Goods News for Our Real Estate Market

But, don't go on a spending spree because the Fed's are eager to raise rates.
The year 2011, will be a strong Real Estate market. Why? Because, Canada is letting in a lot of immigrants, Mortgage rates are very low and have to remain low, not very low, but low (who has a crystal ball, more later). There still is alot of consumers wanting housing because, We, Canada is, Clean, Safe, great infrastructure, good schooling, well organized, Opportunistic, free health care, low interest rates and just a thriving country. And in the future water and Gas will become more important. Except for the emerging markets of Asia and South America we are the envy. And many people from those countries would love to come to Canada. We are nowhere near their population densities.
The government is making a ton of money as the price of gas goes up. They also want to put a stop on the hand outs. We all know the Interest rates are artificially low, so we are OK with some rise. That's the key though. The Bank of Canada can't crank on those rates because yes, we have a lot of our own somewhat fragile economy as well as our Interdependence on other countries, ie. United States.
Our Housing sector has continued to help our economy along, so the Federal government needs this to continue but is looking for job growth as a sign that the rest of the economy is building steam - I think this will be one sign for them to raise interest rates (which affects resale housing).

But raising rates too high, too fast will negatively affect our spending habits. Canadian indebtedness is high on the governments agenda. Households have alot of debt (mortgage, credit cards and lines of credit) they are paying back and as stated by the Bank of Canada and the Federal government.
http://www.theglobeandmail.com/report-on-business/video/bank-of-canada-year-ender/article1837557/
 This too quick, too much rise in interest rates will hurt too many people and will create a housing problem.  It can't happen which is good news for the Real Market in the GTA.

Equalized Housing Market Targeted for 2011

The Canadian Real Estate association has lowered the forecast on Sales activity for much of Canada and in particular Ontario. 

Sales activity in the third quarter of 2010 began on a weak footing, but gained traction as the quarter progressed. Improving momentum for home sales activity suggests the resale housing market is stabilizing, but weaker than expected third quarter activity has reduced CREA's annual forecast.

National sales activity is now expected to reach 442,200 units in 2010, representing an annual decline of 4.9 per cent. While monthly levels for sales activity are stabilizing, year-over-year comparisons are likely to remain stretched well into 2011 due to the record-level activity reported in late 2009 and early 2010.

Lackluster economic and job growth, muted consumer confidence, and the resumption of interest rate increases are expected in 2011. Against this economic backdrop, national home sales activity is forecast to decline by nine per cent to 402,500 units.

"Interest rates are expected to resume their return to more normal levels next year, but will still be at levels that are friendly to the housing market," said Georges Pahud, CREA's President. "For the tenth year in a row, more than 400,000 homes are expected to change hands over the MLS(R) Systems of Canadian real estate Boards and Associations next year."

Levels for sales activity and new listings have swung widely until recent months. Despite their volatility, movements in sales activity and new listings have remained in synch and have kept the resale housing market balanced since early 2010. The overall supply of homes for sale has also been trending lower in recent months. The resale housing market has remained balanced on a national basis and in most provinces, resulting in stable average price trends.

The national average home price is forecast to rise 3.1 per cent in 2010 to $330,200, with increases in all provinces. The small revision to CREA's average price forecast reflects changes to the forecast for provincial sales activity and corresponding provincial contributions to the national average price calculation. The balance between supply and demand is forecast to remain stable, resulting in stable price trends.

Modest average price gains are forecast in 2011 in all provinces except British Columbia, Alberta, and Ontario. Lower sales activity in British Columbia and Ontario are expected to result in a 1.3 per cent decline in the national average price to$326,000.

"Housing demand and supply is stabilizing," said Gregory Klump, CREA's Chief Economist. "That's good news for home buyers, who will feel less hurried to make an offer than they did when transitory factors ignited housing demand in early 2010. It's also good news for home sellers, who will feel more confident about price stability now that the housing market has become balanced."

"Interest rates are widely expected to remain low for some time due to recent downward revisions by the Bank of Canada to its outlooks for economic growth and inflation. Consumer sentiment will likely remain under pressure until economic prospects improve meaningfully," said Klump.

"In the meantime, many households will be focused on paying down their debts before the Bank of Canada resumes hiking interest rates next year," Klump added. "Economic uncertainty is likely to keep potential homebuyers in a cautious mood, so the continuation of low and stable interest rates is unlikely to cause housing demand or prices to swell."

From  CREA via CNW.

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http://video.royallepage.ca/mediadetail/3497901-5-Reasons-to-Use-a-Royal-LePag

Seriously Thinking of Moving- Seriously?- Then Check Out This Link

Click On the Link For This Thought Provoking Article;

http://www.bnet.com/blog/penelope-trunk/how-to-decide-where-to-live/313

Price cuts spark a flare-up in the Toronto condo market

Taken from the Globe and Mail,

In an astonishing turnaround, the Greater Toronto Area's new condo market shot from moribund to near record-breaking in September. In August only 861 suites changed hands, while in September that number rocketed to 1,658.

