Daily Market Update

Banks confident of mortgage growth… Vancouver condos “will never be affordable”… Home builders heading south…and the peril of late-billed taxes…


Banks confident of mortgage growth

Three of the big six banks have reported their earnings so far and all have shown growth in their mortgage books. RBC, Bank of Nova Scotia and Bank of Montreal have all seen their residential mortgage business increase from the previous quarter and year-over-year. Although they have seen a slowing in the rate of growth, they are confident that the mortgage business is in good shape and that it will continue to see gains. Regulators have been keen that banks should not be over-exposed to the real estate markets and so other areas of the banks’ profits have been in focus in the last year or so and are also looking stronger. The other positive news on the residential mortgage side is that delinquent loans, 90 days or more overdue, are trending down. Read the full story.


Vancouver condos “will never be affordable”

Housing in Vancouver, including condos “will never be affordable for the majority of potential home buyers” writes Vancouver real estate analyst Fred Schliewinsky in his latest report on the sector. Schliewinsky is talking about new homes in the city, pointing out that prices for a 2 bedroom new build of just over 1000 sq. ft. in a high rise will set you back over $700,000. He says he isn’t expecting the situation to change anytime soon. Figures from RBC show that it takes around 40 per cent of a household’s pre-tax income to afford a condo in the area, while in Toronto the figure is 34.2 per cent and in Calgary it’s just 24 per cent. Read the full story.


Home builders heading south

Some of Canada’s biggest construction companies are hedging their bets by developing projects in the US. With uncertainty over the domestic housing market, builders are picking up land in Texas, Florida and other parts of the US where prices have yet to recover from pre-crisis levels. Although there are mixed reports on the US housing market, it is expected to pick up and Canadian companies such as Mattamy and Brookfield believe they will be well placed to cash in on the uptick. Builders in the US appear more cautious about building on the low cost suburban land, but this is partly due to being less cash-rich than some of Canada’s firms; there are a lot of unsold new homes down south restricting cash flow. If Canada’s new home sales slow down significantly, those builders that have investments in the States are hoping that those projects will pick up the slack. Read the full story.


The peril of late-billed taxes

In a cautionary tale for homeowners, owners of townhouses in Barrhaven, Ontario have recently been hit by unexpected supplementary tax demands dating back three years. Property assessments were carried out last spring and now the 72 owners have received bills of up to $10,000 due to be paid today to avoid interest charges. Many of the owners pay their property taxes through their mortgage lenders but had seen the amounts they were paying drop due to lower bills. Some of the lucky ones had realised they were paying too little and put the extra money aside but for others it has meant dipping into emergency funds to cover the shortfall. It’s not clear exactly what went wrong in this case, although somehow the assessment of the development had not taken place and owners were being billed for vacant land. It highlights the importance of owners checking figures for themselves and having a contingency fund to cover unexpected property tax demands. Read the full story.


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