The new 15 per cent tax which will apply to most foreign buyers in Metro Vancouver from next week will be good news for Canada’s banks. That’s the view of ratings agency Moody’s which believes that the tax will mean a slowing of Vancouver house prices, which should help “stabilize banks’ mortgage collateral values in that city.”
Moody’s assistant vice president Jason Mercer wrote in his report that according to the government’s assessment the impact of foreign buyers is “not insignificant.” He says that Hong Kong and Australia have similar taxation and that its absence “accelerated the pace of foreign investment in Vancouver and this levels the playing field with those jurisdictions.”
Source: http://www.canadianrealestatemagazine.ca/market-update/foreign-buyers-tax-good-for-banks-211235.aspx
Thursday, July 28, 2016
Monday, July 25, 2016
Doubled in a decade – the high rise of low rise
Low rise homes in the Greater Toronto Area have more than doubled in price in the past decade; average appreciation in the past year alone was $100,000.
The average price of a new low-rise home hit $887,543 in June, the Building Industry and Land Development Association (BILD) reports; that’s more than double the average $393,398 in June 2006.
High-rise prices have also increased of course but the figures are more modest. The average in June 2016 was $469,516, up 6 per cent from a year earlier and 1.5 times the average price in June 2006.
The BILD report also highlights the significant drop in the supply of new homes in 2016 compared to 2006 with overall inventory at 18,427 compared to 29,968, in 2006. This drop was only slight for high-rise homes (down to 16,363 from 16,560 in 2006) but for low-rise inventory plummeted from 13,408 in 2006 to a near-record low of just 2,064.
"Supply of new low-rise homes has declined dramatically in the last 10 years due to government policy and lack of available serviced land," commented Michelle Noble, BILD Vice President of Marketing and Communications. said. "Demand for ground-related homes is far outpacing supply, with some projects selling out just hours after launching.”
Source: http://www.canadianrealestatemagazine.ca/market-update/doubled-in-a-decade--the-high-rise-of-low-rise-210924.aspx
The average price of a new low-rise home hit $887,543 in June, the Building Industry and Land Development Association (BILD) reports; that’s more than double the average $393,398 in June 2006.
High-rise prices have also increased of course but the figures are more modest. The average in June 2016 was $469,516, up 6 per cent from a year earlier and 1.5 times the average price in June 2006.
The BILD report also highlights the significant drop in the supply of new homes in 2016 compared to 2006 with overall inventory at 18,427 compared to 29,968, in 2006. This drop was only slight for high-rise homes (down to 16,363 from 16,560 in 2006) but for low-rise inventory plummeted from 13,408 in 2006 to a near-record low of just 2,064.
"Supply of new low-rise homes has declined dramatically in the last 10 years due to government policy and lack of available serviced land," commented Michelle Noble, BILD Vice President of Marketing and Communications. said. "Demand for ground-related homes is far outpacing supply, with some projects selling out just hours after launching.”
Source: http://www.canadianrealestatemagazine.ca/market-update/doubled-in-a-decade--the-high-rise-of-low-rise-210924.aspx
Friday, July 22, 2016
“Sell and rent” a viable shield against a potential bubble
While there apparently has never been a better time for home owners in Vancouver and Toronto, the non-stop growth of real estate prices in these cities has made more than a few analysts nervous.
In his July 20 piece for The Motley Fool Canada, industry observer Nelson Smith stated that as more and more people (especially young professionals and starting families) are priced out of the housing markets, it would be sensible for owners and investors to take steps to protect themselves from a possible bubble.
“[If] Canada’s housing bubble pops in a big way, investor portfolios could get caught in the crossfire. That’s bad news, especially for somebody with property in an overheated market,” Smith wrote.
A viable solution that can shield one from a potential crash is the “sell and rent” tactic.
“Admittedly, this isn’t such an easy solution, but it could put hundreds of thousands of dollars in your pocket,” Smith said. “Because owning property is such a popular investment, landlords are forced to accept anemic returns from cash flow. This has made renting more affordable than ever. It’s the natural result of today’s market.”
“There are thousands of homeowners in Toronto sitting on at least $1 million in home equity. If that cash is properly invested in a portfolio of dividend stocks instead of sitting idle, it could spin off between $30,000 and $40,000 per year in income, easily enough to cover rent in a smaller place,” the analyst explained.