Indeed the number is probably about 400 units higher, says George Carras, president of RealNet Canada Inc., which tracks the new condo homes market. Those suites, however, were sold toward the end of the month and RealNet has to wait until the 10-day rescission period is over to count them as sales.

Even the flagging detached new homes market enjoyed a small up-tick, rising to 1,064 sales from August's 936. So what happened? Experts like Mr. Carras suggests two things: A near record level of new project launches (14 and the second highest in a month on record) and the CIA.

No, not that CIA. CIA is what people like Mr. Carras call condo investment advisers. They are a new breed of real estate agents and brokers who have on-hand a healthy roster of investors both domestic and foreign. That's who snapped up new condos at a frantic pace in September, a pace that seems likely to have continued through October as well.

Insiders suggest that, in some areas, investors accounted for up to 60 per cent of sales in those newly launched projects and with about 4,000 new suites coming to market, the impact was indeed profound. Downtown West, the entertainment district, for example, saw 611 sales in September while Mississauga City Centre saw 177 and Highway 7 and Yonge 148.

So what drove investors to open chequebooks and plunge back into the market? The chief factor – aside from a smorgasbord of choice in high density, much sought after neighbourhoods – was price. Believe it or not, the index price for condos actually dropped $14,608 in September from August to stand at $410,730. Bit of smoke and mirrors really. Average price per square foot stayed nearly constant at around $493. The price drop came from builders creating smaller suites – about 831 square feet or 10 per cent smaller than August.

“Those CIAs had been advising their clients to hold off until the fall and all the new launches,” says Mr. Carras. “They are really on top of things and knew builders would be redesigning projects to make suites smaller and therefore more affordable.

“Those guys know exactly what their clients are looking for, what they like, and can match new projects almost perfectly to what clients prefer to invest in.”

The CIA and brokers and agents in general have become a vital part of the new condo business, says Barry Lyon of N. Barry Lyon Consulting Ltd. In the ‘good old days' builders generally relied on their own staff sitting in presentation centres as their primary sales force.

“Then if you sold 30 per cent of suites during a launch period you were doing well,” Mr. Lyon says.

In today's market, however, the success of a project is heavily dependent on risk management and a large chunk of risk management is the speed with which a builder can sell enough units to reach the level of sales demanded by the institutions which provide construction financing.

“Today you shoot for 60 per cent of sales during the launch period,” says Mr. Lyon. “Speed is a determining factor today.”

Which is where the CIA comes in. Brokers and agents with lists of investors in their pocket are courted and treated to advance previews well before the public gets a look at projects. Generally what they want are one bedroom and one plus den suites in buildings on or near high speed transit lines and in sought-after rental areas. Price is crucial. Investors want suites where rents cover all or almost all of mortgage and monthly maintenance costs.

That $14,608 drop in the price index in September gave them what they needed as did new launches in areas like downtown west and a new series of buildings on Etobicoke's Lakeshore motel strip, the last available area of waterfront in the city.

While end users, the men and women looking for a place to call home, continue to play an important role in the condo industry, for this fall they will take a back seat to the CIA.

There is a positive benefit to all this investment activity. Since the mid 1980s, new condos have provided the GTA with about 98 per cent of its rental stock. As condo prices rose, the future stock of rental suites became endangered. This fall's blip means thousands more will come onto the market in 2012 and 2013. What they will rent for, however, is anyone's guess right now.

Bank of Canada Maintains Overnight Rate at 1 Percent

Sometimes it feels good to be surprised, but Tuesday’s anticipated announcement by the Bank of Canada that it is maintaining its target for the overnight rate at 1 percent was a relief.  The global economic recovery is entering a new phase, and the Bank of Canada is now expecting weaker-than-projected recovery across the board, especially in the United States.  Canada is not an exception in this shift in projections since July’s Monetary Policy Report, as the Bank continues to expect the economic recovery here will also be more gradual.

Instead of focusing on household and government expenditures, the composition of demand in Canada is expected to shift towards business investment and net exports.Corresponding to the overnight right maintaining at 1 percent, the Bank Rate is set at 1 ¼ percent and the deposit rate is set at ¾ percent.  Growth rates in Canada are expected to be 3.0 percent in 2010, 2.3 percent in 2011, and 2.6 percent in 2012.  Although a portion of this more subdued profile is a result of the more gradual global recovery, it also takes into account a more subdued expectation for Canadian household spending.  The projections around household spending come from the decline in housing activity, and as a result, the increased focus on household debt considerations.

