Christmas is a homebuyer's market

Garry Marr, Financial Post

Don’t over do it this Christmas, if you want to sell your house, that is.
Royal LePage Real Estate Services says it’s time to start thinking about a smaller tree this year if you plan to list your home for sale over the holiday season. Those large, decorated trees can take over a room and make it appear smaller to potential customers.
The week between Christmas and New Year’s is a slow period for real estate transactions, meaning sellers need any advantage they can muster.
“When people are selling their houses at Christmas time, they are selling under some other stress. They are usually highly motived to sell,” says Dianne Usher, a vice-president with Royal LePage. “You’ve got the euphoria of the holiday season and, oops we have to sell. It’s a great time to buy.”
The real estate company is not being a total Scrooge about the season, it’s just calling for less of everything.
Among its other suggestions are avoiding too many lights and opting for white lights instead of multi-colored flashing bulbs to give your home a neutral glow.
Forget the stacks of presents under the tree too, they just give your home a cluttered look. And those holidays meals may smell great to you, but they are a strange odour to a potential buyer.
“You want to try to tone it down a bit. Take the personal aspect of your home out of it,” says Ms. Usher, adding Christmas marks your home more than usual. “It just adds too much of a distraction to the room.”
But should you have no Christmas decorations? Would that be a turn off to buyers?
“Not in major urban centres because we are so multicultural today,” says Ms. Usher, adding in some rural and suburban centres, a touch of Christmas can be important to selling.
Mary Helen Rosenberg, a partner in Stage To Sell, says the whole idea behind staging is to keep your home as neutral as possible, so it appeals to the widest audience of buyers.
“No, I wouldn’t get rid of the tree all together, but I wouldn’t overdo it with decorations, too,” Ms. Rosenberg says. “You can’t rob the family of traditions. I wouldn’t put the tree up Dec. 1 and take it down Jan. 20. I might close that window and keep it fairly short and allow the family to enjoy its regular traditions. If it’s serious and we need to sell your house, you bring the tree down a little earlier.”
Even the guys who grow the trees say it’s probably not a good idea to have a giant one in the middle of your living room during an open house.
“When it comes to selling a house, it is important to not fill the room with a large and wide tree loaded with decorations. The eyes of the buyer will look at how big a tree is and how small the room is, even if it’s in the basement,” said Lewis Downey, executive director of Canadian Christmas Tree Growers Association.
“I think you do need a tree though. It’s Christmas time and it’s natural to have a tree. If you don’t have a tree, it can have reverse effect and people may say, ‘What’s the matter, there’s no tree. They’re not happy to live there.’”
Thinking of buying or selling over the holidays? I'd be happy to help. http://www.firstchoicehomes.ca/

Analysts fret over housing, want to hear from Carney

MICHAEL BABAD

At least some economists want Bank of Canada Governor Mark Carney to elaborate today on his views on housing and household debt.
Having flagged the issue for months now, Mr. Carney speaks today to the Economic Club of Toronto on "Reflections on the Economic Outlook." Given Mr. Carney's repeated warnings on the high levels of household debts, economists Derek Holt and Gorica Djeric want the central bank chief to update markets on the outlook for housing.
"Our concerns have not gone away," the economists said in a research note. "We always argued that there would not be a U.S.-style housing bust principally because of work we've done on the vast differences between Canadian and U.S. mortgage and banking markets, but we still subscribe to the view that house prices face downside risks although the exact timing is uncertain."
Most economists don't expect a U.S.-style meltdown, but continued low interest rates, which Mr. Carney used to fight the recession, have helped lead to a continued build-up in personal debt.
And as The Globe and Mail's Tara Perkins reports today, the situation has become so worrisome that federal officials are studying the possibility of new measures to curb that increase. Many of the country's bankers support such a move, which could come in the next federal budget, Ms. Perkins writes.
The Scotia Capital economists noted that the home ownership rate in Canada is at a record high of about 70 per cent - that's a bit more than the peak in the United States. Home prices are also at record levels and the market is overvalued, while the debt-to-income ratio sits at 145 per cent, which is "not terribly lower than a properly defined U.S. comparison." The ratio of debt to assets, meanwhile, is the second-highest in the G7.
Real estate, they said, may be getting a temporary boost because fixed rates have been kept low as the Federal Reserve's low policy rate ties Mr. Carney's hands from going much higher.
"But the [Bank of Canada] is right to flag the risks of low rates for a long period," said Mr. Holt and Ms. Djeric. "In our view, low rates for a long time translate into concerns about transferring even greater volumes of homebuyers out of the future into the present. When that future comes, Canada's outperformance on GDP growth compared to the G7 average over the past decade that owed itself significantly to the unleashing of pent-up demand in housing and consumption from the 1990s into the past decade will have run its course and a softer demand environment for housing will be unleashed."

Top 10 Things To Avoid When Selling Your Home Over The Holidays, According To Royal LePage

Vacation time and slower work schedules create an ideal time for open houses. However, as homes fill up with presents, decorations and visitors, sellers are often faced with the challenge of striking the right balance between cozy and crammed. Keeping your home tidy and sparingly-decorated doesn't mean sellers can't celebrate the season in style, but remember that buyers are looking for just the right amount of sparkle.

"Potential buyers expect that there may be some decorations, but when they arrive they are trying to envision how they would spend their day-to-day lives in the home," says Phil Soper, president and chief executive, Royal LePage Real Estate Services. "Keeping the holiday decorations to the right level will be easier if you remember the goal is to bring out the home's structural charm," Soper adds.
We know that potential buyers can be put off by a home that has too many personal items. So while trying to manage the Christmas clutter, sellers should also remove items that remind buyers that the home belongs to someone else. To assist sellers, Royal LePage compiled a top ten list of things to avoid when selling a home during the holiday season.
Too many lights: A home will dazzle more if lights are kept to a tasteful minimum. Sellers should opt for white lights instead of multi-coloured flashing bulbs to provide a more neutral glow to a home.
Forgetting to clear the snow: Snow can look beautiful on trees, but driveways and walkways should be cleared as soon as the flakes fall. Buyers should be able to move freely during an open house so it's important to remember all the outdoor paths and patios around your home.
No life or landscape: Give buyers a chance to imagine the potential in your landscape. Frost-resistant plants like flowering kale or miniature trees allow sellers to liven up walkways without taking away the buyer's ability to envision his or her dream outdoor spaces
Not cozy: Everyone appreciates a warm, cozy home - especially in the winter. Set the thermostat at a warm temperature for the whole day, and be mindful that some thermostats have low temperature pre-sets during the day when no one is at home. When the home is attended, fireplaces and candles could also be lit to create a comfortable environment throughout the day.
Engage the senses: Simmering a pot of cider with cinnamon during open houses or showings will create a warm and festive feeling.
Lingering odours: Be aware of those holiday dishes that may leave a strong odour. If possible, wait until showings are completed before cooking those traditional favorites -- potential buyers will appreciate a neutral environment.
Hiding a home's seasonal bests: Photos of the home's back and front yards, gardens and patios in spring and summer will show potential buyers what the house looks like when it is not buried under snow and when the leaves are still on trees.
Don't let the tree take over: A smaller Christmas tree, with minimal decorations, will create the appearance of more space. A huge tree, on the other hand, will make the room look smaller, and busy decorations can intensify clutter.
Presents should not be present: It is important to cut back on clutter when showing a home; hide the wrapped presents to keep them out of eyesight.
Too many decorations: Remember, when selling a home during the holidays, less is always more. Whimsical ornaments can be great accents during the holidays, but be mindful not to go overboard. When it doubt, remove it!

