Strong demand for residential real estate across the Greater Toronto Area continues to place serious upward pressure on housing values, according to RE/MAX-Ontario-Atlantic Canada.
    Despite a modest five per cent year-to-date increase in overall average price, detached homes in 17 per cent, or 11 of the 63 Toronto Real Estate Board (TREB) districts examined, reported increases in excess of 10 per cent in the first six months of 2006. Although double-digit appreciation in the detached housing category was on par with last year’s levels, the districts experiencing upward pressure have shifted. In 2005, nearly 50 per cent of detached homes reporting double-digit growth were located in the central core. This year, double-digit appreciation has been far more equitable, with increases occurring across the board, including the city’s east, west, and north ends.
    Both detached housing and condominium apartments and town home values are climbing in TREB districts across Greater Toronto. Leading the charge in terms of price appreciation in the detached housing category are: the Scarborough Bluffs area (E08), where prices have climbed 21.2 per cent to $360,175; the Beach (E02), which has seen an increase of 19.6 per cent to $622,042; Swansea, South Parkdale, and Roncesvalles (W01), where values have risen 19.25 per cent to $640,132; Bayview Village (C15) where prices have jumped 17.7 per cent to $602,211: and Lawrence Park (C10) where housing values have appreciated 17.6 per cent to $1,132,410.
    “After years of extraordinary upward momentum, escalation in the city’s central district is moderating. The core is no longer the centre of the universe,” says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. “With the average price of a single-detached home approaching a prohibitive $830,000 in the core, it’s clear that purchasers are expanding their boundaries and seeking more affordable options in other areas of the city.”
    Neighbourhoods that offer detached product at reasonable prices have experienced the greatest return on investment. For example, the Scarborough Bluffs area, south of Kingston Rd., offers properties similar to those found on the Bridle Path at a fraction of the price. South Parkdale and Roncesvalles, both communities undergoing revitalization, continue to rank among the top five neighbourhoods in terms of price appreciation. After years of slow but steady growth, newcomer Bayview Village, with its large bungalows and good lot sizes, has finally been discovered.
    While the average price of detached housing continues its ascent, condominium apartments and town homes are also reporting solid gains. Tops in terms of price appreciation is the Annex, Yorkville (C02) area where condominium values have jumped a substantial 16 per cent to $516,729. Affordably-priced Humber Summit, Elia (W05) rose 14 per cent to $173,238 while the desirable Lawrence Park, Davisville area (C10) ranked third with a percentage increase of 10.6 per cent to $327,525. Richview, Humber Heights
(W09) climbed 9.2 per cent to $184,389 while Don Valley South, including Don Mills, Victoria Park Village, Parkwoods, and Graydon (C13), rounded out the top five with an 8.5 per cent jump to $258,206.
    “Condominiums continue to represent the best value for first-time buyers, allowing purchasers to buy into the city’s best neighbourhoods at an affordable price point,” says Polzler. “The sacrifice in terms of size is negligible, given the location of some of these condominiums.”
      For more info on Toronto real estate market call Alexandre Malkhassiants, Sales Representative & Anna Falileeva, Sales Representative at (416) 723-9383 (cell) or email: amalkhass@rogers.com
Right at Home Realty Inc. , Brokerage

TORONTO REAL ESTATE

Interest-only mortgages

A controversial decision by Canada Mortgage and Housing Corp. to provide insurance to lenders for interest-only mortgages won’t drive up house prices as the Bank of Canada fears, the agency says. Karen Kinsley, president of Canada Mortgage and Housing Corp. says potential home buyers who apply for interest-only mortgages won’t face any less stringent criteria for income, credit history and collateral than those applying for traditional mortgages.

Bank of Canada Governor David Dodge told reporters that he feared that incentives for interest-only mortgages could be inflationary. If so, that would work against the national housing agency’s stated aim of making housing more accessible to Canadians, Mr. Dodge said. Home purchase loans that require only a repayment of the interest each month are often considered high risk.

Mr. Dodge pointed to other countries where interest-only loans have encouraged home buyers to take on larger mortgages than they can comfortably afford. In the United States, for example, economists fear such easy money has contributed to a housing bubble. But after meeting with Ms. Kinsley later on July 13, Mr. Dodge’s concerns were eased, Bank of Canada spokesman Jeremy Harrison confirmed.

“We were reassured by the fact that CMHC’s interest-only mortgage product includes no change in mortgage qualification criteria and as such would not be of significant concern to the bank.” Just over two weeks ago, CMHC, a Crown corporation, announced it would be offering insurance on interest-only mortgages, waiving application fees for some loans and insuring mortgages with amortizations of up to 35 years. In the past, the agency required 10 per cent down and gave buyers up to 25 years to pay the mortgage off.

CMHC provides insurance for the lenders who provide mortgages to homeowners. Home buyers who apply for the interest-only mortgage must have an income that is able to support a repayment of principal and interest for a 25-year amortization period at the lender’s 3-year fixed rate of interest.

As a rule, the home buyer’s principal, interest, heating and property tax costs should not exceed 32 per cent of their income. With an interest-only mortgage, homeowners have the flexibility to put more cash toward the mortgage when they’re able and stick to repaying the interest only during months that are lean.

“Perhaps in the early years you’ve got other one-time expenditures to make — appliances and other things,” Ms. Kinsley says. “This gives them the flexibility, if they need it, to be able to make those expenditures but still with the comfort that we have that they’re able to carry the mortgage even on an interest-only payment.”

Because the criteria has not been relaxed, the number of people who qualify won’t increase and thereby bring a flood of new house hunters into the market, Ms. Kinsley explains. “[Home buyers] have to have a strong credit history and a strong capability to be able to support the mortgage they’re applying for.”

  For more info on Toronto real estate market call Alexandre Malkhassiants, Sales Representative & Anna Falileeva, Sales Representative at (416) 723-9383 (cell) or email: amalkhass@rogers.com
Right at Home Realty Inc. , Brokerage