Archive for December, 2015

Real Estate prices weigh on consumer confidence

Wednesday, December 30th, 2015

Steve Randall
Other

Concern that real estate prices are likely to slow in 2016 has led to a further drop in the weekly Canadian Consumer Confidence Index. The poll, by Bloomberg and Nanos Research saw a drop to 54.54 in the week ending Dec 24, from 55.03 in the previous week. “Of note, there has been noticeable downward pressure on positive views on the value of real estate over the past week,” said Nanos Research Group Chairman Nik Nanos.

Positive opinions on the Canadian economy edged higher but there was lower sentiment for job security and personal finances (including mortgages.) The proportion of respondents expecting real estate prices to be higher in 6  months was down from 35.36 per cent in the week ending Dec 17 to 31.49 per cent last week.

“Consumers have reacted to the extremely low level of interest rates with a worrisome imbalance between housing market speculation and traditional household investment. It seems likely that consumer expectations and spending might suffer until labormarket displacement issues are addressed and households can repair their balance sheets”, said Robert Lawrie of Bloomberg Economics.

Across the provinces, only the Prairies saw higher confidence overall and it was generally lower income households that were more optimistic. Renters increased their confidence in the economy while homeowners’ saw a decline.

Copyright © 2015 Key Media Pty Ltd

 

Canadians remain optimistic about 2016

Wednesday, December 30th, 2015

Steve Randall
Other

As we prepare to enter a new year with oil prices still low, US interest rates rising and concern over the rate of global growth, it seems that most Canadians are remaining positive. A poll commissioned by Global News and conducted by Ipsos found that 53 per cent feel ‘good’ about the economy in 2016. That’s lower than a similar poll a year earlier when 62 per cent were positive but not surprising given the events of the past year. The poll found that those in British Columbia are most likely to be optimistic (60 per cent) while Albertans are least likely (39 per cent). On personal finances, including mortgage debt, almost three quarters of respondents are confident.

Copyright © 2015 Key Media Pty Ltd

Drivers for purpose-built rentals include historically low cap rates, high demand from investors, low interest rates and low vacancy rates.

Tuesday, December 22nd, 2015

Other

Purpose-built rentals have been a hot topic in the media lately and a big topic of conversation amongst industry professionals in Canadian cities across the country. Drivers for these purpose-built rentals include historically low cap rates, high demand from investors, low interest rates and vacancy rates as low as 0.6% in Guelph, 1.2% in Victoria and 1.4% in Vancouver. The combination of these factors has made rentals an attractive investment opportunity and an increasingly important piece of the multi-family residential real estate sector.

In Vancouver, the Rental 100 incentive program is an additional driver which has propelled the increase in construction and transactions of purpose-built rentals buildings. Rental 100 is a policy that encourages the development of communities that are 100% rental housing, secured to remain rentals at a capped rental rate for a minimum of 60 years. The incentives include development cost levy reductions, parking requirement relaxations and increased density. These incentives have seen several purpose-built rental projects recently launch in Vancouver, including The Level by Onni, The Lauran by Westbank and Bosa False Creek by Bosa Properties.

With land on the rise and developer profit margins being squeezed on multi-family development, purpose-built rentals could be an exciting opportunity for developers in the Fraser Valley. Despite the Fraser Valley’s size, all of its municipalities combined account for less than 10% of the 115,000 rental units in Metro Vancouver and there is only a handful of new ones in development. The aforementioned drivers (low cap rates, high demand, low interest rates and low vacancy rates) exist in the Fraser Valley, but currently, there are no established incentive programs across any of the region’s municipalities. At Frontline, we are seeing an increase in clients exploring purpose-built rentals as a viable development option, particularly along the proposed Light Rapid Transit routes and in the densely populated areas of South Surrey, Surrey City Centre, Clayton and Willoughby. As we’ve seen in Vancouver, a rental incentive program would only accelerate the growth in the rental sector.

Copyright © Frontline Real Estate Services

Results of CMHC’s Survey of Foreign Ownership in Condominiums in Canada

Sunday, December 20th, 2015

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Utilizing the RE/MAX 2016 Housing Market Outlook Report

Wednesday, December 16th, 2015

Other

Highlights of this year’s report:

  • The RE/MAX 2016 price projection for the average residential sale price is 2.5%, based on continued demand in Greater Vancouver and the Greater Toronto Area
  • Many regions in Canada posted year-over-year gains in average residential sale price. The exceptions were primarily regions that rely heavily on the oil and natural resource sectors
  • Regions such as Victoria and Fraser Valley reported a spillover effect from the price increases in Greater Vancouver

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Home Sales Across BC Up 34.5% in 2015?s Super-November: BCREA

Monday, December 14th, 2015

With transactions and average prices both rising, sales dollar volume is up 56.4 per cent year over year, says association

Joannah Connolly
Other

As in Greater Vancouver and the Fraser Valley, BC home sales saw the second strongest November on record, according to a BC Real Estate Association report issued December 14.

There were 8,032 residential sales on the Multiple Listing Service® (MLS®) in November 2015 – a 34.5 per cent rise over November 2014.

