additional upfront cost of home ownership in the City of Toronto www.LetsGetThisRightToronto.caToronto Real Estate Board Market According to Mercer, October 2012 9
  11. 11. ‘416’ sales well-below pre-recession peak TorontoMLS Sales: City of Toronto 4,000 LTT 3,500 3,000 2,500 2,000 Reduction to 25-Year Amortization. 1,500 Source: Toronto Real Estate BoardToronto Real Estate Board Market According to Mercer, October 2012 10
  12. 12. ‘905’ / ‘705’ sales have fared better TorontoMLS Sales: TREB 905/705 Areas 5,500 LTT 5,000 4,500 4,000 3,500 3,000 2,500 Reduction to 25-Year Amortization. 2,000 Source: Toronto Real Estate BoardToronto Real Estate Board Market According to Mercer, October 2012 11
  13. 13. 2012/2013 TREB Sales Forecast TorontoMLS Sales Outlook 95,000 90,000 89,666 88,000 85,000 84,500 80,000 75,000 70,000 65,000 60,000 55,000 50,000 Source: Toronto Real Estate BoardToronto Real Estate Board Market According to Mercer, October 2012 12
  14. 14. Presentation Outline 1. Economic Overview/Outlook 2. Trends and Outlook for TorontoMLS Sales 3. Trends and Outlook for TorontoMLS Average Selling Price 4. Rental Market Overview 5. SummaryToronto Real Estate Board Market According to Mercer, October 2012 13
  15. 15. Strong price growth continues Average Annual Price Growth, Sept. 2012 TorontoMLS Average Price & MLS® HPI By Home Type 14% TorontoMLS Average Prices 12% 12% MLS® HPI Benchmark Prices 10% 8% 8% 6% 7% 7% 6% 6% 4% 5% 2% 2% 0% Detached Semi-Detached Townhouse Condominium Source: Toronto Real Estate Board ApartmentToronto Real Estate Board Market According to Mercer, October 2012 14
  16. 16. Listings still below pre-recession levels TorontoMLS Monthly Active Listings 30,000 25,000 20,000 15,000 Actual Active Listings Trend 10,000 Source: Toronto Real Estate BoardToronto Real Estate Board Market According to Mercer, October 2012 15
  17. 17. Months of Inventory tells the story Months of Inventory & Average Annual Price Growth 5.0 25.0% Average Annual Price Growth 4.5 20.0% Average Price Growth Months of Inventory 4.0 MOI Trend 15.0% 3.5 10.0% 3.0 5.0% 2.5 0.0% 2.0 -5.0% 1.5 -10.0% Source: Toronto Real Estate BoardToronto Real Estate Board Market According to Mercer, October 2012 16
  18. 18. Strong price growth continues Average Annual Price Growth, Sept. 2012 TorontoMLS Average Price & MLS® HPI By Home Type 14% TorontoMLS Average Prices 12% 12% MLS® HPI Benchmark Prices 10% Condo price growth has been lagging. 8% 8% 6% 7% 7% 6% 6% 4% 5% 2% 2% 0% Detached Semi-Detached Townhouse Condominium Source: Toronto Real Estate Board ApartmentToronto Real Estate Board Market According to Mercer, October 2012 17
  19. 19. Dichotomy between low and high-rise listings TorontoMLS Active Listings TorontoMLS Active Listings Low-Rise Trend High-Rise Trend Decade High 20,000 6,500 18,000 6,000 5,500 16,000 5,000 14,000 4,500 Decade Low 12,000 4,000 10,000 3,500 Jan-05 Jan-07 Jan-09 Jan-05 Jan-07 Jan-09 Jan-03 Jan-04 Jan-06 Jan-08 Jan-10 Jan-11 Jan-12 Jan-03 Jan-04 Jan-06 Jan-08 Jan-10 Jan-11 Jan-12 Source: Toronto Real Estate Board Source: Toronto Real Estate BoardToronto Real Estate Board Market According to Mercer, October 2012 18
  20. 20. Many more condo listings Toronto CMA Condominium Apartment Completions (Annualized, 12-Month Moving Average)20,00018,00016,00014,00012,00010,000 8,000 6,000 4,000 2,000 0 Source: CMHC; TREB AdjustmentToronto Real Estate Board Market According to Mercer, October 2012 19
