Select a news topic from the list below, then select a news article to read.
Pay down my mortgage? I’d rather take a vacation!... Condo market spike in Toronto… Vancouver on target for record-breaking building permits… And Chinese investors increase foreign property purchases…
Fewer Canadians paying down their mortgages
A new CIBC poll finds there has been a significant decrease in the number of Canadians using the low interest rates to pay down their mortgages faster. While over half of Canadians with mortgages (55 per cent) are taking one or more actions to pay their mortgages down sooner, a similar poll last year had the figure at 68 per cent. However, while the numbers increasing payment value or frequency has dropped, there is an increase in the numbers making a lump-sum repayment. The new report also says that Canadians are expecting to 58 years old before they are mortgage-free. So, if we’re not paying down out home loans, where is any spare money going? The report has shown a large increase in spending on home renovations (up 30 per cent) and vacations (up 20 per cent). "A mortgage is the largest debt most Canadians will take on in their lifetime, and being mortgage-free is an important goal for many," says Barry Gollom, Vice President, Secured Lending and Product Policy, CIBC. "With current low interest rates, this may be an opportune time to make progress against your mortgage - even a few small changes can make a big difference in the length of time it takes to pay off your mortgage and the amount you pay in interest charges."
Toronto sees condo sales spike
Quarter 2 was a good period for sales of condos in Toronto, driven by supply. Figures from the Toronto Real Estate Board show a 10 per cent increase in Q2, following a 9 per cent annual gain in Q1. The average selling price was up 5.6 per cent to $367,010. Investors account for around a quarter of the purchases as the rental market is hot in the city but there has also been a shift in choices made by those with young families and baby boomers , who along with professionals are opting for condos as a more affordable purchase than single-family units. Read the full story.
Record building permits issued in Vancouver
Building permits were issued in Vancouver for property valued at $1.12 billion in the first half of this year. That’s the best half-year figure since before the recession hit in 2008 and the full-year is set to break the $2.6 billion record of 2012. Half year totals have been above a billion dollars for the last three years and this latest number sees a 6.4 per cent increase on last year. There is a lot of construction in Vancouver and some expensive property pushing the permit values higher, including the Pacific One tower, valued at $87 million. Read the full story.
Chinese investors stepping up their foreign real estate portfolios
The Chinese government has been trying hard to boost the country’s economy and has been generally successful, except in real estate. Even with a targeted mini-stimulus for the housing market there, prices are still falling. Chinese investors have been keen purchasers of foreign property for some time, but the weak domestic market is increasing their demand for overseas real estate. While many seek high-end property in London, New York and Sydney, there is also much interest in Canada’s biggest cities. Investment in holiday homes is also a growth area for China’s richer citizens. Of course, as they have seen in London, growing levels of foreign property investment has not helped ordinary families in the city, as prices have got hotter. Read the full story.
BoC Governor hints that lower rates could be here to stay... RBC still ‘in business’ for US mortgages... Insurance Bureau advises homeowners to shop around for lower premiums....
Low interest rates could be here to stay
The expectation is that next year we will see a rise in interest rates; it’s the tool the Bank of Canada always uses to stimulate or cool the economy right? Maybe not. BoC chief Stephen Poloz, speaking yesterday on CBC’s The Current, suggested that there could be a change in policy to a “neutral interest rate”. The concern for the Bank is that any hike in the interest rate could have a disproportionate impact on the wider economy, given the high levels of consumer debt. The last thing anyone needs is homeowners struggling with mortgage repayments, cutting back on other spending and the ripple effect that would have on the retail and leisure sectors and business in general. A change in policy could mean fewer interest rate decisions and an average rate being lower than the predicted 3 to 5 per cent. Read the full story.
RBC still ‘in business’ for US mortgages
When the Royal Bank of Canada closed its branches south of the border and ended its retail banking operations there, many took that to mean that they were no longer operating in the US mortgage market. With predictions of the loonie dropping against the greenback in the next year, we may see growth in the traditional Canadian appetite for US homes, but while many choose to pay cash, mortgages are available from RBC. Read the full story.
‘Shop around’ for property insurance says IBC
Canadians should seek out the best deals for their property insurance, says the Insurance Bureau of Canada. Region vice-president of the IBC Bill Adams, was speaking in Alberta where homeowners are facing hikes of 20 per cent following last year’s floods; figures show Alberta had an 80 per cent higher cost of claims than the rest of the country in 2013. Mr Adams said that while we’ll put in the effort to research which flat screen TV to buy, we’re not so diligent when it comes to insurance policies. His advice was to check out various options and we may find that insurers who were not so exposed last year will have better rates. There was however a warning for the longer term. Mr Adams said that climate changes mean this is not going to be a one-off situation and that we should be prepared for premiums to continue to rise. Read the full story.
