August sales reflect national trend

Sales down Prices UP!

 Last month a total of 627 homes exchanged hands, down 16.1% from the previous year, making August 2010 the third consecutive month in which the decline in market activity forecast by the Canadian Real Estate Association (CREA) and Canada Mortgage and Housing Corporation (CMHC) continued to erode the gains made last year. Erode but not erase: Year to Date home sales in the jurisdiction of the London and St. Thomas Association of REALTORS® still tops those of last year by 5.2%. “We absolutely knew this was going to happen,” explains Richard Thyssen, President of the London and St. Thomas Association of REALTORS®. “Last year’s bounty was the direct result of meeting pent-up demand on the way out of a downturn. It’s what happens under those circumstances. The fact is that the ten year average for home sales in August is 750.”

Year August Sales

2010 627

2009 747

2008 762

 2007 871

2006 832

2005 894

2004 781

2003 672

2002 695

2001 673

2000 570

“The good news is that we continue to see modest gains in house prices month over month,” says Thyssen. “That’s a sure sign that our market is in recovery.” The average price for a home Year to Date now stands at $227,794, 7% higher than last year at this time. This month, as in previous months and years, homes in LSTAR’s jurisdiction maintain their affordability compared to other major Ontario and Canadian centers. According to the CREA’s Major Market MLS® Statistical Survey for July 2010 (the most current available), the average price year-to-date for: London and St. Thomas -- $227,794

Year Average Price Total Residential

2010 YTD $227,794

2009 $213,402

2008 $210,888

2007 $202,256

2006 $188,942

2005 $178,058

2004 $166,138

 2003 $152,586

2002 $142,106

 2001 $136,636

 

 

The best-selling house style in LSTAR’s jurisdiction for the month of August was the two-storey, followed by the bungalow, the ranch and the townhouse condo. Home sales in London’s Sister City of St. Thomas numbered 55, a decline of 26.7% from last August. However, St. Thomas sales are up 15.9% for the year. The average price of a home in St. Thomas Year to Date stands at $184,652, up 0.6% over last year. According to a recent study prepared for the Canadian Real Estate Association by Altus Group Economic Consulting in Toronto, a total of $46,400 in ancillary expenditure is generated by the average housing transaction in Canada over a period of three years from the date of purchase. “That means that this month’s sales will generate $29,192,800.00 of economic activity over the next few years,” says Thyssen. “What comes around goes around.”

 

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The Bank of Canada is keeping its benchmark lending rate at a record low of 0.25 per cent, reiterating on Tuesday its conditional commitment to hold rates steady until the middle of this year.

Although it held the overnight lending rate steady, the bank acknowledged the recovery appears to be proceeding at a better pace than it had anticipated.

"The level of economic activity in Canada has been slightly higher than the bank had projected in its January Monetary Policy Report," the bank said in announcing the rate decision.

"Conditional on the current outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target."

The Canadian economy grew at a strong five per cent pace in the fourth quarter, Statistics Canada reported Monday. Robust growth like that makes it likely that the bank will move to hike rates and rein in inflation sooner rather than later.

After shrinking by 2.6 per cent in 2009, the bank projects that the economy will grow by 2.9 per cent in 2010 and 3.5 per cent in 2011.

In its statement, the bank repeated its mild concern over the risk that the elevated Canadian dollar presents to the recovery.

"On the downside, the main risks are a more protracted global recovery and persistent strength of the Canadian dollar," the bank said.

It is set to release its next decision on interest rates on April 20.

 

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 Ottawa advised to tighten mortgage rules

February 10, 2010

By Julian Beltrame
OTTAWA — The federal government should avoid major surgery and make only minor adjustments to deal with fears of overheating in Canada’s housing market, a number of leading economists said Wednesday.

Federal Finance Minister Jim Flaherty and the Bank of Canada have expressed concern that Canadians may be assuming too much debt in home purchases, debt that could rebound on them when interest rates rise.

But some solutions being floated in advance of Flaherty’s March 4 budget — doubling the minimum down payment to 10 per cent, or reducing the maximum amortization period from 35 to 30 years — could do more harm than good, the economists said.

“We want some sort of micro-surgery, not (taking) a pickaxe to the problem,” said Avery Shenfeld, chief economist with CIBC World Markets.

Bank of Nova Scotia economist Derek Holt said such radical surgery could cause home prices to crash and shake confidence in the consumer sector, a key driver of the fragile economic recovery.

Interviews with economists at four of Canada’s big banks showed some disparity of views as to the size of the problem, but general agreement that there is good reason for concern.