  21. 21. Months of Inventory tells the story Months of Inventory Trend Average Spread: 0.6 Months Low-Rise vs. Condo Apartments 5 MOI Low-Rise (Trend) MOI Condo (Trend) 4 3.7 Months 3 2 2.2 Months 1 Source: Toronto Real Estate BoardToronto Real Estate Board Market According to Mercer, October 2012 20
  22. 22. Strong price growth continues… TorontoMLS Average Selling Prices$600,000 All Types$550,000 Condominium Apartments$500,000 Low Rise$450,000$400,000$350,000$300,000$250,000$200,000 Source: Toronto Real Estate BoardToronto Real Estate Board Market According to Mercer, October 2012 21
  23. 23. 2012/2013 Average Price Forecast TorontoMLS Average Price Outlook$550,000$500,000 515,000 500,000$450,000$400,000$350,000$300,000$250,000$200,000$150,000$100,000 Source: Toronto Real Estate BoardToronto Real Estate Board Market According to Mercer, October 2012 22
  24. 24. Affordability remains the keyTREB Affordability IndicatorShare of Average Household Income Used for Mortgage Principal and Interest,Property Taxes and Utilities on the Average Priced GTA Resale Home55% 39% Upper limit codified in50% latest mortgage lending guideline changes.45%40%35%30%25%Assumptions: Minimum allowable down payment, average 5-year fixed mortgage rate,maximum permitted amortization period.Source: Toronto Real Estate Board Data and Calculation; Statistics CanadaToronto Real Estate Board Market According to Mercer, October 2012 23
  25. 25. Lowest default rate in 20 years Share of Mortgages in Arrears Three or More Months Province of Ontario 0.8% 0.7% 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% Source: Canadian Bankers AssociationToronto Real Estate Board Market According to Mercer, October 2012 24
  26. 26. Presentation Outline 1. Economic Overview/Outlook 2. Trends and Outlook for TorontoMLS Sales 3. Trends and Outlook for TorontoMLS Average Selling Price 4. Rental Market Overview 5. SummaryToronto Real Estate Board Market According to Mercer, October 2012 25
  27. 27. Rental market better supplied in Q2/Q3 Rental Condo Apartments Listed & Rented Average Annual Per Cent Change Tightening Market Conditions More Balanced 30% 20% Listed Rented 10% 0%-10% Source: Toronto Real Estate BoardToronto Real Estate Board Market According to Mercer, October 2012 26
  28. 28. Slower average annual rent growth TorontoMLS Condo Apartment Rent Growth Weighted Average for 1-Bdrm. & 2-Bdrm. Units 6% 5% 4% 3% 2% 1% 0% -1% -2% -3% Source: Toronto Real Estate BoardToronto Real Estate Board Market According to Mercer, October 2012 27
  29. 29. Condo vacancy rate remains very low GTA Condominium Apartment Vacancy Rate 1.8% 1.6% 1.6% 1.4% 1.4% 1.2% 1.0% 1.1% 0.8% 0.9% 0.8% 0.8% 0.6% 0.7% 0.4% 0.4% 0.4% 0.4% 0.2% 0.1% 0.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Canada Mortgage and Housing CorporationToronto Real Estate Board Market According to Mercer, October 2012 28
  30. 30. Presentation Outline 1. Economic Overview/Outlook 2. Trends and Outlook for TorontoMLS Sales 3. Trends and Outlook for TorontoMLS Average Selling Price 4. Rental Market Overview 5. SummaryToronto Real Estate Board Market According to Mercer, October 2012 29
  31. 31. Summary 1. Home sales in the GTA have been impacted government policy and, to a lesser extent, by mediocre economic growth. 2. While sales are down, price growth is expected to continue through 2013, as market conditions remain tight, especially for low-rise home types 3. The ownership and rental markets will be better supplied in 2013, which will result in more moderate rates of price and rent growth.Toronto Real Estate Board Market According to Mercer, October 2012 30

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