High taxes hamper real estate investment in Canada: Study

By Tony Wong

High taxes are an impediment to commercial real estate investors looking to invest in Canada, says a new global study.
“I think it’s clear that the system is broken and no one has the fortitude to step up to fix it,” said Gerry Divaris, vice president of Cushman & Wakefield property tax services.
Commercial property owners in Canada pay the highest taxes globally, according to a report by Luxemburg-based tax advisory service Taxand.
Taxes are a “massive” 53 per cent of commercial property rents, according to Taxand in the report released Monday.
The U.S. has the second highest tax rate at 41 per cent, but that’s still a healthy 12 points below Canada’s, according to Taxand.
“The alarmingly high total tax rate for Canada is largely the combined result of high levels of tax, “which includes income and real estate taxes, said Keith O’Donnell, head of real estate for Taxand.
Norway is in third place globally at 36 per cent. Finland charges the least tax on commercial rental income at a mere 8.99 per cent.
Divaris said investors are turned off by the high taxes in Canada. In the Toronto market, for example, annual property taxes are at 1 per cent while commercial properties are taxed at 4 per cent, said Divaris.
“Home owners are the sacred cow,” said Divaris. “And people are worried that they can’t afford to pay for their property if taxes go up. The problem is, if you chase away all the businesses, who will provide for those jobs that you will need to pay for your home in the first place?”
Divaris says the Taxand study is no surprise, since investors have been complaining loud and hard that Canada is an expensive place to do businesses.
“Fortunately we have a lot of other things going for us that make us an attractive place to do business, but taxes are not one of them.”
However, the Taxand study has attracted some backlash from the industry, including from their Canada-based associates at tax law firm Gowlings, who say the 53 per cent figure may be overstated.
“That figure may be high and we’ve asked for clarification on how they came at those numbers,” said David Stevens, a partner with Gowlings specializing in business law.
Vince Imerti, a partner with Gowlings national tax group, said clients may typically complain about high taxes, but Canadian corporate tax has actually been falling over the years.
One thing that may have skewed the figure upwards is that the city of Toronto has a second land transfer tax that is in addition to the provincial land transfer tax. That tax was approved in 2007.
“As far as I know, Toronto is unique among municipalities in Canada to have such a tax,” said Stevens.
Because federal and provincial governments have over the years downloaded more responsibility on municipalities, property taxes are virtually the only way they can get revenue, said Divaris.
The City of Toronto Act was supposed to address that issue by allowing Toronto to charge fees such as the unpopular $60 vehicle registration tax. Incoming mayor Rob Ford says he already plans to scrap it.
“The problem is, if you’re not able to raise money any other way, then commercial property owners will continue to get hit until someone figures out a way. Right now it’s just politically unpalatable.”
contact me for all your real estate needs

Canadian new home prices rise again

09/12/2010 - CBC News
New home prices in October rose across Canada for the third month in a row, Statistics Canada said Thursday.
The agency's national new housing price index climbed 0.1 per cent in the month, down from the 0.2 per cent gain new home values increased in September. But October was still the third consecutive month in which the index headed north.
"The top contributors to the monthly increase ... were Toronto and Oshawa, as well as Vancouver," Statistics Canada said in a press release.
The index is designed to measure home prices for similar abodes and uses 1997 values as the base.
Thus, the index value for an average Canadian home in October stood at 158, or 58 per cent higher than the price of the same home in 1997.
Saskatoon experienced the biggest price jump, at 0.8 per cent in the month. Statistics Canada said rising labour costs in the city led to the higher new home prices.
Saskatchewan enjoyed the second lowest unemployment rate among provinces at 5.5 per cent in November, more than two percentage points below the national average of 7.6 per cent in the same month.
A low jobless rate indicates the potential for higher labour costs as companies hike wages to attract increasingly fewer available workers.
Interestingly, new home prices in Calgary dropped by 0.6 per cent in October despite the fact Alberta's unemployment decreased to six per cent from 6.2 per cent in September.

Housing affordability improves in GTA

Housing affordability is improving in the Greater Toronto Area, thanks to lower mortgage rates and softening price appreciation.

According to a Royal Bank of Canada report to be released Monday after four consecutive quarters of steep decline, housing affordability gained traction in the third quarter of 2010, thanks to bottoming mortgage rates and a slowing demand.
“The improvement in affordability has reduced some of the stress that had been mounting in housing markets during the past year,” said Robert Hogue, senior economist with RBC.
Housing affordability measures improved for the first time since the second quarter of 2009, when sales and prices of homes started to surge in the Toronto market coming out of the recession.
Many of those sales were buyers rushing in to avoid a new Harmonized Sales Tax and to buy before more stringent mortgage regulations. This led to fears that the market was in an unsustainable bubble.
“Although triggering a fair amount of anxiety while it unfolded, the Toronto area market’s return to earth this spring was, in retrospect, a mostly benign affair,” said Hogue. “The fears were that the payback for the clearly unsustainable record high levels of existing home sales at the start of this year would be an all out rout.”
So far that hasn’t happened, as the Toronto market seems to be in for a generally soft landing.
However, affordability is not expected to improve moving into next year with the spectre of increased interest rates, says Hogue.
“The recent decline in mortgage rates, however, is not expected to be sustained much beyond the coming months of this year,” said Houge.
RBC expects the Bank of Canada to start hiking rates in the second quarter of 2011.
“Higher mortgage rates will be the dominant factor raising homeownership costs over the medium term,” said RBC. “We expect housing demand and supply to remain mostly in balance.”
Some of the increases in mortgage rates will be offset by increasing household income as a mitigating factor, says RBC.
The price of an average two-storey home was $554,700 in the third quarter. But it would take a household income of $120,400 to afford that.
Some banks raised five-year fixed mortgage rates slightly last week by a quarter percentage point, as turmoil in Europe spilled over into the bond markets. However, variable rates can still be had as low as 2.15 per cent from some lenders. A five year fixed rate is going as low as 3.45 per cent.
The RBC affordability index for a standard two-storey home has fallen to at 56.1, down significantly from the 60 points recorded in the second quarter of the year. (the lower the number, the more affordable the home)
A rise in the index means homes are less affordable. The study measures the proportion of pre-tax median income needed to service the costs of owning a home such as mortgage, utilities and property taxes. A measure of 56.1 means that it takes more than half of average pre-tax income in Ontario to pay the monthly costs of owning a home.
The long term average since 1985 has been 53.4, meaning that affordability is getting closer to a normal range.
Nationally, the RBC index is slightly above long term averages, suggesting that “some greater than usual tensions persist for Canadian homebuyers,” according to the bank.
“These tensions are unlikely to derail demand for housing in the near term, but will act as a restraint on growth and market activity going forward.”
The Toronto market, meanwhile, looks reasonable when compared to Vancouver. There it takes 78.1 per cent of pre-tax income to afford a two-storey home. But that’s down already by 4.7 points from the earlier quarter.
An average two-storey home in Vancouver goes for $766,300. To afford that, you need to be earning $149,400 annually.