Vancouver condo skyscraper moves closer
It hasn’t pleased everyone in the neighbourhood but the construction of a 21 storey condo high-rise in the Mount Pleasant district of Vancouver has been approved by the development permit board. The project, known as The Independent, would be the tallest in the area and opponents say it is not in keeping with the neighbourhood and will give rise to similar applications. The development would be five buildings, housing 257 condos and some commercial outlets. The developers won’t know if they have final approval until the fall, but that’s a short wait considering the seven years that this project has been going through the city’s approval process. Read the full story.
While most property transactions close without too much heartbreak and hassle, buyers should take note of the unusual case where one couple was sold the wrong lot.
Anything can happen during the buying process, but the story of how a Moncton couple ended up with the wrong piece of property is both scary and bewildering.
The first-time buyers wanted to buy a plot of land near Irishtown, but instead they ended up paying money for land some distance from their desired location and ‘For Sale’ sign and which is already owned by another party. And now the couple is now suing Royal LePage for the mix-up. The estate agent company is arguing in its defense that the previous owner of the land misled them and that the couple should have hired a surveyor to ensure it was the correct land.
Speaking to CREW, Realtor Richard Payne from Halifax says the buyers are right to sue in this case but warns all investors to carry out research on all industry professionals you work with.
“The bit about being misled by the current owner is not really a defence as we always check the legal owner on the land registry to the parcel of land,” he says. “They could have easily checked that the parcel was located in the right place as well.”
He says that a surveyor may have helped but would not have been necessary. “The surveyor would have picked up that the unique number ID for the land doesn't match the location that the buyers thought they were buying,” he says. “At some stage they would have looked at the same land registry and seen that the land size didn't match. Warning bells would've gone off then but again realtor and lawyer should have caught it long before that.”
Yesterday’s BoC report comes with some concerns... Saskatchewan Realtors have optimism for the province... Sleepy town grows into popular city... and $26 million buys you a house to teardown....
BoC still concerned about high property prices
Yesterday’s report from the Bank of Canada was a mix of good news and bad; serial disappointment in the economy offset by good news for homeowners with the frozen interest rate. The report said that the Bank is still confident of a soft landing for the housing market but as usual, there was a warning for homeowners too. The high level of household debt and sky high property prices will continue to leave individuals, and the wider economy, vulnerable to any sudden downturns or rate rises.
Saskatchewan realtors not expecting a correction
The warnings of a market correction keep bubbling away but in Saskatchewan realtors are optimistic. The Chief executive of the Association of Saskatchewan Realtors says he’s not expecting any significant corrections in the region, noting that most of the over- valuation of property (as cited by Fitch and Morningstar this week) is
in Toronto, Vancouver and Calgary. Bill Madder says that if things stay buoyant in the local economy, the housing market will be stable. He says that people can afford property in the area and assuming there are no sudden rises in unemployment, he is optimistic that the market will hold up. Read the full story.
Warman no longer sleeping
Saskatchewan’s 16th as the population and investment grow. With the number of home starts among the highest in the province and vibrant commercial construction city is shaking off its image as a sleepy rural town projects, Warman is fast gaining popularity. The aim is to make the city a self-sustaining community with all the jobs, shops and leisure facilities it needs and it is well on the way to achieving its goal. When comparing property with other cities in the province it may be too late to get a bargain price, but value is another matter. While the average price
in Warman is $410,000 – about $60,000 more than Saskatoon – your dollars will normally get you a lot more property. With large investments being made in infrastructure, including $5 million for road improvements, the city is set for continued growth in prosperity in what is a highly competitive province. Read the full story.
For almost $26 million you’d expect to be able to live there?
A Vancouver property has raised a few eyebrows. The price may not be the most shocking aspect of the listing - $25.8 million is less than half the price of the area’s most expensive property – it’s the condition. While the ocean view is fantastic, highlighted by its repeated mentions in the listing, the property itself will almost certainly be demolished by new owners as it’s currently boarded up and in poor shape. Clearly whoever the eventual buyer is, they will need vision, lots of cash and to not be desperate to move in to a new home straight away. Read the full story.
Following another long and costly case, landlords are calling for a complete review of the Tenant and Landlord Board process.
Experienced investors and others in the field of housing should be members of the Landlord and Tenant Board, while the process should be reviewd to save time and money.