Most see home prices in Canada as being 10 to 15 per cent too high, largely because construction of new homes ground to a halt during the recession, decreasing available supply, and because of record-low interest rates, which are luring many new entrants into the market.

The Canadian Real Estate Association said this week it expects home prices to gain another five per cent to a record average of $337,500 this year. Sales will also hit record levels this year before tailing off next year, the association said.

It is unclear whether Flaherty is contemplating measures to cool prices and activity. Last weekend, the minister told reporters he was closely watching prices, but did not believe Canada had a housing bubble as yet.

But if one were to develop it could have wider repercussions on the economic recovery, as occurred in the United States, the economists said.

The best approach now is to take baby steps that would help moderate prices and activity and create a so-called soft landing.

One measure, according to TD Bank deputy chief economist Craig Alexander, would be to tighten the “income test” banks use to assess whether a prospective homeowner can meet monthly mortgage payments.

Already, banks build in a cushion in handing out floating mortgages by judging credit worthiness based on the borrower’s ability to make payments on the three-year rate, not the variable rate — about a two percentage point difference. Alexander said that could be increased to the still higher five-year posted rate.

A variation would be for banks to judge ability to meet payments not just on the mortgage but on all outstanding debts of a prospective homebuyer.

Yet another idea would be to deny government-backed insurance on mortgages for investment properties, thereby dampening speculation.

Economists believe such measures could help deflate any housing bubble without bursting it.

“It’s not in the interest of either buyers or lenders to have boom-bust cycles,” said the TD’s Alexander.

“That’s the lesson from the U.S. experience. If you have the wrong incentives and you don’t have regulations, you end up in a place you don’t want to be.”

Bank of Montreal economist Douglas Porter said if Ottawa chooses to raise the down payment requirement, it should do so modestly, perhaps to six or seven per cent.

Porter said, however, that he didn’t think reducing the amortization period to 30 years would be dramatic enough to cause a major disruption in the market.

Economists point out that home affordability is expected to tighten this summer even if Flaherty does not change the rules.

The introduction of the harmonized sales tax starting July 1 in Ontario and British Columbia — two of the hottest home markets — is expected to add a couple of thousand dollars to home purchases in those provinces.

And Bank of Canada governor Mark Carney is widely expected to start raising interest rates as early as July.

 

The Bank of Canada is expected to raise its benchmark interest rate in the Summer of 2010. The only question remains is how much and how fast. That is only 6 months away and this will have a major impact on all lending rates including mortgages, lines of credit and maybe even credit cards. Now is the time to reexamine all your debts and financial situation.



Having a prudent financial mortgage expert working on your behalf is the best defense against rising interest costs. The decision you make over the next couple of months regarding your mortgage and other debts will have a major impact on your financial future

 

 

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Bank lowers slightly growth forecast for 2009 and 2010, but keeps interest rates unchanged

OTTAWA - The global recovery is under way but expansion of the Canadian economy remains dependent on government support and historically low interest rates, the Bank of Canada said today.

As expected, the central bank again pledged to keep its trendsetting policy rate at the lowest practical level of 0.25 per cent until mid-2010, saying the economy at the moment is performing slightly worse than it projected three months ago.

To reinforce the commitment, the bank said it was extending its emergency lending instruments to April, with maturity dates beyond June, at the low policy rate.

The announcement contained few surprises for markets, but the tweaking of growth rates — although at the margins — was somewhat unexpected.

“Economic growth in Canada resumed in the third quarter of 2009 and is expected to have picked up further in the fourth quarter,” bank governor Mark Carney and his policy-making council said in an accompanying note.

“Nevertheless, considerable excess supply remains, and the bank judges that the economy was operating about 3.25 per cent below its production capacity in the fourth quarter of 2009.”

Carney had been among the most bullish of forecasters for the economy this year, although by historic standards, even Carney was not anticipating a robust recovery.

Now the bank says the economy likely contracted by 2.5 per cent last year, a little worse than the 2.4 per cent it had predicted in October.

As well, it says growth this year will be 2.9 per cent, one-tenth of a point less than it had previously forecast and more in line with the private sector consensus of 2.6 per cent.

The good news is that the economy will make the up ground in 2011, says the bank, with a growth rate of 3.5 per cent. It had earlier pegged next year’s growth at 3.3 per cent.

The bank’s message to Canadians is that although conditions are improving, strengthened by a global economy that is expanding faster than expected, the recovery still is dependent on “exceptional monetary and fiscal stimulus, as well as extraordinary measures taken to support financial systems.”

In Canada , the bank says the private sector won’t become the sole driver of domestic demand until 2011.

