Positive U.S. housing market could indicate great things for Canada

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In a recent article, we addressed the fact that analysts and mortgage pros are a bit concerned by the state of Canada's housing market and likened it to a "slow-motion version of what happened in the U.S." Remember that?

The good news for Americans is that the U.S. housing market is improving – maybe not by leaps and bounds, vast improvements nonetheless. The even better news is that U.S. housing market gains can be a really great thing for the Canadian economy and even stimulate economic growth in many different ways.

According to a recent article in the Winnipeg Free Press, the increased American housing activity and positive change for U.S. homeowners and prospective buyers marks the possible end of the four-year recession and plenty of economic woes. Unemployment rates are still soaring and improving at a snail's pace – if that. However, economic recovery is on the horizon, despite its recovery rate hovering near 1.7 percent annually. Continue reading

Could the Canadian housing market really follow in America’s footsteps?

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Just because experts predict something doesn't mean it's guaranteed to happen. But what if those experts have a pretty great track record, including successfully predicting the collapse of the American housing market?

Perhaps it all depends on what the prediction is and who is making the prediction – to be clear, we're not talking about Nostradamus and his sort-of-vague-but-interesting predictions. What if the predictions concerned the Canadian housing market and were made by the founder of the Case-Shiller Home Price Index, which saw America's impending doom coming one year before it happened?

According to Neil Macdonald, a senior correspondent for CBC News, and Robert Shiller, American real estate pro and the aforementioned founder of the Case-Shiller Home Price Index, Canada's housing market could indeed be heading for a fate similar to the U.S. housing market. Continue reading

Vancouver: Harbinger of a housing crisis?

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Vancouver: The city has a variety of interesting nicknames, from Hollywood North, because of its long association with the film industry, to The Big Smoke, because of the mills and smokestacks that dotted the city's skyline in the early days of western expansion.

Now, we might be able to add another to the list: Canary in the Coal Mine, since Vancouver's housing market might be an indication of the direction the rest of Canada is headed.

Recently, the Quebec Landlords Association warned of an impending housing crisis as the new rules from Ottawa regarding home loans drive would-be first-time homebuyers away from ownership and back into renting. According to that group, the last housing crisis to hit Montreal back in 2000 brought the vacancy rate down to 1 percent, which left residents scrambling to find a place to live and drove rental prices sky high. (Today, by comparison, the vacancy rate in that city is about 4 percent, and the Canadian Mortgage and Housing Corporation says a healthy market has about a 3 percent vacancy rate.) Continue reading

Congrats on the marriage! Have a… mortgage?

If your son or daughter is about to tie the knot, and you're overcome with extraordinary feelings of parental pride, you, like many others before you, might feel compelled to offer them some incredibly thoughtful – and expensive – gift. But according to one financial expert, perhaps the best gift you can give is a home loan with low interest rates.

Writing in the Financial Post, Fabio Campanella pointed out that 40 percent of Canadian marriages end in divorce. Where once it was common – and, to a certain extent, still is – for moms and dads to bestow upon their children a house in honor of the happy union, that statistic indicates it may not be such a good idea anymore. Parents who are distraught by the breakup of their child's relationship will get a double whammy when they see their ex-in-law walk off with the house.

Securing home loans with favorable rates, rather than dishing out for a whole house, could be a much more practical way to go. By getting lawyers involved at the outset and crafting a strong contract, you can ensure your child's gift isn't lost in a possible divorce and still give the couple a strong boost, Campanella said. Continue reading

Canadian housing market slowing, but remains the envy of the world

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After what seems like years of increasing home sales and low mortgage rates, could it be that the Canadian housing market is finally slowing down? Let's take a look at the evidence:

• Housing prices rose 5 percent during May – an increase, yes, but a much smaller one than in previous months.
• Growth in home sales in Toronto – the hottest market in the country – dropped by more than one-third compared with previous months.
• Home sales in British Columbia, particularly in Vancouver, continued to slide at dramatic rates, with the number of units sold falling roughly 16 percent from 2011.

