On May 1st, Team Masterson attended a real estate market update session with guest speaker Phil Soper, President & CEO of Royal LePage and Brookfield Real Estate Services Inc. Before I share his insights, you might want to know a bit about the man behind the presentation and the company behind the man.
Phil Soper was recently named the most influential leader in Canadian real estate and 16th overall in North America. Real Estate Marketing magazine declared him one the 25 most important leaders of the past 25 years and in 2015, he was honoured as “CEO of the Year” by the Canadian Public Relations Society, a first for a real estate industry executive. He is a former governor of the University of Alberta and prior to his real estate career, Phil Soper was an IBM executive. He is a graduate of the University of Alberta School of Business, and the University of Western Ontario’s Ivey Executive Program.
Here are some fast facts that you may not know about our company…
With over 17,000 agents in its Royal LePage, Royal LePage Commercial and Johnston & Daniel businesses, we are the largest real estate brokerage firm in Canada boasting $90 billion dollars in property sales in 2016. Unlike most companies that rely on data from the Canadian Real Estate Association, Royal LePage has its own data company, compiling its own statistics and performing real time analytics. Our corporate website had 39,000,000 visitors in 2016! Because we are committed to strengthening the communities where we live and work, Royal LePage is the only real estate company with its own charitable foundation. The Royal LePage Shelter Foundation is Canada’s largest public foundation dedicated exclusively to funding women’s shelters and violence prevention programs. 100% of the monies raised go directly to support the shelters and support programs serving this at risk group of women and children. Since 1998, we have raised more than $24 million.
So what did Mr. Soper share about the market? He said that the difference between the process and outcome of the BC government’s intervention and that in Ontario was huge. To begin with, BC made decisions without any consultation. It was a purely political play. Market activity dropped following the implementation of the foreign buyer’s tax. Hardest hit were the businesses that supply product related to housing – such as Ikea, paint shops, etc. This accounted for an estimated $700,000,000 in losses to the economy. The situation in BC caused what is expected to be a ‘short-term’ correction, rather than a longer-term solution. It may even result in a renewed and higher than anticipated spike in home prices.
In Ontario, some consultation did take place and Mr. Soper feels that they learned from the BC experience. Toronto’s market is 2 ½ times larger and homes are cheaper here than in BC. It’s known that there is less impact here from foreign investors.
So what matters… Strong economies drive household formation. Canada is the fastest growing country in the world, Ontario is the fastest growing province and the greater Golden Horseshoe is the fastest growing area. At 20%, the last quarter’s increase in home prices was a bit of an anomaly. A 5% increase in prices is more typical. People have a tendency to step back and demand slackens when interest rates rise. The bottom line is that we are not anticipating a significant correction in the near future. Globally, we are considered the 2nd best country and the 6th happiest. It seems that everything will continue on its current course.
This is corroborated by the Toronto Real Estate Board. Here is what they had to say and you can read the full article on our Facebook page. “It was encouraging to see a very strong year-over-year increase in new listings. If new listings growth continues to outpace sales growth moving forward, we will start to see more balanced market conditions. It will likely take a number of months to unwind the substantial pent-up demand that has built over the past two years. Expect annual rates of price growth to remain well-above the rate of inflation as we move through the spring and summer months,” said Jason Mercer, TREB’s Director of Market Analysis.
New Insights on Foreign Buyers, Domestic and Foreign Speculation…
A summary of TREB’s key findings from an analysis of the data:
- The number of buyers with a mailing address outside of Canada is well-below one per cent, regardless of the year. Most of these buyers have a mailing address in the United States.
- Between 2008 and April 2017, the average share of foreign buyers in the GGH was 2.3 per cent. The share was 2.2 per cent in 2016 and 2.6 per cent for the January through April period in 2017. The majority of foreign buyers – 87 to 90+ per cent – purchased their home as a place to live: 91.5 per cent in 2016 and 88 per cent January through April in 2017.
- The trend from 2008 to April 2017 suggests that the share of foreign home buyers has remained low. The results also follow the results from earlier released data from an Ipsos survey of TREB Members conducted in the fall of 2016. The Ipsos survey results estimated that 4.9 per cent of transactions undertaken between the fall of 2015 and the fall of 2016 were accounted for by foreign buyers. The Ipsos survey results had an estimated margin of error of ± 2 percentage points, 19 times out of 20.
- Between 2008 and April 2017, homes bought and sold within a short period of time – within one year of the original transaction – by domestic or foreign buyers accounted for a very small share (less than five per cent in 2016 and approximately seven per cent between January and April 2017) of total transactions.
- TREB analyzed the ratio of property owners that owned more than one property in the GGH to the total number of properties. As of April 2017, this was a relatively small 6.2 per cent of total properties.
“It is not yet clear what impact the measures contained within the Ontario Government’s Fair Housing Plan have had on TREB’s market area or the broader Greater Golden Horseshoe…” said John DiMichele, TREB’s Chief Executive Officer.
Our own daily review of listings and sales shows an increase in the number of new listings, a decrease in the number of offers being seen in multiple offer situations and a smaller percentage of homes going ‘significantly’ over the list price. Thinking about selling or buying? Team Masterson’s service will “move” you.