Monday, April 5, 2010

Report Says 1 in 4 Canadians House Poor ....

One in four Canadians rely on subsidies or spend over 30 per cent of their pre-tax income on housing costs, including mortgages and rent, according to a report by the Conference Board of Canada.

According to the report, a household is unaffordable if more than 30 per cent of its pre-tax income is spent on household costs - a situation that more than three million Canadians find themselves in. The typical household spends 50 per cent more on shelter than on food and over five times more on shelter than on clothing.

"The quality and cost of housing are major factors in the health of Canadians," said Diana Mackay, conference board director of education and health. "However, about one-fifth of Canadian households do not have the resources to afford both good-quality homes and other health-enhancing expenditures, such as nutritious food or access to recreational activities."

The report warned that the high number of Canadians stretched too thin negatively affects their health, productivity, and national competitiveness, and increases the cost of health-care and welfare.

Mary Wozny

Tuesday, March 30, 2010

Banks Start Interest Rate Shake Up...

Four big banks have increased their posted rates on fixed mortgages, signaling the start of an upward move on record-low interest rates.

Royal Bank, TD Canada Trust and Laurentian all moved their posted rates on five-year fixed mortgages by 0.6 per cent yesterday, a move followed by CIBC today. Many non-banks have already followed, prompting a surge in requests from variable-rate clients to lock into fixed rates.

The interest rate increase will also mean higher qualifying criteria for new clients, who must meet the five-year posted fixed rate when the new mortgage insurance rules kick in on April 19.

CIBC economist Benjamin Tal told the Globe and Mail the rise in rates along with other factors means the booming housing market will slow down significantly after spring.
"Given where interest rates are now, I still think you'll see an extremely strong spring.

However, after that I think the housing market will stagnate," Mr. Tal said. "We are in the ninth inning of this booming house market. We are not expecting a crash, but we will stagnate."

Saturday, March 27, 2010

Vacancies Rising in BC, but Sales Pick Up in Apartments

Rising vacancy rates have been good news to renters in the British Columbia apartment market as new supply has come online.

But as prices adjust, sales activity in apartments has also begun to pick up, according to a report this week by Avison Young.

While vacancy rates are climbing, up as high as 8 per cent in Chilliwack, Avison Young says prices have stabilized and sellers have adjusted their expectations.

"As a result of the lower prices in certain submarkets, the bid-ask gap will likely continue to narrow, leading to more sales as effects of the global financial meltdown and U.S. credit crisis soften," says the Avison Young Multifamily Investment Report on BC.

Despite the BC-wide vacancy increases, Victoria's vacancy remains below 1.5 per cent, and Vancouver just above 2 per cent, according to the Canada Mortage and Housing Corp.

According to Businessweek Magazine, Vancouver faces $700 million in financing for the luxury condos used by Olympic athletes in February, and the city needs to sell 474 units for as much as $10 million each to recoup its lending. These condos overlooking False Creek could otherwise prove damaging to Vancouver's credit rating.

Similarly, Montreal's 1976 Olympics left Quebec with $1.5 billion of debt that took three decades to repay, says the magazine.

Mary Wozny

Tuesday, October 6, 2009

Ottawa Area Realtors Scramble for Listings

According to an article in todays Ottawa Citizen, homeowners in Ottawa are staying put, leaving real estate agents scrambling to find listings and creating one of the strongest seller's markets the nation's capital has seen in years.

According to the president of the Ottawa Real Estate Board, realtors in Ottawa have fewer than 3,800 resale homes available to sell. Although listings traditionally drop in the fall, realtors had more than 4,700 listings at this time a year ago.

Yet even with the limited supply, the board reported its best-ever September with 1,220 sales, topping the 1,208 sales of September 2008. That pushed the average resale price to $304,789, a 5.7-per-cent increase from a year earlier.

According to one Re/Max agent in Ottawa's west end, he is finding the market so constrained that he has sold off his last remaining houses and now has no listings of his own, indicating that "it's not the first time in his career that he's been 'listless'." "Listing inventory is definitely down. But it's not like they have been expiring, we have sold them all. It's very much a strong market right now."

The economic slowdown has caused many potential sellers to decide simply to ride out the slump. As a result, buyers who hope to tap into low interest rates must scramble for available homes.

Buyers are facing multiple offers on homes and that is influencing the upward prices. Whatever inventory is coming on the board is selling.Agents are also dealing with intense competition from newcomers that help sellers market their home directly to eager buyers.

The supply shortage is pushing builders to step up construction of new homes. The value of building permits in Ottawa jumped 8.1 per cent to $161.8 million in July, the most recent month for which statistics are available. That's up from the $149.6 million worth of building permits sought in June, according to Statistics Canada.

The increase supports a Canada Mortgage and Housing prediction in September that the pace of new home construction in Ottawa will take off in late 2009.

The resale market looked anemic in the first few months of 2009. At the end of March, 2,479 resale homes had been sold in Ottawa, an 8.7-per-cent drop from the first three months of 2008.

But September's record pace builds on a strong July and August for the real estate board.
As of September, condominiums were selling for an average $241,458, and other residential properties for an average $322,960, the board said.

Tuesday, September 15, 2009

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New Canadians Drive Canada's Housing Demand

As a result of stronger labour markets and mortgage product innovation, the homeownership rate rose for all immigrant groups regardless of how long they had resided in Canada.

As more immigrants transition from renting to owning, they will continue to drive housing demand, most notably in the condo market. Research has shown that immigrant homeowners are more than twice as likely to live in a condominium than their Canadian counterparts. The report also indicated that 69 per cent of immigrants who came to Canada between 2001 and 2006 settled in Toronto, Montreal and Vancouver.

Sunday, September 13, 2009

Is Canada's Commercial Real Estate Market Set for a Comeback?

As reported in Mortgage Brokers News and following dismal reports of Canada's commercial real estate market seeing a 50 per cent decline in transactions in the first half of 2009, there are signs that it may be coming back to life.

According to commercial mortgage specialists, this is a good time for purchasers with strong backing. They are seeing an increase in volume year over year. Lenders are still being "very cautious and conservative", with many of them going below appraised values for commercial buildings, the situation has improved from earlier this year. For buyers in strong positions, there are deals on industrial buildings and it appears that there is a "cautious" market coming back for hotels and plazas.

A recent story in Dow Jones also pointed to Canada's commercial market recovering. Pierre Boiron, a real estate agent, developer and co-author of "Commercial Real Estate Investing in Canada" told the news service that slowing demand, inventory peaks and price declines are pointing to the bottom of an "adjustment phase" in the commercial market that will lead into an acquisition phase. "It means that the mess is being cleaned up," Boiron told Dow Jones, also noting that the turnaround will be gradual and dependent on employment numbers.

Mary Wozny