Ajax Pickering Real Estate Blog

By Sharon Singleton, QMI Agency

Canada’s real estate market showed no sign of losing steam in February, with housing starts rising faster than expected and a new survey showing 10% of Canadians expect to buy a home in the next two years.

Seasonally adjusted housing starts were 196,700 in the month, up from 185,400 in January, according to figures from the Canadian Mortgage Housing Corp. That was above analysts’ forecasts for a 190,000 gain.

RBC’s 17th annual home ownership study found that the number of Canadians saying they are very likely to buy a new home rose from 7% two years ago to 10%. The number of people who view their house as a good investment rose to a 12-year high of 91%.

Canada’s real estate market has been one of the main drivers of economic growth, with housing construction helping to power a 5% expansion in gross domestic product in the fourth quarter.

Some economists have forecast that the property market will begin to cool from the second half, when the Bank of Canada is expected to begin raising interest rates and demand and supply of available housing becomes more balanced.

“The gain in February housing starts was concentrated in the multiple starts segment, particularly in Toronto,” said Bob Dugan, chief economist at CMHC’s Market Analysis Centre.

Urban multiple starts, or condos, increased by 19.1% to 89,900 units while single urban starts increased by 0.5% to 89,200 units.

Urban starts rose 28.6% in Ontario, 14.3% in Atlantic Canada, 10.8% in the Prairie region and 8% in British Columbia. In Quebec, urban starts dropped 14.1%.

Rural starts were estimated at a seasonally adjusted annual rate of 17,600 units in February.

According to the RBC poll, younger Canadians between the ages of 18 to 24 are likely to lead the market. About 15% said they were likely to buy, almost double the number in 2009.

About 60% also believe housing prices will continue to rise this year, up from just 25% this time a year ago. They also expect mortgage rates to rise, with two-thirds expecting to have to pay more, the bank said.

That belief is being reflected in the choice of mortgage, with 16% opting for a variable rate loan compared with 20% last year.

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Contact the Jeffrey Team for more information  -  416-388-1960

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A home may be one of the biggest investments you ever make. Saving up a down payment is just the first step.

Investor Education Fund

1. You may find it hard to get your money out. Some investments can lock in your money for a while, but you can usually pay a penalty and get your money out if you really need it (for example, a five-year Guaranteed Interest Certificate (GIC)). If you buy a home, you may find it will tie up most of your savings. Turning your house into cash means selling it or renting it out, and that can take a lot of time and effort. That’s why a home is not considered a very liquid investment.

2. You will pay very different kinds of costs. Most investments have costs like service charges, fees, or commissions. The costs to maintain a home investment are different, and many are hard to plan for. There are taxes and utility costs, for starters. Then there’s maintenance. On top of that, if you have a mortgage, you will pay interest – and interest rates can go up, making your home investment more costly to own.

3. Many factors affect what you will make. Some investments, such as GICs or bonds, give you a fixed rate of return, so there’s no guesswork. You can estimate the return on other investments, such as stocks or mutual funds, based on past results and other factors, but there is no guarantee what you will make. To predict how much money you’ll make when you sell a home, you have to look at factors such as:

* The average increase in housing prices over time, which runs between 2% and 4% a year in most locations
* The location of your home
* Your home’s size, age, and condition

4. You get the unique advantage of living in your investment. Most investments bring you a return in the future. A home can do that too, but with a home, you also get to enjoy your investment by living in it.

5. You are not just investing, you are also borrowing. A few lucky people have enough money to pay cash for their homes, but most people make a down payment and borrow the rest by taking out a mortgage. When you buy investments like stocks and bonds, you don’t usually borrow the money you invest – or at least, not as much.

6. You use different sources of information to research your home investment. Your real estate agent is your best source of information when buying a home. Find one you feel comfortable with, who seems to understand your needs and your budget. Make sure they are familiar with the area you are interested in. Of course, don’t overlook other sources of information. For example, people in the neighbourhood are often willing to share information that can help you make your final decision. Newspapers, books and the Internet also provide useful information. You can also talk to your banker or financial adviser.

