21 May

Rising Real Estate Prices and Low Interest Rates Keep Canadian Households Upbeat


Posted by: Jaime (James) Fleming

The share of Canadians who are predicting higher home prices in their neighborhood remained above 40% for a fifth week in the latest weekly polling by Bloomberg and Nanos Research. That’s kept consumer confidence levels at near the highest in four years, the data show.

Improving views on housing follow a recent acceleration in the real estate market in recent months that reflects a shift by policy makers at the Bank of Canada to dim expectations for rate increases as it plays down concerns over rising household debt to focus on stimulating the economy.

“The crux of it is the rates environment,” said David Tulk, chief macro strategist at TD Securities. “It’s that combined impact of seeing your own asset increase but also realizing that no one is going to take away the punch bowl.”

The Bloomberg Nanos Confidence Index measured 59.6 in the week ended May 16, little changed from the previous reading of 59.5. The survey-based index hit a four-year high of 60.1 on April 25. The index is calculated on scores derived from weekly polls on the outlook for real estate prices, personal finances, job security and the Canadian economy.

The proportion of survey respondents who believe home values in their neighborhood will rise over the next six months was at 40.7% last week. While down from 42.8% two weeks ago, the score has averaged 41.9% over the past five weeks, up from an average 37.3% over the past year. The share of Canadians who expect a decrease in real estate prices fell to 9.7% last week, the lowest since January.

The Nanos data are based on phone interviews with 1,000 people, using a four-week rolling average of 250 respondents. The results are accurate to within 3.1 percentage points.


Last week’s poll coincided with Canadian Real Estate Association data that showed home sales in April rose 2.7%, the fastest pace since August, largely on a surge in transactions in Vancouver and Toronto. April’s sales gain was the third consecutive increase after a four-month winter skid.

The national average price of a home sold in April was up 0.8% from March and 7.6% from a year earlier. There is also evidence construction is holding up better than expected; Canada’s housing agency reported this month work on new homes accelerated to 194,809 units at a adjusted annual pace in April, a 24% increase from the previous month.

Rate Bias

Over the past year, Bank of Canada Governor Stephen Poloz has turned the central bank’s focus away from rising housing debt toward concerns that inflation is persistently low amid excess economic capacity. Poloz removed the central bank’s rate- rise bias in October.

Canadian inflation hasn’t exceeded the central bank’s 2% target since February 2012. Statistics Canada will report April inflation data on May 23. Economists are forecasting a 2% pace for the first time in two years.

The impact of the Bank of Canada’s policy shift has prompted commercial banks to lower mortgage rates, even as the federal government and other financial regulators have tightened mortgage rules to shield households that would be most vulnerable to a home-price correction.

Canada Mortgage & Housing Agency this year restricted the availability of mortgage insurance for individuals purchasing a second home and increased premiums on its products. The federal government has recently shortened the maximum amortization period on mortgages.

The regulations “are not targeting the average homeowner, they are trying to limit the most vulnerable of borrowers of entering a fairly stretched market,” said Tulk.

Economists surveyed by Bloomberg News forecast the 1% overnight policy rate won’t rise before the middle of 2015 at the earliest. Poloz reiterated last month he is neutral on the direction of the next move.

Bloomberg Nanos’s confidence index has two sub-indexes: the Expectations Index, based on responses on the outlook for the economy and real-estate prices, and the Pocketbook Index, based on survey responses to questions about personal finances and job security. The Pocketbook Index rose to 60.2 last week from 59.2, while the Expectations Index fell to 59 from 59.7.

Both gauges are above their 12 month averages.

Bloomberg News | May 20, 2014 | Last Updated: May 20 12:01 PM ET

15 May

Analysts warn of market ‘froth’ as home prices rise again in April


Posted by: Jaime (James) Fleming

Canadian home prices continued their ascent in April, while the number of existing homes that changed hands came in slightly lower than a year ago.

The average sales price across the country rose 7.6 per cent from a year earlier, to $409,708.

Averages can be distorted by changes in the types or locations of homes that are selling. If you take the Vancouver and Toronto areas out of the mix, the average price in the rest of the country was up 4.8 per cent. The MLS Home Price Index, which attempts to give a more apples-to-apples comparison of price increases, rose 5 per cent. That’s a slightly slower pace of home price growth than the 5.19 per cent gain in March.

ut at an annual growth rate of around 5 per cent, Canadian home prices are continuing to rise faster than incomes are, something that is worrying to some economists.