Father doesn't know best

Suzanne Wintrob, National Post
Looking for your first home? Then do your homework before hitting the open houses.

"A first-time homebuyer can save a lot of time by knowing in advance how much they would qualify for and what they can afford," says Marcia Moffat, RBC's VP, Home Equity Financing, Canadian Banking.
RBC recently surveyed 1,050 Canadians, half who bought their first home in the past two years and half who intend to do so within the next two years. While two-thirds of future buyers said they hoped to purchase a single detached home, those who had already bought ended up in a townhouse or a condominium. The difference, suggests Ms. Moffat, comes down to dollars and sense.
"Affordability isn't just the house price -- it's thinking about maintenance of the home, taxes, legal feels on top of it and, if it's a young family, factoring in childcare costs," she says. "Sometimes when someone is in the market of intending to buy, they haven't thought through all those elements. Then, when they actually come down to buying, it's part of the whole approval process. Yet if they get pre-approval, it strengthens their credibility with the realtor and means they're not spending all of their time looking at homes that they can't reasonably afford."
Apparently, getting advice is all in the family. While one-third of current homeowners turned to the bank as their primary source of mortgage advice, those planning to buy turn to Mom, Dad and other family members to better understand mortgages. That's not always smart, says Ms. Moffat, since what was right for your parents when you were a kid might not be right for you now.
"I've heard parents say, 'You should go into a 10-year fixed,' but those were parents who lived through the late '80s at a time of very high interest rates and uncertainty," she says.
Of course, managing cash flow becomes a much more pressing concern once the sale is final. According to the survey, those planning to buy fret most about three things: being approved for a mortgage, affording the downpayment, and rising housing prices. Once in the market, though, they get cash-flow anxiety, worrying considerably about rising mortgage rates, being able to make their regular monthly mortgage payments, and declining housing prices. With all that stress, it's not surprising that 85% of first-time buyers said they intend to stay in their new home for the long-term.
As for mortgages, the study reveals that first-time homeowners are more likely to opt for fixed or variable rate mortgages -- though older first-timers are more comfortable with variable rates than their younger counterparts. Future buyers go for a combination of the two, which RBC concludes may reflect their uncertainty.
Ms. Moffat says there are many simple ways for first-time homebuyers and those planning to buy to make the experience more soothing. For those unsure if they're ready to buy, mortgage specialists can offer budgeting advice while online mortgage calculators can compare monthly rental payments to mortgage payments.
Ms. Moffat also suggests setting mortgage payments for the highest amount possible.
"If you are concerned about rising rates, a good rule of thumb is to plan for the worst case scenario for the next five years and build your financial plan around that number," she says. "If things turn out better, you'll be ahead of the game because you've already paid down a good chunk of your principal and you've tested your budget for higher payments."

Canadians are on the move

There is no place like home, but for many Canadians, buying a home doesn’t mean they plan to stay for long, says a recent TD Canada Trust report. It found one-in-five repeat buyers have owned more than five homes. Twenty-three per cent of those surveyed plan to move again within six years, and less than one-third say their next move will be their last.

Canadians are split on whether their next home will be larger (49 per cent) or smaller, but there is consensus that in their next house-hunt, they intend to find a fully detached home. Seven-in-10 repeat home buyers are looking for a fully detached home – even those currently living in condos, townhouses or semi-detached homes are looking for fully detached homes for their next purchase.
Half of Canadians say the proceeds from the sale of their current home will be less than the value of their new home, meaning that they will need to take out a mortgage.
The top factor that influences the decision to move is retirement (29 per cent). Other factors include being bored of their current home (16 per cent), investment opportunities (15 per cent) and market conditions (15 per cent). Fourteen per cent say they had always planned to move but were waiting to save enough money.
The top considerations for Canadians’ next home are the layout of the home (98 per cent), the size of the home (97 per cent) – though they are divided on whether to go smaller or bigger – and price (96 per cent).
The majority of home buyers plan to sell their current property before purchasing another one (84 per cent). Of the remaining 16 per cent who will keep both properties, 39 per cent will use one as a rental property or investment property.
Fifty-five per cent of Canadian home buyers are cautious, saying they wouldn’t buy a new home until their current home is sold – but 45 per cent say they would put in an offer if the perfect home came up for sale and hope that their house sells.

Canada’s housing market ‘pricey, not dicey,’ BMO says

Michael Babad

Housing pricey but no bubble seen
Canada's housing market is moderately overvalued but not a bubble waiting to be burst, BMO Nesbitt Burns says.
“All things considered, the Canadian housing market does not appear to be in a bubble, and is unlikely to suffer a U.S.-style collapse,” economists Earl Sweet and Sal Guatieri said in a research note.
“A key and overriding difference is the quality of loan origination in the past decade, as well as other institutional factors such as mortgage insurance and recourse against defaulters,” they wrote in the report titled “Canadian housing: Pricey, not dicey.”
The Economist published a report recently that indicated Canada's real estate market is overvalued to the tune of 24 per cent. The magazine used a measure that compares home prices and rent, whereas comparing prices with personal income is a “superior methodology,” Mr. Sweet and Mr. Guatieri said.
Using their method, they found prices peaked, in terms of overvaluation, at 18 per cent late last year. But a 3-per-cent drop in prices so far this year, along with moderate income growth, cut that to “a less worrisome” 11 per cent in the third quarter.
“Though overpriced, the absence of widespread speculation and egregiously loose credit standards suggests the market is not in a bubble,” They wrote. “Instead, Canada’s housing market remains reasonably affordable because of exceptionally low interest rates. Barring a sharp spike in mortgage rates or a relapse into recession, a substantial price correction is unlikely to occur. The greater risk could be that sustained low interest rates might recharge the housing market and inflate a true bubble that ultimately bursts when rates normalize.”
The BMO study comes as Canada’s mortgage market tops $1-trillion for the first time, Globe and Mail real estate reporter Steve Ladurantaye writes today.