As has been the case throughout the recession, Canada ’s recovery continues to be hampered by the slow pick-up in U.S. demand for Canadian products and the high Canadian dollar, which makes those exports less competitive.

That means Canada ’s internal domestic economy, largely reflected in consumer spending and the hot housing market, will be the main engine of the recovery.

The bank noted that inflation has been rising faster than it anticipated, but appeared not to be overly concerned, especially with the large amount of slack in the economy.

Although economists forecast inflation likely hit 1.6 per cent in December, after being below zero through much of the summer and part of the fall, the bank said it still doesn’t believe inflation will return to the two-per-cent target until the third quarter of 2011, when it expects the economy to be firing on all cylinders.

The Canadian Press

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London Free Press Article September 22, 2009:

Council OK's licence for small landlords


London city council last night voted to license smaller landlords, a measure most politicians said would protect the health and safety of vulnerable tenants.

The new bylaw was a compromise measure that will leave about 8,000 landlords rather than bylaw officers policing properties on first inspections.

But while the change was moderate, drawing the support of 13 of 17 council members, the rhetoric was at times heated, with some supporters of licensing accusing a landlord lobby group of deceit.

"Reprehensible scare tactics" was how Coun. Nancy Branscombe described efforts by the London Property Management Association to enlist tenants who won't be affected by the change to oppose licensing.

The new bylaw only applies to rental properties with four or fewer units and properties that have added units since 1993 without expanding the size of the building.


But the London Property Management Association sought support from tenants in highrises with notices that warned they would be slapped with a "tenant tax."

That claim is disputed by city staff, who say the $25 licence fee per building simply covers the cost of adding a bylaw officer and a clerical worker to boost enforcement -- a view endorsed by most of council.

"I hope nobody stands up today and says it's a tenant tax because that would be shameful," Coun. Stephen Orser said.

His warning didn't deter Coun. Paul Van Meerbergen.

"It is a tenants' tax -- no ands, ifs or buts," he said.

Van Meerbergen was joined in opposition to the bylaw by Controller Bud Polhill and Couns. Roger Caranci and Cheryl Miller, but a broad coalition of council members held the day.

Not all tenant advocates were entirely pleased either -- Coun. Joni Baechler acknowledged some viewed the measure as "watered-down." But their allies on council seemed pleased to get more protection for tenants as well as neighbourhoods that suffer from absentee landlords.

"We're finally going to be able to go in and make the (bad) landlords smarten up," said Coun. Bernie MacDonald, whose ward includes student housing around Fanshawe College.

Larger landlords fear council will some day expand licensing to include them, too, Deputy Mayor Tom Gosnell said. But that's not reason to intervene now with smaller landlords who place tenants' health and safety at risk, he said.

The new bylaw will be phased in beginning next March when landlords will be given checklists by the city that highlight key areas of safety and health. A landlord must fill them out, share them with tenants and submit them to city hall. The bylaw also enables enforcement officer to enter rental buildings without permission as long as they provide notice, a power lacking in the existing bylaw. Jonathan Sher is The Free Press city hall reporter

Inspections: If these walls could talk

Jan 03, 2009 Tracy Hanes Toronto Star

After almost a year of living in their new townhouse in Uxbridge, Libby McCready and her husband figured there was little wrong with their home. But Libby's parents, who had bought several new houses over the years, urged them to take the time to fill out the Tarion new home warranty program's one-year report listing any issues.

As neither Libby nor her husband had much knowledge or experience with home building or repairs, they hired home inspector Brian Daley to have a look.

"We wanted to make sure we caught everything but we're not handy," says McCready. "Brian found a number of things we never would have noticed. The stuff he found came as a surprise."

The most significant defect Daley found was that the clothes dryer hadn't been vented properly, thus was not blowing outdoors but into insulation, which could have eventually caused a moisture and mould issue. He also noted that the plumbing to a toilet in a seldom-used second bathroom wasn't on the right angle for flushing, that a promised rough-in for an electrical fan for the fireplace was not completed and that attic insulation had been flattened in places.

Armed with Daley's report and digital photos, the McCreadys filled out the Tarion Warranty Corp. forms by the one-year deadline and as a result, those issues are covered. If they hadn't submitted the report in time, their builder would not have been obligated to repair the defects.

"Although everything turned out fine, I'd never move in to a brand-new house again without having a home inspection done right away," says McCready. "I would have rather had a comprehensive list of the problems from the start, as we'd lived here for almost a year and some of the issues could have caused problems. The inspection was totally worthwhile."