A more radical version of this tactic is to look and settle outside the red-hot markets altogether.
“Yes, I know it’s hard to leave a place that’s grown to become home. But Toronto homeowners who move just a few hours away can find affordable housing in communities that still offer many of the amenities of home, and they can lock in impressive gains in the process,” Smith said.
“I argue that it’s prudent for investors to lighten their exposure to real estate. At this point in the cycle, it’s just smart,” he concluded.
Source: http://www.canadianrealestatemagazine.ca/news/sell-and-rent-a-viable-shield-against-a-potential-bubble-210886.aspx
In his July 20 piece for The Motley Fool Canada, industry observer Nelson Smith stated that as more and more people (especially young professionals and starting families) are priced out of the housing markets, it would be sensible for owners and investors to take steps to protect themselves from a possible bubble.
“[If] Canada’s housing bubble pops in a big way, investor portfolios could get caught in the crossfire. That’s bad news, especially for somebody with property in an overheated market,” Smith wrote.
A viable solution that can shield one from a potential crash is the “sell and rent” tactic.
“Admittedly, this isn’t such an easy solution, but it could put hundreds of thousands of dollars in your pocket,” Smith said. “Because owning property is such a popular investment, landlords are forced to accept anemic returns from cash flow. This has made renting more affordable than ever. It’s the natural result of today’s market.”
“There are thousands of homeowners in Toronto sitting on at least $1 million in home equity. If that cash is properly invested in a portfolio of dividend stocks instead of sitting idle, it could spin off between $30,000 and $40,000 per year in income, easily enough to cover rent in a smaller place,” the analyst explained.
A more radical version of this tactic is to look and settle outside the red-hot markets altogether.
“Yes, I know it’s hard to leave a place that’s grown to become home. But Toronto homeowners who move just a few hours away can find affordable housing in communities that still offer many of the amenities of home, and they can lock in impressive gains in the process,” Smith said.
“I argue that it’s prudent for investors to lighten their exposure to real estate. At this point in the cycle, it’s just smart,” he concluded.
Source: http://www.canadianrealestatemagazine.ca/news/sell-and-rent-a-viable-shield-against-a-potential-bubble-210886.aspx
Monday, July 18, 2016
June house prices rise in almost every region
Home prices rose in ten of the eleven markets covered by the Teranet-National Bank HPI in June; the index was up 2.3 per cent for the month and 10 per cent from a year earlier.
The increase was driven by four cities though; Vancouver (up 23.4 per cent year-over-year); Hamilton (up 13.8 per cent); Victoria (up 12.5 per cent); and Toronto (up 12.4 per cent). Vancouver’s increase was the largest on record.
Elsewhere, price appreciation is more subdued: Winnipeg (up 1.7 per cent year-over-year); Ottawa-Gatineau (up 1.4 per cent); and Montreal (up 0.5 per cent).
Calgary, Edmonton, Quebec City and Halifax all saw lower prices year-over-year with declines of 2.4, 1.9, 1.4 and 0.7 per cent respectively.
Overall, the national rise in prices for the first six months of 2016 was 6.8 per cent, well above the historical average first-half rise of 4 per cent.
Source: http://www.canadianrealestatemagazine.ca/market-update/june-house-prices-rise-in-almost-every-region-210454.aspx
The increase was driven by four cities though; Vancouver (up 23.4 per cent year-over-year); Hamilton (up 13.8 per cent); Victoria (up 12.5 per cent); and Toronto (up 12.4 per cent). Vancouver’s increase was the largest on record.
Elsewhere, price appreciation is more subdued: Winnipeg (up 1.7 per cent year-over-year); Ottawa-Gatineau (up 1.4 per cent); and Montreal (up 0.5 per cent).
Calgary, Edmonton, Quebec City and Halifax all saw lower prices year-over-year with declines of 2.4, 1.9, 1.4 and 0.7 per cent respectively.
Overall, the national rise in prices for the first six months of 2016 was 6.8 per cent, well above the historical average first-half rise of 4 per cent.
Source: http://www.canadianrealestatemagazine.ca/market-update/june-house-prices-rise-in-almost-every-region-210454.aspx
Thursday, July 7, 2016
Buyers are taking risks says home inspector
A year ago around 75 per cent of homes sold in Greater Vancouver and Fraser Valley were inspected before the deal closed; this year it’s as low as 10 per cent.