Real estate association members ratify deal giving consumers wider choice

The Canadian Press

ST. JOHN’S, N.L. — Delegates from Canada’s 101 local real estate boards Sunday ratified a deal worked out by the federal Competition Bureau and the real-estate industry.
It would allow consumers to choose what services they want from their agent when selling their homes, and to pay for only those services.
The deal was reached after months of negotiations between the competition watchdog and the Canadian Real Estate Association that represents some 100,000 realtors.
The bureau chief was quick to praise the ratification.
“I am pleased that CREA members have voted in favour of this agreement,” said commissioner Melanie Aitken. “For Canadian homeowners, it ensures that they will have the freedom to choose which services they want from a real-estate agent and to pay for only those services.”
Association president Georges Pahud also welcomed the vote.
“We are pleased that after careful consideration and reflection, real-estate boards and associations from across Canada have endorsed the agreement,” Pahud said.
Under the deal, the Canadian Real Estate Association has agreed that its rules as well as those of its members should not deny or discriminate against realtors wishing to offer mere posting services.
The Competition Bureau has been pressuring the association to change rules it calls “anti-competitive” on behalf of realtors and consumers who want more flexible services.
“This 10-year agreement brings a close to a long process of negotiation with the Competition Bureau and will allow CREA and realtors to do what they do best — help people with the biggest financial decision of their lives, buying and selling a home in these challenging economic times,” said Pahud.
But experts say the doors to lower-cost services won’t be thrust open overnight because the industry is dominated by traditional agents who are reluctant to change their business models.
Realtors currently operate on the principle that selling agents will split the standard five per cent commission with the buyer’s agent.
Canadian Real Estate Association members voted on amendments to the organization’s rules in March that were expected to appease the Competition Bureau, but the watchdog took issue with a clause in the amendments that said the changes are subject to the rules of local boards.
The watchdog said it would settle for nothing less than a legally binding agreement so that the association couldn’t change its rules back on a whim.
With Sunday’s ratification, the deal will be legally binding as of today and will remain in effect for 10 years, with hefty penalties for any violation.

Housing boom blamed on subsidies

Garry Marr, Financial Post ·

The federal finance committee got an earful Tuesday from one group not too thrilled with the housing boom — Canadian landlords.
John Dickie, president of the Canadian Federation of Apartment Associations, said at least part of the housing boom over the past decade can be attributed to the government favouring housing over rental accommodation by providing a much larger subsidy.
“There are a number of rules in the current tax system that amount to massive favoritism towards homeowners as opposed to renters,” said Mr. Dickie Tuesday, adding it’s true for all three levels of government.
In Ontario, the group estimates, municipal, provincial and federal governments provide a subsidy of $2,629 per owner-occupied house, compared to $395 per renter.
“There is a perception among politicians that homeowners vote more frequently than tenants,” said Mr. Dickie. “There is perception in society that homeownership is good and should be encouraged.”
Homeownership rates in Canada have climbed steadily over the past decade and are now closing in on about 70% of households, something Mr. Dickie said “pushes it further than it should.”
Federal subsidies include such things as a rebate on the goods and services tax on new homes and the home-renovation tax credit. Capital gains on the sale of a principal residence are also exempt from federal and provincial taxes.
Though it varies by city, homeowners generally pay less property taxes than landlords. In Ottawa, Mr. Dickie said, landlords pay property tax of 1.7% of the value of the home, compared to 1% of the value for homeowners. Condominium owners, who rent out their space, get the residential rate in most municipalities.
He said renters should be concerned about the disparity. “They don’t know they are getting ripped because it’s the owners that cut the cheques.”
Craig Alexander, chief economist with TD Bank Financial Group, said homeownership has long been a goal of Western society.
“There is no question the policy environment provides incentives and support to homeowners,” he said.
But there is a risk subsidizing the sector, he said. “In the case of the United States, one could make the argument that part of what fuelled the housing bubble was oversubsidization of the housing market or maybe just excessive public-policy support for homeownership.

September home sales off 20% year-over year

By Tony Wong

The weather is turning cooler – and so are sales in the Canadian housing market.
Canadian home sales were up a seasonally adjusted 3 per cent in September over August, according to the Canadian Real Estate Association in figures released Friday.
However, actual year over year activity in September fell by 19.8 per cent compared with 2009.
And unlike the strong increases in past months, prices are flat lining and back to where they were a year ago. Average prices are now at $331,089, down 0.4 per cent from September 2009.
“Supply and demand are rebalancing, and that’s keeping prices steady in many markets,” said CREA president Georges Pahud.
One thing that’s keeping pricing from dropping further is that new listings remain 15 per cent below the peak reached in April, as some vendors have decided to take their homes off the market.
The seasonally adjusted number of months of inventory, representing the time it would take to sell current stock, is at 6.6 months at the end of September, down from 6.9 months in August.
In the Toronto market, sales are down by 22 per cent in August compared with last year.
One moderating factor is that some banks have eased off on mortgage lending rates, said CREA economist Gregory Klump.
“Interest rates are going nowhere fast, so home ownership will remain within reach for many homebuyers.”
Still, CREA does not expect the latest round of low rates to ignite market demand.
“The continuation of low and stable interest rates is unlikely to cause housing demand to take off, especially since the hangover from accelerated home purchases earlier this year is expected to persist for some time.”

GTA resale home prices up in September

John Spears, Business Reporter

The number of existing homes sold in September in Greater Toronto dipped 23 per cent in September, compared with September a year ago, says the Toronto Real Estate Board.
Board members recorded 6,310 sales in September, down from 8,196 a year ago.
But prices rose despite the softer sales, with the median price of a home rising to $360,325 from $347,000 a year ago. The median price marks the point where half the homes sold for more, half for less.
The average price also climbed, to $427,329 from $406,877 a year ago.
Softer sales volume isn’t surprising after the record sales chalked up by the market in the second half of 2009 and early 2010, said Bill Johnston, president of the real estate board.
Meanwhile in a national survey, Re/Max says the outlook for Canada's home resale market looks healthy going into the final three months of 2010, after a summer "pause."
The national real-estate sales organization says it anticipates fewer sales than in the surprisingly strong fourth quarter of 2009 but prices are expected to hold up.
Re/Max says there hasn't been a big influx of listings, while demand has normalized after a very hot period in late 2009 and early this year.
It also says there was a good sign from the number of higher-end properties sold this summer in both smaller and larger centres.

