Author: Dean Terry

Housing starts rebounded in the second half of 2009, and it is expected to strengthen in 2010 according to Canada Mortgage and Housing Corporation’s (CMHC) first quarter Housing Market Outlook, Canada Edition.

In 2009, there was a total of 149,081 units, housing starts are expected to be in the range of 152,000 to 189,300 units in 2010, with a point forecast of 171,250 units.

In 2011, housing starts will be in the range of 156,400 to 205,600 units, with a point forecast of 175,150 units.

Chief Economist for CMHC, Bob Dugan noted that the existing home market has shifted from a buyer’s market, at the beginning of 2009, to a seller’s market. With the relative lack of listings for existing homes has pushed some of the demand into the new home market, which can help explain the forecast made for higher housing starts activity in 2010.

The pace of the Multiple Listings Service (MLS) sales seen in the second to fourth quarters of 2009 reflects, in the activity that was delayed in the previous two quarters.

This pace is unlikely to be sustained as pent up demand, as it has exhausted and financing costs increase with anticipated higher interest rates later in 2010.

The results of this will be that existing home sales will be in the range of 455,350 to 509,900 units in 2010, with a point forecast of 486,700 units. It is expected to lower slightly in 2011, within the range of 426,300 to 494,600 units, with a point forecast of 469,950 units.

With the balance improving between supply and demand, the average MLS price is expected to remain close to the average of the last quarter of 2009, for most of 2010, and then rise modestly in 2011.

Jeff Markewich
Broker of Record with InfoMarket Group GMAC Real Estate
www.imgrealestate.ca

Author: Herman H. Cheung

A new forecast from RBC Economics says that Canada’s economy is set for real Gross Domestic Product (GDP) growth of 3.1% this year and 3.9% in 2011.

RBC has noted that a peak in stimulus investment, improved credit markets and a recovery in consumer spending are pushing the increase of GDP growth.

Craig Wright, chief economist has noted that recovery has taken a solid root in Canada, which is also due to low interest rates and improved credit markets. He has also gone as far as to say that the strength in the housing market and investment by private sector should provoke additional economic growth.

With the economy in for a major rebound, we can also expect to see that the housing market improving further on.

As it stands, we are already surpassing last year’s level, however the months so far were ones we were deep into the recession. We will truly be able to see how the market will fare once we reach April, which was around the time last year when we first began to see huge improvements in the housing market.

Until then nothing is certain, however I believe that with new mortgage rules and interest rates rising in mid 2010, we might see the housing market stabilize, but no records broken anytime soon.

Rita Baxter
Broker of Record with Town and Country Realty
www.lloydminsterrealestate.ca/

Author: zarak.khan2009

A recent Royal Bank of Canada (RBC) poll showed that homebuying momentum in Canada continues to gain momentum with the portion of Canadians who are likely to purchase a home within the next two years rising to 10%.

This data is according to the 17th Annual RBC Homeownership Study; it shows that younger Canadians, aged 18-24 will be leading this year, with those to buy almost doubling to 15% from 8% in 2009.

Ipsos Reid conducted the RBC study, and it was found that 91% of Canadian homeowners believe a home is a good investment, making this the highest level in 12 years.

We also have 26% of Canadians expecting their home to be their primary source of income when they retire.

With this information, people have to be ready to see buyers not stalling any further with their purchase. If you are a buyer on the market today, you should not waste too much time when you find the house of your dreams.

As we know, there will be new mortgage rules as of April 3rd, and by the middle of the year interest rates should start increasing.

If you want to purchase your home with a low mortgage attached, now is the time to be purchasing a home, however I cannot stress this enough, that you should not over extend yourself too thin.

Tips will be provided to help you your buying process on a later date.

Glen Chapman
Broker of Record with Club “100″ GMAC Real Estate
www.club100realestate.com

With so many stats released about how the market performed last month or last year, all of this information can obscure the fact that what matters to many potential homeowners is what will happen to the market in the future. Taking the pulse of current consumer confidence can help in this task.

Image: USACE Europe District / Flickr

RBC has released its annual Homeownership Study, and it shows that the housing market is not likely to cool off in the next few months. Ten percent of all of the people surveyed said they planned to buy a house in the next two years, compared to the seven percent the survey recorded in 2008. Younger respondents were the ones who showed the most eagerness to buy, with 15% expressing strong interest, compared to eight percent last year.

Undoubtedly, this is being driven by the increasingly stable market conditions and low interest rates. And many people think that now is the time to buy, as opposed to later: three-fifths of respondents said they think that average house prices will keep rising in 2010. This is a huge turnaround from 2009, when only a quarter thought house prices would rise.

Because of this optimistic view of house prices, and possibly because people are getting concerned about the volatility of the stock market, 91% of the survey respondents think that owning a home is a good way to invest your money, and a quarter think that their home will the main way they will pay for their retirement. This is the highest level for homeowner satisfaction that RBC has seen in 12 years.

A senior economist for RBC, Robert Hogue, says, “With the Canadian housing market showing continued vigour, it’s not surprising that Canadians feel more confident in the long-term value of owning a home.”

When they do buy a home, fixed-rate and combination fixed and variable rate mortgages are neck-in-neck in terms of popularity: fixed rate has 44%, and combination has 40% support. This supports the judgement that Canadians are optimistic about the future, but they are trying to be cautious as well, because not all of their questions are answered.

What should you take away from this survey? Essentially, that for buying and selling, now is a good time to take a leap into the market. With consumer confidence rising, there will be more people entering the market, and therefore, more opportunities to make the deal you want.

Heleen Jacobsen
Broker of Record with InfoMarket Group GMAC Real Estate
www.infomarketgroup.com

Although the most recent Federal budget announcements were mostly met with approval by housing industry analysts, there were concerns that some calls to make housing more affordable were not heeded by Flaherty.

Image: Hugh Lee / Flickr

For instance, while the budget retained the first time homebuyers tax credit and the new ceiling on the amount homebuyers can pull from their RRSPs to put into their down payment on a home, they did not extend the home reno tax credit.

Clearly, some of this is due to concerns that Canada may experience a housing bubble in the near future, and that providing any more impetus to its growth may be harmful. Flaherty felt there was no need for further stimulus because the market for homes is “healthy and stable.”

But industry groups do feel that some changes are needed to improve housing affordability. For instance, when the GST was first rolled out, it allowed new homeowners to rebate their full GST costs for any homes under $350,000. However, that was in 1991. Due to inflation, a home that cost $350,000 would be worth upwards of $550,000 today, and so the number of people that can claim this rebate is falling every year.

The Canadian Real Estate Association (CREA) is also asking for the first-time home buyers tax credit to be boosted, and that the credit be indexed to inflation so that the problem with the GST credit doesn’t happen to this credit.

These same groups are happy that the government is not putting any further regulations on the market. The chief economist of the CREA, Gregory Klump says that, “We’re satisfied that no further regulatory action needs to be taken.” He characterizes the current condition of the market – which some feel is too hot – as the activity that occurs in a period of economic recovery. He also expects it too cool later in the year when interest rates start to rise.

Although the budget did not have a lot of positive news for home buyers, perhaps no news is the best news: home buyers don’t need a new HST, for instance. And the first-time home buyers credit is one of the best ideas that the government has come out with in a while. From a real estate perspective, then, this budget was probably the best we could reasonably hope for.

Heleen Jacobsen
Broker of Record with InfoMarket Group GMAC Real Estate
www.infomarketgroup.com