Calling the whole set-up a "money-making scheme", Kayla Andrade from the Ontario Landlords Watch says the whole process, from fees to the decision-making process, needs to be overhauled and fair to both sides.
“It is $170 to file an issue with the board and the landlord has to also hire a paralegal to represent them during the case, while the tenant does not have to do,” says Andrade. “Many of the cases take a long time to come to conclusion, after which time the tenant can stay rent-free in the unit. It's unnessary and unfair."
Andrade’s criticism of the Board follows in the wake of a recent decision from the Divisional Court with one lawyer saying the system is screwing the landlords.
In that case, the landlord applied to the board to terminate the tenancy and evict the tenant on the grounds that she had not paid her rent (which amounted to around $2,000). The hearing was postponed on two occasions, with the tenant arguing she needed more time to obtain documents. Despite the Board finding in favour of the tenant, she appealed the decision which she subsequently lost.
The landlord sought partial indemnity costs of under $17,000, meaning costs must have been in excess of $25,000. The court stated that the tenant was of modest means and that the issue were relative to simple issues and awarded the landlord a measly $2,500 in costs.
Samsung’s big deal with a leading condo developer for the country’s first smart home systems may be making the news, but will it make the best investment choice?
Samsung Electronics may be hoping to tap into the increasing demands of Canadian Generation Y buyers, but some experts believe “smart homes” may be a step too far for this market.
With the technology on their smartphones, condo residents would be able to control access to the building, the door lock, surveillance system, temperature and lighting.
Canderel Residential is placing this system into 25 of its high-end units in one of its new builds, which is set to open in 2017.
“Smart home systems like the Samsung product definitely add the wow and cool factor to these high-end units for potential buyers and renters but they are more of a perk than anything else,” says Joy Patterson from The Condo Chicks. “The younger more tech savvy generation would appreciate these kinds of products and services, but unfortunately they aren't necessary the ones buying or renting these high-end units.”
Such technology has already been rolled out in South Korea and the U.S. and while proving popular, cyber security remains one of the key concerns for many.
However, Patterson tells CREW that security, or more so lack of, is not an issue for a huge cohort of possible buyers. “The tech-savvy (generation) are already used to doing online banking and so forth, so security would be less of a concern and the product becomes more of a convenience tool.”
Global ratings agency warns that housing market here is over-valued by 20 per cent… Banks could be vulnerable in any housing crash… Consumers remain optimistic despite warnings… And office leasing sees some growth in Toronto…
Canada’s housing over-valued by 20 per cent
The latest warning of an over-valued housing market has come from credit ratings agency Fitch. The analysts say that the market needs slow down soon or the federal government may have to take yet another measure to try to reduce the heat. Fitch Ratings says that the high prices caused by low interest rates and a lack of supply in metropolitan areas have been the normality since the start of the recession, but that economic changes could trigger a crash. The main concerns are a rise in unemployment and/or interest rate rises. David Madini from Capital Markets believes the housing sector is in line for a “major correction over the longer term”. The latest stats on prices are expected today from the Canadian Real Estate Association. Read the full story.
Banks exposed to the threat of a downturn
Canada’s banks could find themselves in crisis if a housing market crash was to happen. A report from investment analysts Morningstar says that the likelihood of higher interest rates, falling prices and a slower market at some time in the next year or so could lead to a high level of defaults. The Royal Bank of Canada and CIBC would be hit the hardest. Morningstar predict that there will be a correction in the market within the next five years and are suggesting that it could see property values fall by as much as 30 per cent. Read the full story.
Homeowners confident in the market
While experts continue to express concern about the hot housing market, it seems that consumers are revelling in it. The latest figures from the Bloomberg and Nanos index shows that the level of Canadians predicting increased house prices in the next six months has grown to 47 per cent. That’s a 10 per cent rise since April and the highest ever figure in the index. Read the full story.
Toronto sees growth in office leasing
The Greater Toronto Area has seen increases in the amount of occupied office space after a slow start to the year. The newly released ‘Second Quarter 2014 Greater Toronto Area Office Market Report’ from Avison Young reveals Downtown, Midtown and Toronto West saw leasing activity rise, although Toronto West and North had more offices becoming vacant than the level of new rentals. As a result the overall vacancy rate for the GTA remained at 9.4 per cent but the increased activity is encouraging. The office leasing market is changing due to market demands, with many businesses now seeking ways to use less space more efficiently. Read the full story.
Condo investors worried about the future pool of buyers may take heart from a new poll suggesting that Ontarians are willing to take the plunge…and soon.