This information, released earlier this week from the Canadian Real Estate Association, is among the first signs that the market as a whole may be coming to an end of the roller coaster ride of recent years. You may recall that the Royal Bank of Canada came out with similar numbers recently. Its analysis showed a decrease in the value of building permits, which could indicate slower growth down the line. Continue reading

Home affordability calculations misleading, expert argues

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Despite claims from a variety of sources that home affordability across Canada is actually high, one expert says it's actually not as easy to buy a house as some might think.

Canadian mortgage rates have been stuck near record lows for more than two years, pointed out economic analyst Ben Rabidoux in a recent article for The Globe and Mail. Not only that, but the housing boom may be artificially propping up the rest of the economy as mortgage refinancing and home equity lines of credit support both consumption and demand. As if those two factors weren't scary enough, Rabidoux said there's a problem with the way banks calculate affordability, as well.

The Bank of Canada assumes a 5 percent down payment when it tallies its average home price index, which is fairly conservative, according to Rabidoux. Recently, Toronto-Dominion Bank Vice President Kevin Moffatt recommended homebuyers save up between 15 and 20 percent for a down payment. Continue reading

Toronto’s hot housing market a good thing, experts argue

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The old real estate adage used to be "location, location, location," but Canadian homebuyers appear to be narrowing their focus. Now, the refrain sounds more like "Toronto, Toronto, Toronto."

Home prices in Toronto have been rising steadily – and quickly – over the past few years, and there's no sign of a slowdown on the horizon. While many Canadians see the boom as more burden than boon, one analyst recently argued that the rapid price increases are a sign of confidence, not calamity. Canada is a powerhouse of economic calm compared with the rest of the world, and its largest city is a real estate mega-haven, according to Globe and Mail columnist Marcus Gee. Continue reading

Canadian housing market is strong, brokers’ group says

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Unless you've been living in the woods somewhere in the Northwest Territory, shut off from the outside world, chances are good you've heard it said that Canadian household debt has reached all-time highs. But despite dire warnings about crippling debt levels leading to a nationwide default on home loans, most Canadians say they're actually pretty comfortable with their current mortgages.

A new report titled "Confidence in the Canadian Mortgage Market" from the Canadian Association of Accredited Mortgage Professionals, an industry group representing mortgage brokers and other lenders, indicates the state of the market is strong. A significant majority of Canadians also appear to already be following much of the advice coming from government ministers and other financial regulators regarding the best ways to avert a national housing collapse like the one in the United States.

A number of financial bigwigs have called for certain changes in the rules governing home loans, specifically that minimum down payments should be raised from 5 to 7 percent, maximum amortization periods should be shortened from 30 to 25 years, and potential borrowers should be subjected to more rigorous financial stress testing to ensure they won't default on their loans if mortgage rates should rise in the near future. Continue reading

Canadian housing market echoes Spain

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Canadians wondering how the current housing market boom might end could look to Spain for a real-world example. Citizens of that country invested heavily in housing during the late 1990s through the last decade and are now facing serious economic woes, according to BMO Financial Group.

Starting in 1999, investment in the Spanish housing market took off, with up to 80 percent of the country's wealth tied up in bricks and mortar. Foreign investors seeking big returns on their purchases bought property all over the country, driving up costs. Locals looking to cash in on the trend took out second and third mortgages, noted BMO Chief Economist Dr. Sherry Cooper.

"Housing is a key sector in any economy and many developed countries pride themselves on a high level of homeownership, but as we have painfully seen in recent years, over-investment in housing can result in enormous economic instability and dislocation," said Dr. Cooper. "The entire growth boom in Spain was focused on housing and households invested almost all of their assets in residential real estate." Continue reading

Edmonton neighborhood named one of the best for old homes

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The Highlands neighborhood located in the northeast section of Edmonton, Alberta, has been recognized as one of the top spots for old homes in North America, according to the Edmonton Journal.

This Old House magazine recognized the Highlands as one of the nation's 10 best for old homes and is one of 61 neighborhoods in North America to be been honored for their craftsmanship, architectural diversity, community amenities and more, the news source states.

“It’s a special neighborhood, it exerts a special pull on people,” Ken Tingley, the city reigning historian laureate, who is finishing a history of the neighborhood, told the news source. “Since the beginning of the community, many people have lived there for a number of generations, or have grown up there, gone away, and then returned.” Continue reading