Remember: Location matters when you’re buying a home

The return on investment for homes in some places is higher than it is in others. Whether you live in a small town or a big city, you get the same interest on a GIC. If you buy a house in a small town, you probably will not pay as much for it as you will for a similar house in the centre of a large Canadian city, close to public transit, shopping, schools, and entertainment.

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Contact the Jeffrey Team for more information  -  416-388-1960

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Orit Alon – Shalom Life

Active listings are down in 81 per cent of real markets in January with interest rates remarkably low. Every good listing is getting full attention from variety of buyers.

Guy Scheiner, a Mortgage Broker and a Real Estate Agent with Sutton Group, describes the real estate arena as a sellers market. “From my perspective from all parts of the real estate arena, I see that the prices are very high, the demand for properties is bigger than the supply, people that were hurt form the recession don’t want to move, they postpone the sell to better times. The prices have gone up as a consequence of this market condition along with encouraging interest rates that you can block today to five years and enjoy the low expense.”

RE/MAX Market Trends Report 2010, published this week, examined real estate trends and developments in 16 markets across the country. It found that unusually strong activity during one of the traditionally quietest months of the year has led to a sharp decline in active listings in 81 per cent of markets surveyed. The threat of higher interest rates, tighter lending criteria, and in British Columbia and Ontario, the introduction of the new Harmonized Sales Tax (HST) have clearly served to kick-start real estate activity from coast-to-coast, prompting an unprecedented influx of purchasers. As a result, 87.5 per cent of markets posted an increase in sales in January, with average price appreciated in 81 per cent of markets surveyed.

Markets experiencing the tightest inventory levels include Toronto (- 41 per cent); Kitchener-Waterloo (-33 per cent); Ottawa (- 30 per cent); Victoria (- 30 per cent); Greater Vancouver (- 27 per cent); Halifax-Dartmouth (- 19 per cent); London-St. Thomas (- 18 per cent); Regina (- 16 per cent); and Winnipeg (- 13 per cent). Conditions were still balanced, but starting to tighten in Calgary, Edmonton and Saskatoon, particularly in the single-family detached category.

The highest year-over-year sales gains were reported in Greater Vancouver (152 per cent), Kelowna (121 per cent), Greater Toronto (87 per cent), Victoria (69 per cent), Hamilton-Burlington (58 per cent), London-St. Thomas (55 per cent) and Calgary (47 per cent). Western Canadian cities dominated the list of centres with the highest increases in price appreciation. These included Victoria at 25.5 per cent, Kelowna at 22 per cent, Greater Vancouver at 19.5 per cent, and Winnipeg at 17 per cent. St. John’s (23 per cent) and Toronto (19 per cent) were also among the frontrunners for price growth.

“In few months the situation will be different” explained Scheiner. “The interest rate will be higher for mortgages as the Bank of Canada promised to raise at the second mid. of this year. The new program to tighten the down payment will effect buyers and lower the pressure on real estate deals. Other then that, the new HST will add (additional) percentage to the price. All these factors can combine to the boiling market. Though, we need to remember that Canada is a land of immigrants and as new comers keep coming, the pressure to find a place to live will effect the local real estate market.”

While buyers are taking advantage of favourable conditions, sellers too are reaping the rewards. Competing bids are a factor in the marketplace once again, with well-priced listings-especially at the entry-level price point-experiencing multiple offers. Properties priced at fair-market value will likely sell quickly for top dollar. The overall pressure on sales and price is significant across the board – and it’s not likely to subside unless more inventory comes on-stream.

Recent revisions to lending criteria will add fuel to the fire in the short term. Buyers considering a variable rate mortgage will step up their plans for homeownership in the next month or so just to get in under the wire. In the longer term, buyers will adjust, but move forward. Compromise has long been a reality-particularly in the larger centres. This simply means they may go smaller or further in their pursuits.

“From a buyers point of view, I advise to do a good search in the market for a good opportunity with your agent, only if you find one for a reasonable price, though it is a seller’s market, get the deal, from the sellers side- more then yesterday this is your game,” Scheiner advised.

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Contact the Jeffrey Team for more information  -  416-388-1960

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