Real estate group reaches tentative agreement on MLS listings

JOHN IBBITSON AND STEVE LADURANTAYE - Globe and Mail
It will become easier and cheaper for Canadians to sell their homes after peace was declared on Thursday in the war between the Competition Bureau and the organization representing Canada’s real estate agents.
The bureau and the Canadian Real Estate Association (CREA) reached a tentative agreement that will allow sellers to hire an agent to post their property on the all-important Multiple Listing Service and then conduct the rest of the sale on their own, if they choose.
39% 189 votes - Yes
61% 296 votes - No
“It’s better to negotiate something than go to court,” Don Lawby, chief executive officer of Century 21, said in reaction to the agreement. “Bad press is bad press, and whatever the fee structure, people will always think it’s unfair.”
News of the agreement caught industry leaders flat-footed. The heads of several of the country’s largest brokerage firms were unaware of it until contacted by The Globe and Mail.
If ratified by CREA’s membership at the end of October, the agreement will end a challenge from the bureau in which the two sides are scheduled to appear before the Competition Tribunal in April. Once ratified, the new rules will take effect immediately and be in effect for 10 years.
Traditionally, sellers hire an agent in an all-or-nothing agreement, in which the agent lists their homes on the Multiple Listing Service – on which about 90 per cent of residential properties are bought and sold – negotiates the sale with the buyer and handles much of the paperwork. In return, the agent receives a commission that is typically a percentage of the sale price.
Energized by a new commissioner, Melanie Aitken, and an expanded mandate, the Competition Bureau went to the Competition Tribunal in February demanding that CREA allow consumers more choice on what services to use.
The association, which represents nearly 100,000 real estate agents across Canada, loosened some of its rules in the spring. Nonetheless, the bureau decided the measures were insufficient.
But while both sides appeared intransigent in public, negotiations quietly paved the way to Thursday’s agreement after association representatives approached the bureau earlier this month.
The agreement is a major victory for the Competition Bureau, which was determined to force the real estate industry to become more competitive.
“The agreement is welcome news for Canadians,” Ms. Aitken said in an interview. “Consumers are going to have the ability to choose what services they want from a real estate agent, and pay only for those services, and at the same time, it gives much-needed flexibility for the agents to offer the variety of services and prices that meet the needs of consumers.”
CREA president Georges Pahud said in a statement that that the agreement “would avoid unnecessary and expensive litigation proceedings.”
The long-term impact on the country’s real-estate market is far from certain. The cost of buying or selling a home could come down as competitors seek to offer different packages and undercut each others’ prices.
But agents have warned that changes could lead to shoddy service or fraud. The agreement seeks to strike a balance, increasing consumer choice while leaving agents as the only portal to the MLS.

Things you think add value to your home - but really don't

Jean Folger, Investopedia.com
Every homeowner must pay for routine home maintenance, such as replacing worn-out plumbing components or staining the deck, but some choose to make improvements with the intention of increasing the home's value.

Certain projects, such as adding a well thought-out family room - or other functional space - can be a wise investment, as they do add to the value of the home. Other projects, however, allow little opportunity to recover the costs when it's time to sell.
Even though the current homeowner may greatly appreciate the improvement, a buyer could be unimpressed and unwilling to factor the upgrade into the purchase price. Homeowners, therefore, need to be careful with how they choose to spend their money if they are expecting the investment to pay off. Here are six things you think add value to your home, but really don't.

Swimming Pools - Swimming pools are one of those things that may be nice to enjoy at your friend's or neighbour's house, but that can be a hassle to have at your own home. Many potential homebuyers view swimming pools as dangerous, expensive to maintain and a lawsuit waiting to happen. Families with young children in particular may turn down an otherwise perfect house because of the pool (and the fear of a child going in the pool unsupervised). In fact, a would-be buyer's offer may be contingent on the home seller dismantling an above-ground pool or filling in an in-ground pool. An in-ground pool costs anywhere from $10,000 to more than $100,000, and additional yearly maintenance expenses need to be considered. That's a significant amount of money that might never be recouped if and when the house is sold.

Overbuilding for the Neighbourhood - Homeowners may, in an attempt to increase the value of a home, make improvements to the property that unintentionally make the home fall outside of the norm for the neighbourhood. While a large, expensive remodel, such as adding a second story with two bedrooms and a full bath, might make the home more appealing, it will not add significantly to the resale value if the house is in the midst of a neighbourhood of small, one-storey homes. In general, homebuyers do not want to pay $250,000 for a house that sits in a neighbourhood with an average sales price of $150,000; the house will seem overpriced even if it is more desirable than the surrounding properties. The buyer will instead look to spend the $250,000 in a $250,000 neighbourhood. The house might be beautiful, but any money spent on overbuilding might be difficult to recover unless the other homes in the neighborhood follow suit.

Extensive Landscaping - Homebuyers may appreciate well-maintained or mature landscaping, but don't expect the home's value to increase because of it. A beautiful yard may encourage potential buyers to take a closer look at the property, but will probably not add to the selling price. If a buyer is unable or unwilling to put in the effort to maintain a garden, it will quickly become an eyesore, or the new homeowner might need to pay a qualified gardener to take charge. Either way, many buyers view elaborate landscaping as a burden (even though it might be attractive) and, as a result, are not likely to consider it when placing value on the home.

High-End Upgrades - Putting stainless steel appliances in your kitchen or imported tiles in your entryway may do little to increase the value of your home if the bathrooms are still vinyl-floored and the shag carpeting in the bedrooms is leftover from the '60s. Upgrades should be consistent to maintain a similar style and quality throughout the home. A home that has a beautifully remodeled and modern kitchen can be viewed as a work in project if the bathrooms remain functionally obsolete. The remodel, therefore, might not fetch as high a return as if the rest of the home were brought up to the same level. High-quality upgrades generally increase the value of high-end homes, but not necessarily mid-range houses where the upgrade may be inconsistent with the rest of the home. In addition, specific high-end features such as media rooms with specialized audio, visual or gaming equipment may be appealing to a few prospective buyers, but many potential homebuyers would not consider paying more for the home simply because of this additional feature. Chances are that the room would be re-tasked to a more generic living space.

Wall-to-Wall Carpeting - While real estate listings may still boast "new carpeting throughout" as a selling point, potential homebuyers today may cringe at the idea of having wall-to-wall carpeting. Carpeting is expensive to purchase and install. In addition, there is growing concern over the healthfulness of carpeting due to the amount of chemicals used in its processing and the potential for allergens (a serious concern for families with children). Add to that the probability that the carpet style and colour that you thought was absolutely perfect might not be what someone else had in mind. Because of these hurdles, wall-to-wall carpet is something on which it's difficult to recoup the costs. Removing carpeting and restoring wood floors is usually a more profitable investment.

Invisible Improvements - Invisible improvements are those costly projects that you know make your house a better place to live in, but that nobody else would notice - or likely care about. A new plumbing system or HVAC unit (heating, venting and air conditioning) might be necessary, but don't expect it to recover these costs when it comes time to sell. Many homebuyers simply expect these systems to be in good working order and will not pay extra just because you recently installed a new heater. It may be better to think of these improvements in terms of regular maintenance, and not an investment in your home's value.
The Bottom Line - It is difficult to imagine spending thousands of dollars on a home-improvement project that will not be reflected in the home's value when it comes time to sell. There is no simple equation for determining which projects will garner the highest return, or the most bang for your buck. Some of this depends on the local market and even the age and style of the house. Homeowners frequently must choose between an improvement that they would really love to have (the in-ground swimming pool) and one that would prove to be a better investment. A bit of research, or the advice of a qualified real estate professional, can help homeowners avoid costly projects that don't really add value to a home.

