According to a recent release from Central 1 Credit Union, Ontario’s housing market is in need of a boost, as sales during 2011 have been underwhelming thus far.
The report forecasts a down year for 2011, as many homebuyers wait for better economic situations. With a better labor market and improved income figures, home sales will begin to pick up next year and continue through 2013, the credit union predicts.
In January, the province’s real estate market actually peaked, following several months of increased sales activity beginning in mid-2010. Since January, however, sales have declined 8 percent through the end of April. In fact, many regions surrounding Ontario have been in decline since December.
In an effort to improve the financial planning knowledge of Canadian citizens, Canada’s Task Force on Financial Literacy states that Ottawa is set to appoint a financial literacy leader when parliament officially unveils the federal budget on June 6.
A recent article in The Globe and Mail states that Canadians currently have a plethora of information and resources available to them regarding financial planning, such as the Service Canada website or the Financial Consumers Agency of Canada. While those who want to compare rates of mortgages or investigate life insurance companies currently can, not every resident is aware of how to obtain this information.
The vice chairman of Canada’s Task Force on Financial Literacy Jacques Menard recently expressed this point at a conference regarding financial literacy. Menard stated that his task force has found more than 50 institutions that offer financial literacy, yet, their services are unorganized.
According to a recent survey conducted by Environics and sponsored by the TitlePlus program, more Canadians are interested in selling their homes privately instead of through realtors, the Canadian Press relays.
Of those responding to the poll, 45 percent would rather assist the transaction themselves. However, despite this enthusiasm, only 11 percent said they understood the changes needed to get on the Multiple Listing Service.
“What these findings show us is that there is an appetite among Canadians to conduct the sale of their home privately,” TitlePlus vice president Ray Leclair, told the news source.
The Bank of Canada is not expected to raise interest rates for mortgages next week, despite recent rumors, according to a recent Reuters report,
Many financial analysts had predicted a rate hike in July to offset the recent surge in inflation. However, the report states that, because the country’s commodity boom has not revived the economy, the BoC will keep rates stagnant to keep the real estate market growing.
“When oil and gas prices go up, it’s all great. But now it’s hurt mode for the U.S., so you’re in this grey area where it may not be a big win for Canada any longer,” Michael Gregory, senior economist at BMO Capital Markets, told the news source. “And I think that ultimately is the reason for the bank to be cautious.”
More Canadians are taking on mortgages while reducing their credit card bills, according to a recent article in the Financial Post.
The Bank of Montreal’s CEO recently told the Post that the market for home loans “is continuing to be more robust,” as Canadian consumers begin to better manage their finances. BMO is reaping the benefits of this trend as well, as the bank increased its profits by 7.5 percent to begin the second quarter of 2011.
Since the recession took place in the U.S., more Canadian banks have cut their credit provisioning to boost their results. For the first quarter of 2011, BMO had set aside $145 million in provisions for potential credit losses, which was $104 million less than the previous quarter.
The Teranet-National Bank recently revealed positive news for those looking to sell their homes. The bank’s Composite House Price Index, which calculates the price changes resales of single-family homes, reached its highest level in nine months during March.
Overall, resale prices were up 0.6 percent month-over-month, while the year-over-year increase rose 4.1 percent. The index covers six major metropolitan areas, and discovered that all but one experienced significant gains.
“This should calm those who were fearing a severe downward price correction,” said Marc Pinsonneault, senior economist at National Bank Financial. “On the other hand, we do not think that the acceleration of home price inflation in March represents the start of a lasting trend.”
Since the economic recession began in 2007 and 2008, the real estate market in both the U.S. and Canada has struggled. However, recent signs, according to the Calgary Herald, have pointed to a rejuvenation for the market.
Local homebuilders have noticed increased interest in units in the city, which has spurred optimism for the sector.
“Those signs are very consistent and you can put your finger on them. No. 1, there are buyers out there,” said Logel, president and partner of Cardel Lifestyle, a local homebuilding company. Logel further relayed that location is most important for these interested homebuyers, however, they have become patient and “very educated and wise about their buying decisions.”
A recent report conducted by the Investors Group revealed a differing opinions from Canadians regarding their financial woes. While some were optimistic, others are less positive about their problems.
A majority of Canadians responding to the company’s survey stated that they current monetary hardships will have a positive effect on their lives in the future.
Seventy-five percent of Canadians with debts stated that home loans were the cause, while 37 percent attribute the hardship to home renovations. Sixty-six percent blamed their daily expenses increased their debt, which included credit card bills.
In Vancouver, the current prices of homes have increased so impressively that many homeowners are considering selling their properties that otherwise wouldn’t have thought to.
The National Post examined the current market and offered examples of these homeowners now interested in selling their property. One previous owner, Cam Hayduk, had a home in Bowen Island in Vancouver that had originally purchased for $380,000 in 2004, putting down 10 percent. In May 2010, because of the high selling prices, Hayduk sold the home for $580,000, resulting in a $180,000 profit from his initial investment, or a 450 percent return-on-investment.
The average price of homes in Vancouver in April jumped to just over $800,000, which is 21 percent higher year-over-year.
A recent article in the Globe and Mail discussed how mortgage brokers can help potential homebuyers with their process.
The article references a recent homebuyer that had been looking to compare rates among different lenders. She then realized that mortgage brokers can assist her with the process and find even lower rates as well. Furthermore, during the process of purchasing a home, a significant number of decisions need to be made, especially pertaining to mortgages. These options include picking between a variable or fixed-rate mortgage and determining how long the amortization period should be.
“It’s overwhelming,” Lauren Chender, the potential homebuyer, told the news source. “There was a lot to know.”