The Toronto Star, Wed Oct 07 2009
By Tony Wong
Real Estate Reporter
Ross Cammalleri is trying to make up for lost time.
The builder has three homes under construction but a Toronto municipal strike over the summer means he is struggling to catch up.
"We probably lost a good two months of prime building time," says Cammalleri, an infill builder who specializes in the Yonge St. and Lawrence Ave. area.
The strike that started in June and ended in July cut off city services, most notably garbage collection, but also permit processing. Without permits, builders cannot legally proceed with construction.
With the release of pent-up demand after the strike, Toronto building permits were up 83 per cent in August, compared with a month earlier, as builders like Cammalleri rushed to get approvals.
Builders took out $434 million in permits in July but $797 million in August, according to data released Tuesday by Statistics Canada.
Both residential and commercial sectors showed growth, with residential permits up 112 per cent and commercial up 49 per cent. But year-to-date activity in the city is still down 26 per cent, with developers constricted by tight credit.
The delay may have had its advantages, given the market changed rapidly this summer. The Toronto Real Estate Board reported Monday existing house sales jumped 28 per cent in September compared with the year-ago month.
Cammalleri, for example, has barely dug a hole in the ground for the home he's building and he's already got an offer for it.
He bought the lot for $564,000 in April, or 131 per cent above asking price.
"People were saying I was crazy then. Now I wish I had 10 of them," says the developer.
Tearing down the existing bungalow last week, he expects to put up a 2,300 square foot home and sell it for anywhere from $1.4 to $1.5 million. In the spring, when the market was softer, he sold an almost identical home nearby for $1.2 million.
"The market has changed dramatically since then. There's just no inventory," says Cammalleri. "I was lucky to get the price that I did back then."
Real estate strength has some market watchers worried that low interest rates are too stimulative.
"If real estate activity does not cool, it might prompt the Bank of Canada to tighten earlier or more aggressively than anticipated," said a report by TD Bank Financial Group released Tuesday.
Nationally, the value of building permits was $5 billion in August, up 7.2 per cent from July, bettering the 5 per cent expected, thanks to Toronto. If the city was excluded, the value would have risen 0.8 per cent.