Housing market makes strides

STEVE LADURANTAYE

The Canadian housing market “vastly improved” over the last three months, ReMax Canada said Tuesday, but sales are expected to remain sluggish for the rest of the year.
The real estate brokerage firm said in its “Market Trends Report” that sales should return to average levels this fall after a slow summer, but that the pace set in 2009 was unsustainable.
“With the diminished risk of a W recession occurring, rebounding commodity and equity markets, and more positive economic data emerging daily, the outlook for the residential housing market has vastly improved over the past three months,” the brokerage stated.
Not everyone would agree with the cheery assessment – sales slowed markedly across the country over the summer, with Vancouver and Toronto seeing drops of more than 30 per cent. Monday, the Real Estate Board of Greater Vancouver said sales were 37.6 per cent lower in September than a year ago, and were only 0.8 per cent higher than August's figures.
Meanwhile, Finance Minister Jim Flaherty warned Monday that the economy was struggling, singling out the housing market as a source of concern. Housing's portion of the economy has grown steadily for the past 10 years, but Bank of Canada Governor Mark Carney warned Thursday that declining affordability and subdued income growth will dampen further growth.
Prices have been moving lower across the country since the spring, but ReMax said the 19 markets it tracks are still seeing higher prices when compared to a year ago.
The brokerage said “by far the most interesting statistic reported” from its agents was an increase in the number of upper-end sales between January and August. ReMax's definition of a luxury home varies by market, from $350,000 in St. John's to $1.5-million in Greater Vancouver. It is difficult to make comparisons to the last market update, released in April, however, because luxury comes cheaper in Tuesday's report – the bar was lowered by $500,000 in Vancouver and Toronto, for example.
“As overall economic performance improves, so too will housing activity,” says Sylvain Dansereau, executive vice-president of ReMax Quebec. “History will show sound market fundamentals supported another healthy year of residential real estate activity in 2010.”
From the report: * “All markets reported a surge of 20 per cent or more in upper end home sales. Sixty-eight per cent of markets saw upscale home sales climb in excess of 40 per cent, while 21 per cent boasted triple-digit gains.
Sudbury led the country in sales appreciation, rising a significant 17 per cent year-to-date (1,876 units in 2010 vs. 1,599 in 2009).
*While virtually all markets reported softened activity over the summer months, Winnipeg, saw 32 per cent of all homes sell in multiple offers in August.
* Montreal was the sole market still experiencing seller's market conditions, while Greater Toronto and Winnipeg were balanced, slightly favouring the seller.
*First-time buyers led the charge in 58 per cent of markets, while move-up purchasers dominated in 21 per cent of markets. The remainder reported all segments working in tandem.
*Buyers were decidedly taking more time to make their decisions in recent months, with many delaying their home-buying intentions. It is expected that many purchasers sitting on the fence will make their way back into the market on the heels of more positive economic news.”

Best bang for real estate buck is in Windsor

By Tony Wong - Business Reporter
Executives looking to relocate in Canada will likely get the best bang for their buck in Windsor, Ont.
At $158,242, economically hard-hit Windsor scores as the cheapest place nationally to buy a four- bedroom, two-bathroom home, according to Coldwell Banker Canada in a report released Wednesday.
The four-bedroom detached home is considered a baseline property preferred by most executives with families. The report is used by corporations to get a gauge of living costs in cities globally.
“Windsor has been working to diversify their industries, but the market value of the homes reflect the economic conditions,” said John Geha, president of Coldwell Banker Canada.
Windsor is across the border from Detroit, which has also been hit hard by jobs lost in the auto industry. Detroit is the cheapest place in the U.S. for a four-bedroom home at a mere $68,007 (U.S.).
Vancouver, on the other hand, is at the opposite end of the Canadian spectrum, and seemingly on another planet, where a similar four-bedroom home will cost a wallet crunching $1,324,000.
Vancouver was the only Canadian city to be in the North American top ten, settling at number 5, just below San Francisco.
“Vancouver has obviously been a very desirable location, but it comes at a cost. If you’re moving from a less expensive market you might have to move outside the core,” said Geha.
Four-bedroom homes were most expensive generally in western Canada, where a comparable property in Kelowna B.C. is $916,697.
In Fort McMurray, Alta., a heady job market means a four bedroom home costs $593,390.
Toronto comes out somewhere in the middle, where a four-bedroom home will cost an average of $495,398.
A four-bedroom home purchased in the old city of Toronto would be much higher, but the average goes down when the former neighbourhoods of East York, Scarborough, Etobicoke and North York are added in.
Toronto also has four-bedroom alternatives such as lofts and townhomes that give buyers choice, keeping the average prices of detached homes down in comparison to other areas of Canada that don’t have the same variety, says Geha.
Relocation for work isn’t the biggest factor in most people’s decision to move. A study by TD Canada Trust also released Wednesday says retirement (30 per cent) is the number one choice of people polled in Ontario.
That’s followed by market conditions (16 per cent) investment opportunities (16 per cent) and children moving out (15 per cent).
In the United States, Newport Beach, Calif., was the most expensive place to relocate, where a four bedroom home will cost $1,826,348 (U.S.)
Globally, Shanghai was among the top most expensive places to live coming in at $1,494,072 (U.S.) Dubai came in a close second at $1,413,750.

Home sales grow in August, prices remain flat in sign of housing market health

By Sunny Freeman, The Canadian Press

TORONTO - Home sales rose in August on a monthly basis for the first time since March but prices remained flat — signs of health in Canada's real estate market that should deflate fears of a housing bubble.
There were about 32,800 transactions in August, up 4.1 per cent from July on a seasonally adjusted basis, the Canadian Real Estate Association said in a report Wednesday.
However, the number of units sold was down 22 per cent from 42,350 units in August 2009.
“High sales activity late last year and earlier this year borrowed from sales this summer and will continue do so over the coming months,” Gregory Klump, CREA’s chief economist said in the report.
“This makes the return to more normal levels of sales activity look like a steep downward trend.”
Many potential buyers raced into the market while mortgage rates were at historic lows and before changes to mortgage qualification standards in April.
In addition, buyers in the hot housing markets of British Columbia and Ontario rushed to buy before the new harmonized sales tax, which applies to real estate services and some home purchases that had previously been exempt, took effect July 1.
In July, sales fell 30 per cent from the year before, when the strong housing market led Canada's economy out of recession.
Sales have been falling steadily in recent months as demand moderates and more owners put their houses on the market. But until last month, home prices had continued to rise on a monthly basis, leading some economists to question whether the market could experience a sharp downturn.
The average price of homes sold through the Multiple Listing Service last month was $324,928, little changed from $324,843 in August 2009.
Douglas Porter, deputy chief economist at the Bank of Montreal (TSX: BMO.TO), said the flat year-over-year numbers suggest home prices have finally started to moderate in line with falling sales.
"Average home prices were officially unchanged from year-ago levels in August," Porter wrote in a report, adding that "we still expect that average prices will post some modest year-on-year declines by the end of this year."
Before the August numbers were announced, there had been some renewed debate amongst economists as to whether Canada's housing market was teetering on the edge of a U.S.-style collapse as prices continued to rise even as sales fell.
That led some industry watchers to warn that home prices could be artificially inflated and might soon see a drastic downturn.
Klump said the hangover from accelerated home purchases earlier this year were likely to persist into 2011, but won't push the market to the brink of crisis mode.
And Porter said a renewed slide in longer-term mortgage rates in recent weeks will help to offset a slow but steady increase in the Bank of Canada's overnight interest rate, which climbed to one per cent last week, sending banks' prime rates and variable rate mortgages higher.
"While home sales are still nursing a bit of a hangover from the real estate party in the first half of the year, it looks like conditions are stabilizing," he said.
"Looking ahead, sales are expected to remain on the soggy side with consumer confidence dimming, but should find support in still-low rates and steady job growth."
In another sign of housing market health, the number of new listings was more than double the number of sales, a clear indication the market is now considered balanced, Porter said.
As a result, it would take nearly seven months for all the listings to be sold at the current pace — a slight improvement from July but still relatively high.