Inflation in Canada has remained slightly below the July projections of the Bank of Canada, but the expectation is that the economy will return to full capacity by the end of 2012 instead of the previously forecasted beginning of that year.

It was a combination of all of these factors that the decision was reached to maintain the target for the overnight rate at 1 percent.  This new announcement continues to keep considerable monetary stimulus in place to continue to achieve the 2 percent inflation target during a time when Canada is coping with a significant excess of supply.  Given the transition in the global recovery, the weaker U.S. outlook, constraints beginning to moderate growth in emerging-market economies, and Canadian considerations that are expected to slow spending and housing activity in Canada, the Bank would need to carefully consider any further reduction in monetary policy stimulus.

Although this announcement is driven by a weaker global economy, the management of the painful current global reality within the confines of the Canadian economy should create a sigh of relief for the real estate and mortgage industry, as there is not any new pressure being pushed onto the industry after a painful 2nd quarter in 2010.

From Canadian Property Wire

GTA's Affordability Index

It still makes sense to buy a house. Believe it or not, it's still affordable. Here's why!

GTA Market Today

According to Toronto Real Estate Economist Jason Mercer, prices are not unreasonable out there and what people need to look at when buying their house is affordability including mortgage rates.

Greg Nemez, Broker
Hon. B. Comm.
Royal LePage Real Estate Services Ltd. Brokerage
1654 Lakeshore Rd. West
Mississauga, Ontario
L5J 1J3
gnemez@royallepage.ca
www.gregnemez.ca
905-822-6900
905-822-1240

GTA's Fall Real Estate Market

Source - Royal LePage Real Estate Services Ltd.

It  now  appears  that  more  pessimistic  news  will  be  flowing  out  of  the  U.S.  shortly,  as  American   banks  take  action  to  remove  what  many  hope  are  the  final  round  of  sub-­‐prime  foreclosures   from  their  books  before  the  end  of  the  year.    It  has  become  abundantly  clear  that  Canada  is   distinctly  different  from  the  U.S.    Our  national  differences  stem  from  variations  in  our   economies,  our  distinctive  real  estate  markets,  dissimilar  banking  and  lending  practices  in  each   country,  and  the  cultural  differences.    Canada,  once  the  forgotten  cousin  within  the  G20  group   of  countries,  has  recently  catapulted  to  the  forefront  of  these  global  powerhouses.      Once   considered  too  conservative  for  the  global  banking  industry,  the  lending  policies  practiced  by   Canadian  banks  are  now  considered  worthy  of  benchmarking  and  role  model  status  for  other   global  banks.    The  litmus  test  for  Canadian  banks  occurred  when  the  tumultuous  U.S.  sub-­‐prime   mortgage  meltdown  barely  scratched  the  surface  of  the  Canadian  sub-­‐prime  mortgage  market.       Some  of  the  most  significant  differentiators  between  the  Canadian  financial/banking  system   and  the  U.S.  system  include  the  following:  

Canada  does  not  have  mortgage  interest  deductibility  for  income  tax;  therefore,   Canadians  want  to  pay  down  their  mortgages  as  quickly  as  possible,  which  is  not  the   case  in  the  U.S.   Canadian  banks  distribute  their  assets  and  liabilities  across  Canada,  spreading  the  risks   and  rewards  across  the  country,  mitigating  against  local  real  estate  market  fluctuations   or  outright  collapses.    In  the  U.S.  banking  industry,  there  are  restrictions  on  interstate   trade  and  banking.    The  grandest  example  of  this  difference  occurred  during  the  Great   Depression,  when  over  10,000  U.S.  banks  failed,  while  Canada  did  not  have  any  bank   failures.         In  Canadian  provinces,  with  the  possible  exception  of  Alberta,  mortgages  are  fully   recoverable,  if  the  financial  means  are  present.    Any  shortfall  resulting  from  a  bank  sale   is  still  the  responsibility  of  the  homeowner,  who  (in  most  situations)  remains  fully   accountable  for  the  debt.   Mortgage  insurance  is  compulsory  for  all  federally  regulated  financial  institutions  in   Canada  when  the  loan-­‐to-­‐value  ratios  exceed  80%,  which  is  not  the  case  in  the  U.S.   In  Canada,  approximately  30%  of  mortgages  are  securitized,  so  most  lenders  have   ongoing  exposures  to  the  mortgages  they  originate,  thus  providing  an  incentive  for   more  prudent  lending  practices.    In  the  U.S.  the  majority  of  mortgages  are  securitized   and  sold  to  third  parties,  who  are  much  quicker  to  write  off  debt,  in  the  event  of  default.  

