This week’s top stories include how Toronto real estate has turned into a buyers market, how there is talk in the U.S. of a double dip recession, how the job market in Toronto is expected to be plentiful, how Vancouver home sales had a large decline in the month of June, how building permits in the month of May took a nose dive, how Royal LePage is predicting a market correction in housing prices and how U.S. jobless claims fell unexpectedly despite analysts predictions.
Buyers Market
During the span of the past few weeks, the resale housing market across the Greater Toronto Area (GTA) has begun to balance itself out. This is great for buyers as they will not have to compete with multiple offers on the same property and take a little more time before deciding to make the largest purchase of most people’s lives.
For buyers this means that they can now take the time to research the property thoroughly, make sure that the financing is secured, get a home inspection done and still allow time to sell their current property. For sellers this means that they can take the time to properly stage a home and do a pre-listing inspection to fix anything that needs repairs. The market has been a seller’s paradise for the past year with almost all properties across the GTA going into a multiple offer scenario but it couldn’t last forever. What are your thoughts? Please comment below.
U.S double dip?
The past few weeks have been disappointing for the U.S. economy with reports below expectations from a number of sectors. U.S. home sales have fallen, there was an unexpected rise in jobless claims and manufacturing activity is continuously slowing.
The major U.S. indexes produced a five day losing streak last week that is forcing people to ask of a double dip recession. TD Bank analyst Alistair Bently commented on Friday by asking, “If the economic recovery is for real, then why are markets acting like the party is over?” Even CIBC economist Avery Shenfeld stated that the global economy is at an inflection point and commented, “We are seeing a turn for the worse. A period of slower, or slow growth, or a turn for the worst, towards a renewed recession?”
Mr. Shenfeld reiterated “Our own long held view that the global economy will see much slower growth ahead. A turn to slowdown looks much like a turn towards outright recession in its early stages.” While the economy has downshifted in the past two months, this is still no where near a double dip recession. What do you think? Please comment below.
Toronto jobs to be plenty
According to a short term forecast by the Conference Board of Canada, job prospects are starting to look a lot brighter in Toronto. This is great news for the labour market report, which is expected to be released on Friday by Statistics Canada.
The Conference Board’s Index is based on the seasonally adjusted number of new, unduplicated, online job postings across 79 employment opportunity sites. They also have a barometer of labour market tightness, which takes the number of unemployed people and divides that by the number of online ads posted for employment. When the barometer falls it is a sign of a tightening labour market, when it rises it is a sign of a loosening labour market.
The economy in Canada has added roughly 30 000 jobs each month since the recovery began in July of 2009. The unemployment rate had reached a high of 8.7% during the recession in August of last year. BMO Capital Markets commented by saying, “The healthy improvement we’ve seen since last year is likely to slow in the months ahead. We see the jobless rate struggling to get below 8% by the end of the year.” What do you think? Please comment below.
Vancouver home sales decline
June saw Vancouver’s housing market slow down quite a bit as sales were down 30% from the same time the previous year. The sharp drop is evidence that the real estate market is beginning to cool after seeing strong numbers until May of this year.
The 2972 sales still managed to be the second busiest June on record for Vancouver after seeing the month of May take a large hit. Buyers were backing away from the Canadian housing market in May and drove sales lower than expected for what should be the busiest month of the year. Sales in May dropped 8.5% or to 40 393 units. Sales are still better than most historical markers but are 15% lower than the peak seen during last fall.
The Real Estate Board of Greater Vancouver (REBGV) stated that home sales dropped 30.2% in June when compared to the previous year and 5.8% from the month of May. Property listings were up 1.2% from May and 32% when compared to the previous year. The president of REBGV, Jake Moldowan commented, “The number of new listings coming on the market is not as dramatic as we saw over the previous three months and demand remains at a healthy level for this traditionally quieter time of year.”
May building permits plunge
Weakness in both the residential and non residential sectors caused the value of Canadian building permits issued in May to drop unexpectedly by 10.8% from the month of April. Market traders and analysts had forecasted a drop of only 2% originally.
Building permits are quite volatile as they rose by 12.3% in March. The recent figures and statistics are definitely negative and may indicate that the Canadian economic recovery is not complete as of yet. The residential sector saw a decline of 5.3% to $3.7 billion mainly attributed to a 9.2% decrease in permits for single family dwellings. Non residential permits were down 18.3% in May from April to $2.3 billion attributed to a 35.2% decrease in the commercial sector and a 21.6% drop in institutional permits.
Decline in real estate to come
The Royal LePage House Price Survey and Market Forecast was released this week with not so stellar news. Home prices are expected to keep climbing overall during the second half of this year but we will see a slight correction in pricing as sales fall.
In the second quarter of this year, the average price of a detached bungalow was up 9% to $331 868 in Canada when compared to the same time last year. Two storey homes also rose by 8.7% to $367 835 while condominiums rose 7.3% to $230 014. The average prices of homes in Vancouver was also up between 16.6% to 19.1% for the month with home prices in Toronto going up by an average of 7.7% to 11.4% overall.
The introduction of the HST in Ontario and B.C. has Phil Soper, president and chief executive of Royal LePage saying, “We will see both prices and unit sales decline towards the end of the year. Moving into the next six months, home prices will remain flat or decline slightly in most cities, but will be more likely to hold their value or increase in energy producing economies such as Alberta. This should not be interpreted as a severe correction but rather a natural reaction to the market having peaked quite early this year.”
U.S. jobless claims down
New claims for unemployment insurance in the U.S. were down more than expected last week with the number of people continuing to receive benefits in the final week of June being the lowest level seen in seven months.
Initial claims for state unemployment benefits were also down 21 000 to a seasonally adjusted 454 000 for the week ending July 3. According to the Labour Department this was the lowest level on record since early in May. Analysts had forecasted claims to drop to 460 000 from 472 000, which shows how unexpected the drop really was. The four week moving average of new jobless claims, which is a much better measure of underlying labour market trends, dropped 1250 to 466 000.
Although the layoffs in the U.S. have slowed, claims for jobless benefits have not declined by a significant amount this year. Analysts are saying that this implies only a gradual labour market improvement but is still considered to be not enough. What do you think? Please comment below.
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