BC’s total home sales dollar volume in November was $5.38 billion, up a staggering 56.4 per cent compared with the same month last year. This increasing rate of growth reflects the combination of skyrocketing transaction volumes and the average MLS® home price in BC rising to $668,317, up 16.3 per cent from November 2014.

“Housing demand last month was the second strongest ever recorded for the month of November,” said Cameron Muir, BCREA’s chief economist. “You’d need to look all the way back to the frenetic market of 1989 to find more homes trading hands in November.“

Year-to-date, BC residential sales dollar volume increased 35.4 per cent to $60.7 billion, compared with January-November 2014.

As in previous months, the BC totals disguise the significant variations between different markets across the province, with the major southern regions seeing huge increases in sales and dollar volumes, and some of the smaller regions struggling, especially in the north and Interior of the province.

Of the larger markets, the largest increase in sales was recorded in the Fraser Valley, where home sales climbed over 60 per cent from November 2014. Greater Vancouver and Chilliwack both saw an increase of more than 40 per cent, and Kamloops home sales were up 30 per cent.

Greater Vancouver’s sales-to-active-listings ratio remains the province’s highest, meaning that is still deepest into sellers’ market territory.

The Northern Lights region once again recorded the biggest annual decline in unit sales, down 41.7 per cent year over year – although, again, the region is small enough that the figure could be anomalous. The Kootenay, South Okanagan and BC Northern real estate boards all also posted declines in sales and dollar volumes.

Despite posting the largest annual rise in sales at 100 per cent, Powell River’s 36 November home sales (compared with 18 the previous November) sold at an average price of 29.4 per cent lower than a year ago. This was the largest average price decline reported by any of the BC boards – followed by Northern Lights and South Okanagan.

To read the full BCREA report, click here.

© 2015 Real Estate Weekly

November Home Sales Second Strongest on Record

Monday, December 14th, 2015

Other

The British Columbia Real Estate Association (BCREA) reports that a total of 8,032 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in November, up 34.5 per cent from the same month last year. Total sales dollar volume was $5.38 billion, up 56.4 per cent compared to the previous year. The average MLS® residential price in the province rose to $668,317, up 16.3 per cent from November 2014.

“Housing demand last month was the second strongest ever recorded for the month of November,” said Cameron Muir, BCREA Chief Economist. “You’d need to look all the way back to the frenetic market of 1989 to find more homes trading hands in November.”

The largest increase in consumer demand occurred in the Fraser Valley, where home sales climbed over 60 per cent from November 2014. Vancouver and Chilliwack experienced an increase of over 40 per cent, while Kamloops home sales were up 30 per cent.

The year-to-date, BC residential sales dollar volume increased 35.4 per cent to $60.7 billion, when compared with the same period in 2014. Residential unit sales climbed by 21.5 per cent to 95,927 units, while the average MLS® residential price was up 11.4 per cent to $632,209.

Copyright ©2015 BCREA

Canada realtor marketing homes directly to Chinese buyers

Monday, December 14th, 2015

Ryan Smith
Other

Last month, Canadian Mortgage and Housing Corp. chief executive Evan Siddall said that foreign buyers might be responsible for a “substantial portion” of luxury home purchases in Canada’s hottest markets. And a study found that as many as 70% of buyers of single-family homes on Vancouver’s West Side were likely from mainland China. While some feel that Chinese investors are driving Canadian housing prices up too fast, one Vancouver real estate agent is now selling luxury homes directly to Chinese buyers.

Mark Weins, an agent with Macdonald Realty, will be in Shanghai this weekend, selling Canadian homes at an event known as the Luxury Property Showcase, according to a News 1130 report.

A flyer for his trip, posted online, reads, in part: “I’m personally taking a select number of high-end listings to Macdonald Realty’s booth at the exclusive Luxury Property Showcase in Shanghai. As a Caucasian, Chinese speaking REALTOR born and raised in Vancouver, I’ll be able to uniquely market your home to an invitation-only audience of 5,000 VIP luxury buyers in China.”

While Weins isn’t doing anything illegal, News 1130 reports that there’s been some online outrage over his trip. What’s more, some feel the flood of foreign investment will have broader economic consequences.

Hilliard MacBeth, author of “When the Bubble Bursts: Surviving the Canadian Real Estate Crash,” told News 1130 that foreign investors are fueling unchecked speculation in the housing market.

“Most countries in the world, including Australia – which has a very large amount of foreign buying from China – keep very close track of it,” MacBeth told News 1130. “They go one step further. They put a tax on it as well, and that would very much be a good idea, I think, in terms of not letting people just buy properties and sit on the, and not pay any taxes while they’re waiting for prices to rise.

 “That’s one of the biggest factors of creating bubbles and making them worse, are people speculating by buying and then just sitting rather than using the properties,” MacBeth added. “A tax would help a lot with that, because then that adds the burden to the speculator, whether that be a foreign speculator or even a domestic speculator.”

