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.
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Tuesday, September 28, 2010
Monday, September 27, 2010
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.
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.
Friday, September 17, 2010
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.
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.
Tuesday, September 14, 2010
'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.
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.
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