Determining home affordability

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Affordability is a hot topic in Canada's residential real estate market. While rising home prices mean greater value for homeowners, they can also translate to difficulties for prospective homebuyers. After all, a more expensive home will require more financing, something that can lead to more debt and ultimately foreclosure if a borrower is unable to stay current on their loan.

Data from the Teranet-National Bank's house price index shows that despite a decline in sales, home prices have continued to rise throughout the country. Overall, on a year-over-year basis, home prices increased 2 percent during May. This follows a 2 percent gain during April. Continue reading

Home prices continue upward trend

It seems that recent good news regarding the Canadian real estate market wasn't an isolated incident, as new data shows home prices are on the rise.

According to the Teranet-National Bank house price index, home prices increased 2 percent overall on a year-over-year basis during May. This comes after a 2 percent gain in home prices during April, creating a pattern of slow but steady growth.

Seven of the 11 cities across the country tracked by the index saw prices moving up above the national average. Quebec City saw a rise of 6.5 percent, while Calgary and Hamilton each saw an increase of 5.8 percent. Winnipeg saw prices rise 4.6 percent, Edmonton experienced an increase of 4 percent and Toronto showed gains of 3.9 percent. Continue reading

Creeping mortgage rates are part of housing market’s soft landing

The reports of the demise of Canada's housing sector appear to have been greatly exaggerated. According to the Royal LePage House Price Survey, housing prices across the country continue to post relatively modest gains, and home loans have been kept in check, leading to market stability. And, defying those who had predicted an imminent collapse, it doesn't appear there will be any extreme price movement either way through at least the end of 2013 and probably into 2014.

Avoiding the housing bubble
Four different sets of rules have been issued by the Department of Finance since the worldwide housing bubble collapse in 2008, all of which increased lending restrictions. Those efforts, along with the creeping rise in mortgage rates over the past few months, appear to have helped the Canadian housing sector into a soft landing, avoiding any possible catastrophe. Continue reading

Affordability weakens, but mortgage brokers can help offset costs

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Are homes in Canada too expensive?

According to a recent article from The Globe and Mail, the answer is: sometimes.

"…[T]here is clearly some stress on affordability, which is reported on in depth by Royal Bank of Canada's economists every three months," the article stated. "As RBC points out in each report, lenders typically qualify borrowers by checking whether mortgage payments, property taxes and heating costs account for no more than 32 per cent of gross household income. In the first quarter of 2013, this package of housing costs consumed a low of 30.4 percent of average household income in Edmonton for a detached bungalow and a high of 82.3 percent in Vancouver." Continue reading

Low mortgage rates can offset high prices

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While rising home prices are good news for sellers and buyers seeking a sound investment, they can also make it that much harder for some Canadians to enter into homeownership.

As a recent article from The Globe and Mail points out, even with mortgage tightening and a dip in sales, home prices continue to remain high throughout the country. As home sales decreased, so did the number of homeowners putting their properties up for sale, keeping the inventory of available properties fairly low, and, by extension, prices high.

"The latest data suggest that the softening in prices is likely to be milder than expected," the article stated. "In Vancouver, the city that was the frothiest in 2011 and the hardest hit by last year's correction, prices did decline. But they're already on the mend." Continue reading

Buyers turn to renting, but low mortgage rates remain

Mortgage restrictions are turning first-time homebuyers into renters, and the increase in rental demand is resulting in higher costs, according to an article from Canadian Mortgage Trends.

Writing for the news source, Rob McLister cites a release from Urbanation, a real estate information firm focused on the Toronto condominium market, as proof of rising rents. Not only does the report from Urbanation show that rental activity is steadily growing, it shows that rents have increased by more than 10 percent over the last two years, adding an additional $170 per month or 23 cents per square foot on average.

"Demand for renting condos has heated up with less first-time buyers," said Shaun Hildebrand, senior vice president at Urbanation. "Rental transactions have exceeded resale volumes in the condo market since mid-2012, when the latest round of mortgage rule changes came into effect."

The number of units listed for rent on the multiple listing service system grew by 19 percent during the first quarter of 2013 on a year-over-year basis. Meanwhile, of the 4,859 units listed, 13 percent were rented out during the first quarter, compared to 2 percent that were resold. Continue reading

Home prices rise, construction declines

If it seems like Canada's housing market bounces back and forth from doom and gloom to optimism and sunshine faster than a mortgage application can be submitted, it's likely because it makes for better headlines than the truth: The market is cooling, but it's heading for a soft landing, not a crash. Mortgage rates remain near all-time lows, making it more affordable than ever for consumers to take the plunge into homeownership. Meanwhile, property prices continue to remain high.

New home prices rise in March
According to data from Statistics Canada, new home prices increased 0.1 percent overall during March on a month-over-month basis. Most of this positive activity is being attributed to Calgary, where Canada's oil industry is giving workers the means for homeownership. The new housing price index shows that prices in Calgary rose 0.3 percent from February to March. Meanwhile, the Toronto-Oshawa region saw an increase of 0.1 percent following a flat rate in February. Regina, Saskatoon and Windsor are also reported to have experienced large price hikes during the same time period. In fact, while prices rose in nine cities, only three saw a decline, including Vancouver, where new home prices fell 0.2 percent from the previous month. Meanwhile, prices stayed unchanged in nine cities during this time period. Continue reading

Canadian real estate expert: ‘Chill out’

Although the Canadian housing market as a whole is being referred to as "tepid" by some experts, the Alberta region is a shining example of a strong local housing market that other areas would be wise to mimic.

Don Campbell, a Canadian real estate expert and senior analyst/founding partner at the Real Estate Investment Network, told the Edmonton Journal that prospective homebuyers and current homeowners in Canada need to "chill out."

"There is no Canadian housing market," he told the news source. "At no other time in history has the real estate market in Canada been so regional. If you go to Hamilton, that market is strong. But in Waterloo the market is starting to slow down, even though the cities are only half an hour apart. And what's going on in Ottawa has nothing to do with Halifax."

There's no question that new home construction, home values and prices vary from region to region throughout Canada. However, the same low mortgage rates are available to qualified buyers. Speak with a mortgage servicer today to learn more about your financing options in the world of Canadian real estate.

Financing options exist for savvy buyers

Many Canadians, especially those who belong to the so-called Generation Y, are less than confident when it comes to their chances of financing a home purchase.

Data from real estate firm Royal LePage shows that more than 72 percent of survey respondents born between 1980 and 1994 said they were pessimistic about their chances of becoming homeowners due to housing prices.

In addition to young homebuyers, 66 percent of baby boomers who took the survey also said they were worried about being able to afford a home.

"Baby boomers have built homes for themselves," said Phil Soper, CEO of Royal LePage. "It's their children that are seeking to create a similar atmosphere of their own, even though new impediments exist for this younger generation." Continue reading