Interest rate drop brings bidding wars in Toronto
Christopher Stevenson, an agent with Sutton Group-Associates Realty Inc., says lower interest rates and a few high-profile sales have combined to bring a little bit of fresh vitality to the Toronto market. Still, lots of properties are changing hands without frenzied bidding wars and agents say new listings are trickling out slowly. The Toronto Real Estate Board reported this week that sales jumped nearly 15 per cent in the first two weeks of February in the Greater Toronto Area compared with the same period in 2014. The average price climbed 10.3 per cent but new listings edged up only 3.5 per cent in the first half of the month compared with the same period last year. Bidding contests such as the one for the semi-detached bungalow at 21 Berkshire Ave. have contributed to the price gains. Listed with an asking price of $499,000, it sold one week later on the night set for reviewing offers, for $595,000, after about 75 showings. “I think the interest rate announcement put a little bit of spark back in people.”
Calgary housing boom to bust?
More than five years of rising oil prices spurred thriving sales of million-dollar trophy homes in Calgary and a doubling of home prices in the last decade. As the oil crash forces energy firms in Alberta to cancel projects and fire workers, housing sales fell the most on record in December and January, with price declines expected to follow. Alberta “has gone from the top spot in the economic growth rankings to second from last on the provincial leader board,” said Derek Burleton, deputy chief economist at Toronto-Dominion Bank, in a note to clients. “A significant softening in job markets will set the stage for a second major housing correction in Calgary and Edmonton” not seen since 2008.
CMHC economist speaks on household debt
With today’s low interest rates and relatively health economy, the fact that Canadians are carrying household debt levels that are more than one and half times their annual income isn’t a problem. It’s when interest rates start rising and the economy gets hit by something like the 50 per cent drop in oil prices that Canadians should worrying, Bob Dugan said, CMHC economist in an article in the Regina Leader-Post. “The low level of liquidity and high concentration (in real estate) and lack of diversification is a vulnerability that can amplify an economic shock,’’ Dugan said. “The good news is the rate at which Canadians are taking on debt is decreasing.’’ If not taken care of, it could effect all Canadians, the economy and realtors as well.