Unfortunately, most new homebuyers mistakenly "believe their new house is perfect," says Daley, when that's seldom the case. That's why Daley and Charters Kenny, both registered home inspectors (RHI), have launched New Home Inspections , a company that specializes exclusively in new home warranty inspections in the GTA and beyond.

Other home inspectors, such as Milton RHI and engineering technologist Martin Sweeney of A Home Inspection Company Inc. have also started offering warranty inspections in addition to their regular inspections of resale homes. Sweeney began doing new home inspections and preparing Tarion documents for homeowners as new development boomed in Halton Region.

New homes in Ontario are covered by the Tarion warranty for deposit insurance, protection against defects in work and materials, against unauthorized substitutions and against delayed closings and occupancies without proper notice. The most common claims relate to defects in work and materials, which require homeowners to submit a list of deficiencies at 30-day and one-year deadlines.

While builders provide a pre-delivery inspection (PDI) for buyers to note defects, Daley and Sweeney say these are more geared to cosmetic issues, such as nicks in drywall and whether the right flooring, cabinetry, etc. are provided. Those inspections usually don't include checks of the attic, of heating and cooling systems or an in-depth exploration of the house's structure and systems. And while independent third-party inspections take about three hours, PDI inspections are usually far briefer.

Daley says outside a new home, his company checks drainage and grading, looks for foundation defects, checks installation of siding and brickwork, roof installation and venting. Inside, they inspect walls, windows, floors, ceilings and doors for structural issues, check that stairs are properly supported, plumbing fixtures and fittings properly installed, that insulation in attics, basements, etc. is sufficient and will see if the heating system is distributing air properly.

"I often find insulation is insufficient or missing in attics," says Sweeney. "Sometimes, vapour barrier hasn't been installed, and on the roof I might find that nail heads haven't been caulked and sealed, which will eventually cause moisture to seep in."

He says it's difficult for the average homeowner to have knowledge of the systems and techniques used to build a house. For example, the new tankless hot water heaters and heat recovery ventilators are "really sophisticated pieces of equipment." He often finds HRV units haven't been correctly installed.

Daley says his company finds an average of 30 defect items during a warranty inspection and Sweeney says his list usually includes 20 to 30. J.D. Power and Associates' 2008 survey of GTA new home buyers found that the proportion of homes delivered "defect-free" in the GTA market was 12 per cent in 2008 (which means 88 per cent had defects). The total number of construction problems noted by buyers was down to 21 per home in 2008 from 23 per home in the previous year, according to the J.D. Power study, which includes only large volume GTA builders.

"It's not because most builders aren't doing a good job or are taking shortcuts," says Daley, but because homebuilding involves numerous complex systems.

Most large builders rely on sub-trades and as many as 30 different trades can be involved in the building of a home, says Daley – and it's unlikely all were supervised during the building process. Because they are piece workers, saving time and money is their No. 1 goal, says Daley, which may compromise quality.

Municipal building inspectors are responsible for checking every aspect of a house as it is being built, but it's virtually impossible to do this effectively in a subdivision, says Daley.

"What generally happens is they check a small percentage of homes in hopes the builders will follow their requirements for the rest of the homes."

While a builder may offer to provide one of his own reps for a warranty inspection, "it is not in the builders' interest to find fault in their own work." Daley says some builders have the best intentions, but it's more likely that their inspector will find fewer defects than a third-party professional.

Daley's company charges $375 per inspection and Sweeney charges $340 to $400, depending on the size of the house. Inspectors from both companies can help fill out Tarion warranty forms.

Anyone considering hiring a home inspector should call at least three different companies before making a decision, Daley suggests. Those with RHI designation have extensive training and are insured. A good place to start a search for a home inspector is with the Ontario Association of Home Inspectors.

David Giovanniello

Century 21 First Canadian Corp.

519-777-0795 Cell

519-673-3390 Office

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www.freelondonhomeinfo.com

1) real estate prices are coming down to levels where it makes sense again to buy
2) mortgage rates are lower
3) car dealers actually are open to talk hen you mention the word "discount"
4) seller's get more motivated on price and terms, and will accept VTBs and long closing (although I have not seen this yet in BC's or Edmonton's multi-family market .... yet)
5) used cars are a tremendous bargain
6) good deals are available when traveling to sun destinations like Palm Springs, Hawaii, Florida or Mexico
7) investors are happy with double digit ROIs and opposed to triple digit in 2-3 years
8) more renters 
 

This makes for a great time to invest in real estate.  It is a great time to invest in a great cashflowing property that will appreciate in time and the tenants will help you pay down.

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