“With home prices already estimated to be 10 per cent overvalued, the risk is for more froth to gather in the Canadian housing market,” Toronto-Dominion Bank economist Diana Petramala wrote in a research note Wednesday.

The price gains came even as sales of homes over the Multiple Listing Service last month were 0.3 per cent below those in April 2013, according to data released by the Canadian Real Estate Association (CREA) on Thursday.

Last month’s sales were also slightly lower than the average number of sales that have occurred in April over the past decade. Sales were up from a year ago in Greater Vancouver, Calgary and Edmonton, but down in areas like Ottawa, Montreal, and rural Quebec, said CREA, which represents the country’s realtors.

The number of homes that are selling is running below the 10-year average in more than 60 per cent of the markets across Canada, it added. The realtors, many of whom have argued that Ottawa has gone too far in its efforts to curb growth in the housing market, suggested that that statistic means the government should not take any more steps in that regard.

“This shows that tightened mortgage rules and guidelines are working as intended to keep activity in check despite mortgage interest rates remaining extraordinarily low,” CREA’s chief economist, Gregory Klump, stated in a press release. The Canadian government has made a number of moves in recent years to stem the growth of consumer debt levels and house prices, as it has sought to prevent a bubble from forming in the market. Many economists were in favour of those moves.

On a seasonally-adjusted basis, sales were up 2.7 per cent from March, CREA said. That marks the third month in a row of rising month-over-month sales, following a string of declines through the winter months. Greater Vancouver and Greater Toronto led the charge, while smaller markets faced challenges.

1 May

Why Friday is the worst day to take possession, and other tips on making your real estate deal go more smoothly.


Posted by: Jaime (James) Fleming


Close your home purchase on a Wednesday: Weisleder
Why Friday is the worst day to take possession, and other tips on making your real estate deal go more smoothly.

The last Friday of the month is typically the busiest day for real estate lawyers, which means deals may not close until late in the day — or may get pushed into the following week.


The last Friday of the month is typically the busiest day for real estate lawyers, which means deals may not close until late in the day — or may get pushed into the following week.
By: Mark Weisleder Real Estate, Published on Fri Apr 25 2014

As the spring housing market heats up, it’s a busy time for closing deals. The price you pay is very important, but you also have to think carefully about your closing date, so that everything goes smoothly.

Here are seven things to remember:

Any day but Friday: The last Friday of a month is typically the busiest day in most real estate law offices, especially in the summer. This mean many deals won’t be able to close until late in the day. Worse, if the deal has to be extended, you don’t get keys until the following Monday, or maybe Tuesday if it is over a long weekend.

Wednesday is good: If there are delays, it is much easier to manage a one-day extension than an extension over a weekend.

When sellers must move: You should be out of your home by 3 p.m. on closing day. Most real estate contracts stipulate that sellers must turn over possession as soon as the deal is registered electronically. Usually — assuming it is not the last Friday of the month — that happens by 2 to 3 p.m. Vacant possession must be given to the buyer at that time.

Try to close early: If you are buying and selling in the same time period, close two days early and get bridge financing. You will close your deal without pressure and have a few days to move in while you wait until your sale closes. This will also make it much easier to negotiate an extension, if you have to, as you will not be dependent on the money from your sale to close your purchase.

Clean up after yourself: You must turn the house over in broom-swept condition, which means no garbage. Buyers should make a final visit two days before closing to make sure the seller is properly cleaning up.

When to move: Buyers should not plan to move in until late in the day or the day after closing, to avoid paying extra to movers if things get backed up or the deal has to be extended.

Do an inspection: Even if you are not moving in that day, buyers should check the condition of the home on the day of closing, to make sure that nothing has been broken or damaged. The seller typically guarantees everything will be working on the closing date, not afterwards, so find out right away if you need to make a claim about anything after closing.

By doing your homework before choosing a closing date, you should be able to avoid pitfalls later.

Related:Think carefully before suing your neighbour

More from Mark Weisleder

Mark Weisleder is a Toronto real estate lawyer. Contact him at mark@markweisleder.com .