While most home-buyers would prefer to get their hands on a detached home, rising prices and limited supply are pushing their dreams out of reach.
However, that is good news for some investors as a majority of potential buyers say they would turn to the condo market for their future residential needs.
According to a recent survey on behalf of the Ontario Real Estate Association and The Ontario Home Ownership Index, almost 30 per cent of Ontarian buyers say they would consider condos. This push is naturally being led by potential buyers in the GTA region.
Almost 60 per cent of the 1,080 surveyed who are likely to purchase a home in the next two years say they would look for a detached house.
And despite all of the doom and gloom in the market, a majority of the survey respondents believe conditions are currently favourable to buy property, while most believe the overall state of the province’s economy is good.
However, not everyone is as positive. One in five believe the province’s real estate market is weaker compared to one year ago.
Interestingly, more Ontarians rank long-term investment value as they motivation for buying, followed by affordability/availability with 26 per cent driven by the desire to own their own home.
Could a housing crash actually be good news for homeowners?… Getting a mortgage is increasingly tough for self employed buyers… Younger buyers proving cautious about entering the market… And banks look to assess their risk to a housing crisis…
Would a market crash actually be a good thing for homeowners?
It’s a phrase that fills Canadians and those of us involved in the housing market with dread, but could a market crash actually create benefits? Portfolio manager David Kaufman suggests that, with the exception of older homeowners looking to downsize, most people would be better off following a correction of the market. The reasoning; assuming a 20 per cent drop in prices across the board; is that young first-timers would need a smaller down-payment and a smaller mortgage and those in their 30s looking to upgrade would find their dream home drops in value more than their existing one, making it more affordable. Empty nesters looking to downsize would of course be facing the reverse situation. In reality there would not be a flat rate decrease and Mr Kaufman draws the conclusion that the best scenario is for a housing market that is in line with inflation. Read the full story.
Tight regulations making mortgages harder to get
Tighter rules on lending in recent years mean that getting a mortgage is tough for some Canadians. Real estate experts say that for the self-employed, those living in rural areas or those with poor credit history, mortgages are available but at a high price. The main issue for the self employed surround lack of history with lenders often asking for a decade or more of accounts. Higher down payments are also usually required and there will inevitably be higher repayments. There is also an issue with tax breaks not being considered by lenders, so income may appear too low for the mortgage payments but savings on income tax covering the shortfall. Read the full story.
Young Americans less interested in home ownership
It’s been the dream for generations of North Americans; grow up, get married, buy that dream home; but times are changing. A new risk-averse generation is growing. They’ve seen the banking crisis and what can happen when things go wrong and they’re choosing to wait before taking that leap into home ownership. Even the daughter of the Mortgage Bankers Association in Washington is reluctant to jump in too soon and says that despite growing up with her dad’s influence, she believes the world has changed. Sarah Stevens says that owning a home is a “five to ten year commitment” and despite being able to afford the repayments and having a down payment, she’s still holding off. This is certainly not an unusual stance; figures show that first-timers in the US are down to 27 per cent of the market, where it has historically been around 40 per cent. Read the full story.
Advisory firm working with banks on real estate concerns
Real estate advisory firm Altus say they are working with two major banks to help them assess their risk from real estate following concerns by regulators of the frothy market. The firm’s CEO Bob Courteau says that recent announcements by the Bank of Canada and the CMHC reflect the vulnerability of the economy to the housing market. He says that although both organisations are predicting a soft landing, the banks are keen to have clear information about their exposure. Read the full story.
With so few taking up grants to upgrade secondary suites, investors from outside of the area should be availing of this opportunity.
Edmonton city’s big plan to increase rental supply through offering monetary incentives is not really working according to plan, but one agent believes investors should jump at the handout.
Only 63 of a possible 225 grants for building and upgrading secondary suites have been approved, with many put off by the number of stipulations attached to the program.
However, Edmonton-based realtor, Jerry Aulenbach says investors would not be too restricted by the stipulations of the Cornerstones II program.
“Certain restrictions, like the unit has to be in a rental pool for five years, does not affect those investors that are looking for a buy and hold property here,” he says.
The maximum grant offered is $20,000, which can make up to 50 per cent of construction costs. Recipients must agree to a 10-year operating agreement for lower income tenants. And if the homeowner sells the property before 10 years are up, they must reimburse the grant cost to the city.
Speaking to CREW, Aulenbach adds that finding single-family homes with legal basement suites has is one of the biggest issues in Edmonton.