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Toronto home buyers may be baffled, but builders are bullish

Toronto home buyers may be baffled, but builders are bullish

“Canadians don’t know what to think about the economy any more,” says Norman Baillie-David, a consumer confidence guru.

Every month, Mr. Baillie-David surveys Canadians to find out how buoyant – or pessimistic – they are feeling about their prospects.

Optimism surged in January only to be dragged down by the mid-winter blahs in February. That bump is typical of the roller-coaster ride Canadians have been on for a while now, says the vice-president of research firm TNS Canada.

Not that he blames his research subjects; Mr. Baillie-David attributes the uncertainty to the conflicts in economic news, which seems positive some days and negative other days.

He points to jobs reports, which were most recently negative in Canada and positive in the United States. Sometimes it’s the other way around.

At the same time, Canadians in many provinces are bracing for cuts to the ranks of public servants, he points out.

The crisis in Europe over the state of Greece and the confusing signals from the U.S. economy are adding to the murkiness.

The stock and bond markets, which typically move in opposite directions, have started moving in tandem. One of them has to be wrong.

Really this anxiety is afflicting everyone from young job seekers to Bay Street veterans and nowhere is the dichotomy more pronounced than in Toronto’s real estate market.

One executive, who has been in the mortgage business for more than 30 years, tells me he and others at his firm are dumbfounded by the action in the market these days.

“If it keeps going like this I’m just going to leave and become a dentist or something because it means I don’t understand the market at all,” he quipped recently.

He’s astonished partly because bidding wars have been so ferocious in Toronto and buyers are taking on such huge mortgages. Sure buyers are competing over relatively few listings but they are bidding jaw-dropping amounts over the asking price.

Still, that recent activity has been a fairly short burst and national stats show that the market has lost some momentum over all.

Adrienne Warren, an economist with Bank of Nova Scotia, says that despite the lure of low interest rates, the softening in employment growth over the past six months, combined with the tightening of mortgage rules last spring, has lowered the temperature in Canada’s housing market.

In Toronto, sales have dipped slightly on a seasonally-adjusted basis this year compared with last. The average price, meanwhile, has risen to $486,654 for the year-to-date from the average price of $466,352 recorded in 2011.

Ms. Warren is looking to the West and seeing brighter prospects there. The employment outlook is stronger and there has been a drift of people – including new immigrants – towards those jobs.

Brad Lamb, a Toronto-based realtor who specializes in the condominium market, is eyeing the same trends.

Mr. Lamb has developed many condo projects in Toronto but last week he unveiled plans for his first foray into Calgary.

Mr. Lamb expects to break ground later this year on a 31-storey tower called 6th and Tenth. The building, with 230 units, will be located in the Beltline neighbourhood.

But that doesn’t mean that condo developers here in Toronto are showing signs of slowing down.

The builders of Aura, which is billed as Canada’s tallest condo tower, recently won permission to add three more storeys to the skyscraper.

After the City’s committee of adjustment granted its approval, Canderel announced that Aura will top out at 78 storeys above Yonge and Gerrard streets.

Canderel’s vice-president of sales and marketing, Riz Dhanji, said in a news release that his firm wants bragging rights to Canada’s tallest condominium.

For a time, 10 York was vying for that title with its plans to build 75 storeys at the foot of York Street.

At Aura, the three additional floors will mean approximately 50 more units are available for sale, bringing the total in the building to 985.

Mr. Dhanji said he’s convinced there remains a strong appetite among condo buyers for units at Aura and added, “I wish we could go beyond the 78 storeys we have today.”

So between the stock and bond markets – from the bravado of Mr. Dhanji to the deepening pessimism of the job hunters – it’s no wonder the average Canadian is flummoxed.