Home inspector Vince Burnett told the Vancouver Sun that after 17 years in the business he would expect to be busy given the heat in the market but he hasn’t inspected a home for 2 weeks.
Burnett is president of the Home Inspectors Association of BC and warns that skipping an inspection puts buyers at risk of huge repair bills and the association wants the government to introduce a cooling off period of 7 days as deals are frequently happening so fast.
Source: http://www.canadianrealestatemagazine.ca/market-update/buyers-are-taking-risks-says-home-inspector-209949.aspx
Home inspector Vince Burnett told the Vancouver Sun that after 17 years in the business he would expect to be busy given the heat in the market but he hasn’t inspected a home for 2 weeks.
Burnett is president of the Home Inspectors Association of BC and warns that skipping an inspection puts buyers at risk of huge repair bills and the association wants the government to introduce a cooling off period of 7 days as deals are frequently happening so fast.
Source: http://www.canadianrealestatemagazine.ca/market-update/buyers-are-taking-risks-says-home-inspector-209949.aspx
Monday, July 4, 2016
Canada bubble fears unfounded - mortgage industry
Mortgage Professionals Canada, a national industry group representing over 11,000 mortgage professionals, recently stated that the fears of a housing bubble in Canada are not based on any compelling evidence.
The group added that any changes by the federal government to the existing lending environment would only serve to inflame the markets and possibly lead to a crash.
“There is a risk that changes in policies of lenders or mortgage insurers that reduce access to mortgages could cause an unnecessary drop in housing demand and housing prices, and bring consequent economic damage,” Mortgage Professionals Canada chief economist Will Dunning told Garry Marr of the Financial Post.
“Given the importance of housing activity to the national economy (especially since investment in energy projects is no longer a driver of growth), we are hopeful that any changes will be based on a careful consideration of the tradeoff between caution in the mortgage market versus overall economic growth,” Dunning added.
The economist noted that despite 8 years of fear-mongering, the scenarios outlined by the most pessimistic market observers have not transpired.
“Those comments have generally assumed that rapid growth in house prices (or a rising ratio of house prices versus incomes or of house prices versus rents) is sufficient evidence of a bubble. To the contrary, these supposedly strong indicators are not definitive proof. They may actually represent healthy outcomes within existing conditions,” Dunning said.
Mortgage Professionals Canada said that a bubble exists only when “excessive activity” is stimulated by undue expectations, and when prices end up far exceeding expected levels considering the provinces’ economic fundamentals.
Dunning maintained that these indicators do not exist at the moment, notwithstanding the dizzying growth of home prices in the most overheated markets (as of May, almost 30 per cent year-over-year in Vancouver, and approximately 16 per cent year-over-year in Toronto).
Source: http://www.canadianrealestatemagazine.ca/news/canada-bubble-fears-unfounded--mortgage-industry-209783.aspx
The group added that any changes by the federal government to the existing lending environment would only serve to inflame the markets and possibly lead to a crash.
“There is a risk that changes in policies of lenders or mortgage insurers that reduce access to mortgages could cause an unnecessary drop in housing demand and housing prices, and bring consequent economic damage,” Mortgage Professionals Canada chief economist Will Dunning told Garry Marr of the Financial Post.
“Given the importance of housing activity to the national economy (especially since investment in energy projects is no longer a driver of growth), we are hopeful that any changes will be based on a careful consideration of the tradeoff between caution in the mortgage market versus overall economic growth,” Dunning added.
The economist noted that despite 8 years of fear-mongering, the scenarios outlined by the most pessimistic market observers have not transpired.
“Those comments have generally assumed that rapid growth in house prices (or a rising ratio of house prices versus incomes or of house prices versus rents) is sufficient evidence of a bubble. To the contrary, these supposedly strong indicators are not definitive proof. They may actually represent healthy outcomes within existing conditions,” Dunning said.
Mortgage Professionals Canada said that a bubble exists only when “excessive activity” is stimulated by undue expectations, and when prices end up far exceeding expected levels considering the provinces’ economic fundamentals.
Dunning maintained that these indicators do not exist at the moment, notwithstanding the dizzying growth of home prices in the most overheated markets (as of May, almost 30 per cent year-over-year in Vancouver, and approximately 16 per cent year-over-year in Toronto).
Source: http://www.canadianrealestatemagazine.ca/news/canada-bubble-fears-unfounded--mortgage-industry-209783.aspx
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