Rough patch ahead for housing market

John Morrissy, Financial Post
OTTAWA — Canada’s weakening real estate market is headed for a rough patch in the months ahead, analysts said after data released Thursday showed housing starts slowing for the fourth consecutive month in August.
Canada Mortgage and Housing said in its monthly report that the seasonally adjusted rate of housing starts slipped three per cent in August to 183,300 units from a downwardly revised 188,900 starts in July.
At the same time, Statistics Canada said the country’s new housing price index fell 0.1% in July, the first such decrease in 13 months.
The decline in housing starts was essentially in line with the 185,000 that analysts had forecast, and follows four straight months of declines in the value of building permits, reported Wednesday.
It was felt across both major components of the housing industry, with single urban starts dropping 3.6% to 65,000 units and urban multiple starts falling 3.7% to 97,800 units, CMHC said.
“The report shows that despite a litany of headwinds, there is still a fair degree of forward momentum in Canada’s housing market,” said David Tulk, senior micro strategist at TD Securities.
Nevertheless, he cautioned, “markets should be prepared for a volatile couple of months ahead before the tone of the data improves.”
But none of the commentaries that followed CHMC’s data suggested Canada’s market is a bubble about to burst, the subject of heated debate in recent weeks.
“The risk of a 1990’s-style housing market correction are minimal,” wrote RBC economist David Onyett-Jeffries.
The current decline, he said, resulted from home buyers getting ahead of the implementation of the harmonized sales tax in Ontario and B.C., as well as rate hikes by the Bank of Canada.
“Much of this slowing represents a payback from earlier unsustainable strength.”
As a result, the housing market will continue to soften for the remainder of 2010 and into possibly well into 2011, analysts said.
“Over the next few quarters, we forecast housing starts to continue to ease, down near 170,000 units in the fourth quarter, and bottoming in the 150,000-160,000 range by mid-2011,” said Pascal Gauthier, senior economist at TD Economics.
Considering the housing market’s importance to the overall economy, Mr. Gauthier expects residential investment to be a drag on the economy for the next five to six quarters, before picking up again in 2012.
The housing market will get no immediate help from declining mortgage rates, pushed down recently by a rally in bonds and other fixed income instruments, thanks to the front-loading of housing activity into the first part of the year, Tulk said.
On a regional basis, CMHC’s August report showed sharp declines in the Atlantic region (down 29%), the Prairies (down 19.9%), and Quebec (down 17.7%). Starts surprised to the upside in the provinces that introduced the HST, with B.C. up 26.4% and Ontario up 15.6%.
At the same time, the month-over-month decline in Statistics Canada’s New Home Price Index was driven almost entirely by weakness in B.C. and Ontario, according to BMO Capital Markets economist Robert Kavcic.
On an annual basis, prices remained 2.9% higher than a year ago, Onyett-Jeffries pointed out.

'If ever there was a time to buy, it is now,'

John Greenwood, Financial Post · Thursday, Sept. 2, 2010

Bank of Montreal has chopped its benchmark five-year mortgage rate, aggressively throwing its weight behind what many are calling an increasingly wobbly housing market.
"It's a great time to buy a home," Martin Nel, a senior BMO official, said in news release announcing the change. He added that people who take advantage of the offer will benefit.
"If ever there was a time to buy, it is now," Mr. Nel said.
The move, which takes effect today, brings the bank's key five-year rate to 3.59%, down from 3.79%, making it one of the lowest five-year rates ever offered by a Canadian bank, says industry newsletter CanadianMortgage Trends.
But some experts are already scratching their heads because of the aggressive tone of the announcement as well as the timing, given the recent spate of warnings about the uncertain state of the market, including one earlier this week from the Canadian Centre for Policy alternatives predicting an imminent collapse.
When the big banks make mortgage rate changes, they generally just disclose the new numbers without commenting on housing market conditions. If pressed, bank officials are usually quick to explain that the changes in these consumer lending rates are merely a function of fluctuations in their own borrowing costs.
"It's a bit puzzling to me," John Andrew, a professor at Queen's University's School of Urban and Regional Planning, said of the BMO announcement. "Perhaps they are concerned that the number of new customers will fall off precipitously."
Residential real estate prices have been in free-fall in the United States as well as many European countries, in contrast to the Canadian market, which has been on a tear for a good part of the past decade with prices in many cities at record levels.
But analysts worry that it's only a matter of time before the Canadian housing market moves in the same direction, and they point to warning signs that have already appeared.
Earlier this year, Moody's reported that debt-to-income levels of Canadian households are the highest ever and close to where they were in the United States before that market started to fall apart in 2007.
The Bank of Canada has raised concerns that the high debt loads of Canadian consumers have made them vulnerable to changes in interest rates and potential deterioration of the economy.
In a bid to crack down on what some described as reckless real-estate speculation, the federal government brought in new regulations in the spring to make it harder for first-time buyers to qualify for government-backed mortgage insurance.
Borrowers must now meet standards for a five-year fixed-rate mortgage, even if they want a shorter-term, variable-rate product. As the key measuring stick for many homebuyers, a lower five-year mortgage rate will mean that more people will qualify to buy more expensive homes than with a higher mortgage rate.
The tougher rules had the desired effect. The recent imposition of the new harmonized sales tax in Ontario and British Columbia also affected demand, and as a result the market cooled so much that industry insiders became worried it had gone too far.
The Canadian housing market is important to the banks because residential mortgages make up the single biggest asset class on their balance sheets.
There are nearly $1-trillion of home loans outstanding, to the Bank of Canada says. About half of these loans are held by the chartered banks.

Seven must-have real estate contract conditions

It's a good idea to educate yourself on the not-so-obvious parts of a real estate contract