Copyright © 2015 Key Media Pty Ltd

Minimum Down Payment by Home Purchase Price: Existing and New Eligibility Rules

Friday, December 11th, 2015

Recent Actions by Minister of Finance Aimed at Responsible Homeownership

Other

TORONTO, Dec. 11, 2015 /CNW/ - The Minister of Finance announced today a change to the eligibility rules for new government-backed insured mortgages on properties priced above $500,000. Effective February 15, 2016, the minimum down payment for new insured mortgages will be increased from 5 per cent to 10 per cent for the portion of the house price above $500,000.

“Today’s announcement by the Minister of Finance shows that maintaining a healthy and stable housing market is important for the new Government,” said Stuart Levings, President and CEO of Genworth Canada. “As a key stakeholder in the housing finance system, we acknowledge the vital role Government plays in this market and remain committed to helping first-time homebuyers achieve homeownership responsibly.”

For borrowers who purchased properties above $500,000 in 2015, we estimate that 9 per cent of our total transactional new insurance written could have been impacted, of which three quarters comprised homes below $700,000. Considering this, we expect that most borrowers impacted by the new rules would be able to afford the increase in down payment, while some might choose to purchase a lower priced home.

As illustrated by the Department of Finance, and outlined in the table below, the minimum down payment will increase only gradually with the price of a house, varying from 5 per cent for homes priced at or below $500,000 to 7.5 per cent just below $1 million. A borrower buying a $600,000 home would therefore see their minimum down payment requirement increase by $5,000.

Minimum Down Payment by Home Purchase Price: Existing and New Eligibility Rules

Home Purchase Price

Existing Eligibility Rules

Eligibility Rules Effective February 15, 2016

   

Minimum Down Payment Percentage

Minimum Down Payment Amount

Minimum Down Payment Percentage

Minimum Down Payment Amount

$500,000 and below

5.0 %

up to $25,000

5.0 %

up to $25,000

$600,000

5.0 %

$30,000

5.8 %

$35,000

$700,000

5.0 %

$35,000

6.4 %

$45,000

$800,000

5.0 %

$40,000

6.9 %

$55,000

$900,000

5.0 %

$45,000

7.2 %

$65,000

$999,999

5.0 %

$50,000

7.5 %

$75,000

Source: Department of Finance

             

Genworth Canada will be working with its customer base to assist in a smooth transition to the new rules.

About Genworth Canada Genworth MI Canada Inc. (TSX: MIC) through its subsidiary, Genworth Financial Mortgage Insurance Company Canada (Genworth Canada), is the largest private residential mortgage insurer in Canada. The Company provides mortgage default insurance to Canadian residential mortgage lenders, making homeownership more accessible to first-time homebuyers. Genworth Canada differentiates itself through customer service excellence, innovative processing technology, and a robust risk management framework. For more than two decades, Genworth Canada has supported the housing market by providing thought leadership and a focus on the safety and soundness of the mortgage finance system.  As at September 30, 2015, Genworth Canada, had $6.1 billion total assets and $3.4 billion shareholders’ equity. Find out more at www.genworth.ca.

Cautionary Note Regarding Forward-Looking Statements This press release includes certain forward-looking statements. These forward-looking statements include, but are not limited to, the Company’s plans, objectives, expectations and intentions, including the Company’s expectations regarding future developments in connection with the potential offering of debentures and any other statements which may be contained in this release that are not historical facts. These statements may be identified by their use of words such as “considering”, “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “seek”, “propose”, “estimate”, “expect”, or similar expressions, as they relate to the Company are intended to identify forward-looking statements. These statements are inherently subject to significant risks, uncertainties and changes in circumstances, many of which are beyond the Company’s control. The Company’s actual results may differ materially from those expressed or implied by such forward-looking statements, including as a result of changes in global, political, economic, business, competitive, market and regulatory factors, and the other risks described in the Company’s Annual Information Form dated March 31, 2015. Other than as required by applicable laws, the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

SOURCE Genworth MI Canada

© 2014 Genworth MI Canada Inc.

Finance minister announces down payment rule changes for mortgages house price above $500,000

Friday, December 11th, 2015

Justin da Rosa
Other

New down payment rules will go into effective February 15, 2016.

“The Government’s role in housing is to set and maintain a framework that is equitable, stable and sustainable. The actions taken today prudently address emerging vulnerabilities in certain housing markets, while not overburdening other regions,” Finance Minister Bill Morneau said in a release. “They also rebalance government support for the housing sector to promote long-term stability and balanced economic growth.”

The minimum down payment for new insured mortgages will increase from 5% to 10% for the portion of the house price above $500,000, the finance ministry wrote.

Minimum down payment for properties up to $500,000 will remain at 5%.

The changes are meant to reduce taxpayer exposure while supporting long-term stability of the housing market, according to the ministry.

“This measure will increase homeowner equity, which plays a key role in maintaining a stable and secure housing market and economy over the long term,” Morneau said. “It also protects all homeowners, including many middle class Canadians whose greatest investment is in their homes.”

Copyright © 2015 Key Media Pty Ltd