Toronto Loft Conversions

Toronto Loft Conversions

I know classic brick and beam lofts! From warehouses to factories to churches, Laurin will help you find your perfect new loft.

Modern Toronto Lofts

Modern Toronto Lofts

Not just converted lofts, I can help you find the latest cool and modern space. There are tons of new urban spaces across the city.

Unique Toronto Homes

Unique Toronto Homes

More than just lofts, I can also help you find that perfect house. From the latest architectural marvel to a piece of our Victorian past, the best and most creative spaces abound.

Condos in Toronto

Condos in Toronto

I started off selling mainly condos, helping first time buyers get a foothold in the Toronto real estate market. Now working with investors and helping empty nesters find that perfect luxury suite.

Toronto Real Estate

Toronto Real Estate

For all of your Toronto real estate needs, contact Laurin. I am dedicated to helping you find that perfect and unique new home to call your own.

 

Homes to become more affordable this year

The Canadian Press

Buying a home in Canada should become more affordable this year, with interest rates being lowered in hopes of avoiding a recession and mortgage rates declining, real estate observers suggest.

In its latest housing affordability report released Thursday, the Royal Bank of Canada said that after homeownership costs climbed steadily in 2007, mainly because of higher prices in booming western Canadian cities, homes should become easier to buy and finance this year.

As a result of the recent lowering of interest rates by the Bank of Canada that has led to lower rates on mortgages tied to the dropping prime rate, consumers should see affordability improve across all classes, said Derek Holt, assistant chief economist at RBC.

“Longer-term mortgage rates will come down because the spreads charged for bank lending and borrowing in international markets are likely to come down a little bit, and that will get passed on to longer-term borrowers,” said Holt.

For short-term mortgages, the central banks are probably going to continue to push interest rates lower, he said.

“We’re expecting the Bank of Canada to cut rates by a further 100 basis points or a full percentage point from where they stand right now.”

Let’s face it, said Peter Norman of real estate research firm Altus Clayton, “if you have an expectation that mortgage interest rates are going to decline by 50 basis points or so, then it would be reasonable to expect that that would probably bring about an improvement in affordability.” (A basis point is one-hundredth of a percentage point.)

But it’s important to also point out that the deterioration in affordability in the last couple of years hasn’t been interest-rate driven per se, he said.

“It’s been mainly due to rising house prices in the West.”

Affordability steady in Toronto, Central Canada

In fact, in real estate markets like Toronto and elsewhere in Central Canada and the East, affordability has been reasonably steady.

In Alberta, though, “there were very severe shortages of labour and materials, and other aspects that went into the production of housing,” said Norman. This forced housing prices up, affecting affordability.

Holt said almost every housing class in every province and major city saw affordability deteriorate last year.

Unlike the late 1980s and early 1990s when double-digit unemployment rates and interest rates led to a housing crunch and declining affordability, the prime culprit this time around has been a long string of house price gains that have outstripped income gains, he said.

The Royal’s affordability report measures the proportion of pre-tax household income needed to service the costs of owning a home. All of Canada’s big banks have been increasingly interested in tracking house trends across the country since a big chunk of their profits come from mortgage lending to homebuyers.

Condos most affordable type of housing

Across the country, the standard condo remained the most affordable housing type, requiring about 30% of pre-tax household income. A standard townhouse was next at 34%, followed by a detached bungalow at 42%. A standard two-storey home remained the least affordable housing type at 47%.

New record highs for the amount of household income going towards home ownership costs are being set across most housing classes in British Columbia, Alberta and Saskatchewan, the report said.

But there is some light at the end of the tunnel that should help affordability, besides declining mortgage rates, said Norman. In Alberta, “we’re starting to see a reversal” in the deterioration of affordability.

Many of the scarcities in labour and supplies “are starting to become addressed, and also the demand has gotten a little bit softer” as people have started to leave the province in search of work in other western provinces such the oilfields in Saskatchewan, he said.

Both of these developments, said Norman, should bring the real estate market much more back into balance into 2008.

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