Amy Fontinelle
When you formally make an offer on a home you want to buy, you'll fill out a lot of paperwork specifying the terms of your offer. Aside from such obvious things as the address and purchase price of the property on which you're making an offer, there are some items you should be sure to include in your real estate purchase contract.
1. Finance Terms
If you are like most people and you won't be able to buy the home without obtaining a mortgage, your purchase offer should state that your offer is contingent upon obtaining financing at a specified interest rate. If you know you can't afford the monthly payment on the house if the interest rate is higher than 6 per cent, don't put 6.5 per cent in your offer. If you do that and you are only able to obtain financing at 6.5 per cent, the seller will get to keep your earnest money deposit when you have to back out of the offer.
If you need to obtain a certain type of loan in order to complete the deal, you should also specify this in your contract. If you are paying all cash for the property, you should state this as well because it makes your offer more attractive to sellers. Why? If you don't have to get a mortgage, the deal is more likely to go through and closing is more likely to happen on time. (Learn more in 6 Ways To Come Up With A Down Payment On A Home.)
2. Seller Assist
If you want the seller to pay part or all of your closing costs, you must ask for it in your offer. The offer should state the amount of closing costs you are requesting as a dollar amount (e.g., $6,000) or as a percentage of the home's purchase price (e.g., 3 per cent).
3. Who Pays Specific Closing Costs
The agreement should specify whether the buyer or seller will pay for each of the common fees associated with the home purchase, such as escrow fees, title search fees, title insurance, notary fees, recording fees, transfer tax and so on. Your real estate agent can advise you as to whether it is the buyer or seller who customarily pays each of these fees in your area.
4. Home Inspection
Unless you are buying a tear-down, you should include a home inspection contingency in your offer. This clause allows you to walk away from the deal if a home inspection reveals significant and/or expensive-to-repair flaws in the structure's condition. For example, if the home inspection reveals that the home needs a new roof at a cost of $15,000, the home inspection contingency would give you the option to walk away from the deal.
5. Fixtures and Appliances
If you want the refrigerator, dishwasher, stove, oven, washing machine or any other fixtures and appliances, do not rely on a verbal agreement with the seller and do not assume anything. Specify in the contract any fixtures and appliances that are to be included in the purchase.
6. Closing Date
How much time do you need to complete the purchase transaction? Common time frames are 30 days, 45 days and 60 days. Issues that can affect this time frame might include the seller's need to find a new home, the remaining term on your lease if you are currently renting, the amount of time you have to relocate if you are moving from a job, and so on. Occasionally, the buyer or seller might want a closing as short as two weeks, but it's difficult to remove all the contingencies and obtain all the necessary paperwork and funding in such a short time period. (Learn more in 10 Hurdles To Closing On A New Home.)
7. Sale of Existing Home
If you are an existing homeowner and you will need the funds from the sale of that home to buy the home you are making an offer on, you should make your purchase offer contingent upon the sale of your current home. You should also provide a reasonable time frame for you to sell your home, such as 30 or 60 days. The seller of the property you're interested in is not going to want to take his property off the market indefinitely while you search for a buyer.
There are many other things that go into a thorough real estate contract, but for the most part, you shouldn't have to worry about them. Real estate agents will commonly use standardized, fill-in-the-blank forms that cover all the bases, including the ones described in this article.
If you want to familiarize yourself with the details of the purchase agreement form you're likely to use before you write your offer, ask your real estate agent for a sample agreement, or search online for the standard form that is common in your locality. (If you are looking for a good deal and have time to wait, a short-sale house may be for you. To learn more, read Purchasing A Short-Sale Property.)
The Bottom Line
Even though these forms are common and standardized and a good real estate agent would not let you leave anything important out of your contract, it is still a good idea to educate yourself about the key components of a real estate purchase agreement.

Home sales tumble

Garry Marr, Financial Post
Housing sales were down 30% in July from a year ago, and the Canadian Real Estate Association is blaming the drop on the new harmonized sales tax in Ontario and British Columbia.

The Ottawa-based group, which represents 100 real estate boards across the country, said July sales plunged 6.8% on a seasonally adjusted basis from the previous month, a decline “almost entirely the result of fewer sales in British Columbia and Ontario,” where the HST went into effect on July 1.
The slowdown had been expected as consumers rushed to buy homes ahead of the July 1 implementation in those provinces. The HST only applies to services used in purchasing and selling an existing home, such as real estate commission, and not the actual sale price.
Phil Soper, chief executive of Royal LePage Real Estate Services Ltd., said the HST, combined with tougher mortgage rules, expectations of higher interest rates and the bounceback from the recession, drove the market earlier this year. “You take those four things and add them together and you get a highly front-ended year, which we forecast,” he said.
The housing market did get some good news from Royal Bank of Canada, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and Bank of Montreal, which all lowered interest rates Monday. The five-year, fixed-rate closed mortgage is down to 5.49%, which means that on a discounted basis, consumers can likely lock in a rate of less than 4% for five years.
But John Andrew, a professor of real estate at Queen’s University in Kingston, Ont., doubts the cut in bank rates will be enough to reverse a declining housing market.
“With homes sales down 30%, that’s surprising. I was expecting a drop, but nothing that big. I think prices are next [to decline] although they are holding their own now,” Prof. Andrew said.
“Thank goodness rates are as low as they are. If we were seeing significant increases in interest rates, it would disastrous for real estate prices,” Prof. Andrew said.
The average price of a home sold in July was $330,351, just a 1% increase from a year ago. However, the average price of a home sold in June was $342,662, so prices are off 3.6% from a month ago.
CREA said the lack of activity in British Columbia and Ontario — two of the country’s most expensive markets — likely skewed average prices down. In B.C., sales dropped 14.1% from a month ago on a seasonally adjusted annual basis. In Ontario, the decline was 8%.
The two provinces accounted for 85% of the change in national activity.
“The soft sales figures we’re seeing right now can be attributed in part to accelerated home purchases earlier in the year,” said Georges Pahud, CREA’s president.
He warned activity will be off for the rest of 2010.
“Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals,” Mr. Pahud said.
Prices are getting a boost from a drop in supply. The seasonally adjusted annual number of new residential listings fell 7.2% in July from the previous month, the third consecutive monthly decrease and the steepest drop in more than a decade.
However, the overall inventory rate, which reflects all housing on the market, is climbing. The number of months of inventory, which represents the number of months it would take to sell current inventories at the current rate of sales activity, was seven month in July. A year ago the number was 4.4 months.
Douglas Porter, deputy chief economist of BMO Capital Markets, said most consumers who were sitting on the sidelines already pushed their purchase ahead in the spring, so he’s also expecting a soft market for the next few months.
"Although with long-term mortgage rates dropping, employment improved and prices stabilized, the longer-term outlook is far from dire,” Mr. Porter said.

Canadian housing market cools

Steve Ladurantaye Real Estate Reporter

The malaise in Canada's housing market is deepening, as record-low interest rates and a vast selection of homes prove to be insufficient incentives to draw new buyers into the market.

Just days after the Canadian Real Estate Association downgraded its sales forecast for the rest of the year, data from British Columbia and Alberta show sharp double-digit decreases in the number of homes sold in July compared to a year ago.
The resale housing market has been at the forefront of Canada's economic recovery, with prices rebounding sharply from recessionary lows. But the market seems to have peaked, and signs of stress are showing across the country.
In Vancouver and Calgary, sales were down 45 and 42 per cent, respectively, compared to last July. In Toronto, new condo sales showed a quarter-over-quarter contraction for the first time in 16 years.
While the CREA typically aggregates information from each of the country's 101 real estate boards in the middle of each month, the boards can release sales data on their own sooner.
Vancouver and Calgary reported Wednesday, Toronto is expected to report Thursday.
All of this slippage is happening while mortgage rates remain at record lows, despite constant warnings from economists that they are bound to rise as the Bank of Canada moves its lending rate higher.
Competition among the banks for new business along with falling bond yields have meant mortgage rates have been largely unaffected by any Bank of Canada moves.