 Canadian  real  estate  markets  are  very  different  on  both  the  local,  provincial  and  national  levels.   For  an  extended  period  of  time,  the  media  has  prophesized  that  Canada  would  eventually   follow  in  the  tracks  of  our  neighbourhoods  to  the south. The medias longstanding  predictions   have  not  come  to  fruition  for  the  following  reasons:  

From  the  mid-­‐2006,  at  the  peak,  housing  prices  in  the  U.S.,  have  subsequently  fallen  by   approximately  30%  through  to  February  2009  (Case-­‐Shiller  Composite  Index).    While  in   the  Canadian  market,  from  the  mid-­‐2008  peak,  prices  have  fallen  by  only  7.4%  through   to  February  2009  (Teranet/National  Bank  of  Canada  Composite  Index).   Buyers  are  still  in  abundant  supply,  which  is  representative  of  a  balanced  fall  market.   The  Greater  Toronto  area  The Greater Toronto area is still one of Canada’s primary destinations for new migrants. According  to  the  Ministry  of  Finance,  the  Greater  Toronto  Area  is  projected  to  be  the   fastest  growing  region  of  the  province,  with  its  population  increasing  by  3  million  or   49.5%  to  the  year  2036.   With  Canadian  interest  rates  remaining  at  historic  lows,  more  buyers  are  able  to  enter   the  real  estate  market fuelling the ‘move-up’ market. Even  though  the  Toronto  Real  Estate  Board  reported  a  22%  drop  in  sales  in  August  2010   compared  to  sales  in  August  2009,  the  average  price  of  homes  in  the  GTA  actually   increased  6%  from  the  previous  year.    The  cyclical  summer  slowdown  was  further   enhanced  due  to  the  introduction  of  the  Harmonized  Sales  Tax  on  July  1st,  which  skewed   the  typical  sales  cycle.  

Although  no  one  has  an  economic  model  or  a  crystal  ball  that  accurately  predicts  where  the   economy  is  going,  our  research  and  data  show  that  the  Greater  Toronto  real  estate  market  is   still  a  thriving  market  place.  Notwithstanding  an  unforeseen  global  event,  taking  into  account   the  typical  seasonal  cycles,  in  addition  to  a  gradual  increase  in  interest  rates  over  the  coming   years,  the  Greater  Toronto  area  should  continue  to  have  a  reasonably  balanced  real  estate   market  as  its  prominence  as  a  world  class  global  destination  increases.  

A buyers market with Phil Soper and Rob Carrick

Downsizing your house in a slower real estate market with Phil Soper and...

Inflation slows hopeful sign for Canadian real estate economy

I know that you thought that the sales were going down and that interest rates and the HST had killed the market.

The bad month was supposed to be August. So, let’s have a look at the August numbers over the last 7 years.

Year………..Sales

2004……….6,743
2005……….7,498
2006……….6,976
2007……….8,059
2008……….6,318
2009……….8,035
2010……….6,232

The average number of sales in the month of August is 7,132. That means that this year we would be 891 sales short, which represents a 7.99% decline.

Just because there were 891 fewer sales in August, does that mean that the market has tanked? Some would say so. Just look at the current newspaper headlines, and the TV stories.

Let’s have a look at the annual sales figures for the last 7 years from January until the end of August in each year:

Year,,,,,,,,,,Sales

2004……….63,099
2005……….60,309
2006……….60,633
2007……….68,463
2008……….58,618
2009……….59.616
2010……….64,313

The average number of sales over the last 7 years from January to the end of August was 62,150. That means that in 2010, there were 2,163 additional sales which represents a 3.48% increase. Not too bad for a market that is tanking.

Now, let’s have another look at the numbers over that last 7 years. Only 2007 was higher at 68,463. That means that 2010 had the second highest number of sales for the first 8 months over that measurement period.

So, why all the worry?

Let’s have a look at 2010, month to month:

Mon………Sales

Jan……….4,986
Feb……….7,291
Mar……….10,430
Apr……….10,898
May……….9,470
Jun……….8442
Jul………..6,564
Aug………6,232

What you will notice is that March and April were exceptionally strong months. And, if there is a real estate story in 2010 about the market, it should be the strength of those two months.

Remember that the common advice in the Spring was:

• Take advantage of low interest rates, and
• Beat the HST

There’s really nothing unusual. The consumer just followed the common advice.

You can’t have the sales in March and April, and then expect them to be there in August too!

The 2010 market is simply performing predictably as it should.

Toronto Mid September 2010 Market Performance

You might very well wonder what’s been happening to Toronto real estate this year. It’s up, then it’s down. But, where is it now?

Actually, it’s just about where it should be. You have to remember that interest rates and prices were both a bargain in the Spring. Also, everyone was worried about interest rates going up in July and the new HST coming into force on July 1st. The standard, common advice was “do business before July 1st”. So, people did. And, if they did, then they can't buy again in the summer!