Canada Housing Prices Predicted to Fall Up to 25%: Capital Economics

Down 25%Magnifying glass

Firm Declares Property Values no longer Sustainable

The independent research firm Capital Economics has warned Canadians that housing prices are on the verge of a weighty fall, as stated in an article that appeared yesterday in the Financial Post.

The firm’s report announced that property prices have “lost touch with fundamentals”. Coupled with record household debts, Capital says Canada’s housing market is over-inflated and ready to pop.

“Relative to disposable income per capita, our calculations suggest that housing is around 25% overvalued, which is approaching the level of excess that the U.S. market reached at its peak in 2006,” the firm said. “House prices have been growing rapidly for nearly a decade now and it has reached the point where housing is so overvalued relative to incomes that a downward correction seems unavoidable.” Continue reading

Budgeting for your Wedding

BudgetMagnifying glass

Clever Methods of Curbing Costs on the “Big Day”

While your wedding should certainly be a day to remember, it best be for the good memories; not the hole it left in your wallet. More and more Canadians are steering away from the grand ceremonies, the extended family invites to people met only a handful of times, and moving toward a more personal celebration.

According the, a wedding planning website, weddings in 2010 cost an average of $27,000. If you are looking at that sum and thinking, “that could be our down payment on a home!” consider the following pointers on keeping your wedding budget a little more reasonable. Continue reading

Survey reveals a significant number of Canadians stay with their lenders

Mortgage LenderMagnifying glass

According to a recent survey conducted by the Canada Mortgage and Housing Corporation, a significant number of Canadians opt to stay with their current lender when they renew or refinance their home loans.

Overall, 89 percent of respondents claimed they do not look elsewhere when renewing their home loans. In addition, 68 percent stay with their lender when refinancing.

Some experts point to the low interest rates as the cause of initial attraction toward certain lenders.

"They stay with the lender because of rate and they leave the lender because of service," Pierre Serré, vice president of insurance product and business development at CMHC, told the Financial Post. Continue reading

Canadians preparing for potential spike in home loan interest rates

Increasing Interest RatesMagnifying glass

According to a recent survey conducted by the Canada Mortgage and Housing Corporation, an increasing number of Canadians are preparing themselves for when the national interest rate for mortgages increases.

For a substantial amount of time, interest rates have remained low, which hoped to spur the economy and real estate sector. This method proved successful, as more consumers came to the market and began purchasing real estate. However, as more homebuyers agreed to take on long-term debt, the threat of interest rates rising could put many in tough financial predicaments. Continue reading

More distribution companies may be eyeing commercial mortgages in Calgary

CalgaryMagnifying glass

An article in The Calgary Herald recently detailed an increasing trend among distribution companies, as more begin moving to the region to increase their presence.

According to Lonnie Benson, Calgary chapter chair for the Supply Chain & Logistics Association, the area is "rapidly becoming known as a distribution hub in western Canada."

The increased price of fuel has dictated this move, according to Benson, as companies can deliver to Alberta, Saskatchewan and Manitoba more cost effectively with headquarters in Calgary, than having centers in eastern or central regions of the country. Continue reading

Edmonton to surpass Calgary in home building total

Home BuildingMagnifying glass

A recent article in the Calgary Herald relayed that, despite close races the last several years, Edmonton is expected to build more homes than Calgary during 2011.

In a battle to reign supreme among Alberta's home sector, Calgary homebuilders created one more property than Edmonton in 2009 – 6,318 to 6,317 – and just three more in 2010 – 9,262 to 9,259.

However, in 2011, Edmonton is expected to easily surpass Calgary, as the region will begin construction on 9,250 new properties, well above Calgary's projection of 8,500. Experts anticipate the margin will narrow again in 2012, but Edmonton will still lead by a total of 10,100 to Calgary's 9,600. Continue reading

The Benefits of Early Mortgage Renewal

Lower Mortgage RatesMagnifying glass

Too often is the case that Canadians fail to review the terms of their mortgage contract, and contrast them with what is currently available on the market. Early renewal, and renewal in general, give you, the homeowner, an excellent opportunity to negotiate a lower rate for your next term. It also allows you to capitalize on today’s rates before they rise, if that is indeed the path they are headed.

An early renewal generally means that you will be breaking the terms of your current mortgage to enter into a new term, at a more desirable rate. Breaking a contract will generally result in a prepayment penalty of either three months interest at your current interest rate or the interest rate differential (IRD). Continue reading

Bank of Canada: Recent economic slowdown is short-term

Bank of CanadaMagnifying glass

Speaking recently at a Federal Open Market Committee, Bank of Canada officials reiterated to the group that the country's recent slowed economy is short-term, and that the second half of 2011 will be fruitful.

A recent Huffington Post Canada article agrees with the BoC's assessment, however, it does point out that a lot of assumptions are being made. For instance, the prediction assumes that a holding pattern or decline will occur in energy prices, the Canadian dollar will be more relaxed and production losses due to major events – such as the disasters in Japan – will only be temporary.

The article further relays that these assumptions overlook the fact that consumers drive the economy, and they have begun spending less because of high gas prices and reduced job growth. In addition, the article states that Canada's household debt-to-income ratio is increasing, and now resides at a level higher than where the U.S. was before its crash. Continue reading

Financial Dos and Don’ts for Couples

CoupleMagnifying glass

Common Mistakes Couples Make when Dealing with Money

“I work all night, I work all day, to pay the bills I have to pay,” sings Abba in their famed hit Money, Money, Money – it’s a rich man’s world. For the majority of couples who didn’t find their “wealthy man”, money is a weighty issue, especially between partners who find themselves working and working yet surrounded by debts.

Talking about money is important, but surveys have found that roughly 70 per cent of couples do just that and yet they are still at war when it comes to funds. Why is that? Mary Claire Allvine, financial planner, told she believes this is because couples don’t know how to discuss their finances appropriately.

“People tend to be emotional and reactive about money, not strategic,” she says. And this is what leads them to make large financial mistakes. Continue reading

Commercial real estate market improving in Montreal

MontrealMagnifying glass

During the second quarter of 2011, the industrial real estate market in Montreal experienced significant gains, which is important, as the sector had been one of the hardest hit during the recent recession.

A report from CB Richard Ellis revealed that Montreal's market represented more than half of the country's positive net absorption of industrial space during the year's second quarter. In all, 6 million square feet was sold through commercial mortgages or leased – 3.7 million of which were in Montreal.

"We dug ourselves out of a hole," said Brett Miller, executive vice president and regional managing director for CBRE in Eastern Canada. "We were surprised by the strength of the absorption. It surpassed our expectations."
Continue reading