Frank Steinhausen, Broker
FSteinhausen@REMAX.net
RE/MAX Rouge River Realty Ltd., Brokerage
Phone 905-428-6533
Fax 905-668-1850
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Archive for December, 2011
Housing correction big risk for Canada
December 30th, 2011 Categories: Real Estate News
The Canadian housing market is at risk of a price correction and remains the chief domestic vulnerability to the country’s economy in the new year, according to two new reports.
They warn of an overvaluation of Canadian housing by 10% to 15%, aggravated by rising levels of household debt.
Entering a year laden with potential global economic shocks, Canadian authorities need to beware of housing risk as the chief domestic risk, the International Monetary Fund warned.
“Adverse macroeconomic shocks, such as a faltering global environment and declining commodity prices, could result in significant job losses, tighter lending standards, and declines in house prices, triggering a protracted period of weak private consumption as households reduce their debt,” the IMF said in its annual report on the Canadian economy.
Should the European sovereign debt crisis destabilize the global economy, triggering in Canada a 15% decline in house prices, combined with a severe downturn in construction activity “could result in a GDP decline of some 2.5% over a period of two years relative to the baseline,” the report said.
TD Economics also warns of a possible housing correction bringing prices more in line with fundamentals next year and into 2013.
Deciding the fate of the housing market will be the opposing forces of rock-bottom interest rates and economic weakness, TD economist Sonya Gulati said in a report.
“Looking ahead, we anticipate a tug-of-war action to take hold in the Canadian real estate market. At one end of the rope is the magnetism of low interest rates; at the other are subdued prospects for economic, income and employment growth.
“Ultimately, we expect the economic side of the equation to win out over the near-term,” she said.
That would mean a soft first half of the year largely as a result of external economic tensions. Even if those headwinds subside in the latter half of 2012, rising interest rates will restore the pressure on housing prices.
On average, and with great regional variation, Canadian housing prices could fall by 1.9% next year and 3.6% in 2013, Ms. Gulati said. Home sales could suffer comparable declines, while average starts should fall to 170,000 to 180,000 annually over the next two years.
“Collectively, these adjustments will gradually erase the over-valuation in the marketplace,” Ms. Gulati said.
The pace of adjustment could become decidedly less gradual if Europe fails to contain financial contagion. And if households continue to take on debt, the eventual deleveraging effect could be more pronounced.
With income growth lagging borrowing, household debt has risen to a record 150% of disposable income, a burden the Bank of Canada said represents the greatest domestic threat to economic stability.
While low interest rates continue to encourage borrowing growth, the IMF lent its support to the central bank’s accommodative rate policy.
“Should the recovery be accompanied by further sustained increases in mortgage debt as a share of disposable income spurred by low interest rates, a tightening of macroprudential policies by the government may be needed,” it said.
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Wishing all my Past Clients and Future Clients……
December 23rd, 2011 Categories: Real Estate News
All the Best for the Holiday Season and have an Incredible 2012. Hope we cross paths soon……
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How Your Agent Markets Themselves Indicates How They Will Market Your Home
December 23rd, 2011 Categories: Real Estate News
With the glut of available homes on the market, how your home is marketed is the biggest factor in determining how quickly it will sell (assuming the price is reasonably presented). A real estate agent’s marketing plan should be the most crucial determinant in deciding who to list your home with. But, how can you really know about the agent’s marketing strategies?
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Where Are the Generation Y Home Buyers?
December 12th, 2011 Categories: Real Estate News
Many buyers are delaying a decision to purchase a home because of the volatility of the real estate market. There is no larger category exhibiting this behavior than those of Generation Y. To define this segment of the population, we go to Wikipedia:
Does this generation wish to own a home?
Yes. A recent survey completed by Trulia shows people between the ages of 18-34 still believe in the concept of home ownership. 65% of those surveyed said “their American Dream includes owning a home”.
Where are these adults living?
Recent research form John Burns Real Estate Consulting shows the number of adults living with their parents has dramatically increased over the past eight years. Below is a graph showing the numbers:
Bottom Line
Generation Y believes in homeownership. Yet, they are delaying the decision to purchase a home of their own. When they do decide to buy, they will impact the housing market in a big way.
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Healthy Fall Market continues into November
December 10th, 2011 Categories: Real Estate News
Greater Toronto REALTORS® reported 7,092 residential transactions through the TorontoMLS® system in November – up 11 per cent in comparison to November 2010. At the same time, the number of new listings was up by 14 per cent in comparison to last year.“We have seen strong annual sales growth through the 2011 fall market. The increase in transactions has been broad-based, with strong growth across low-rise and high-rise home types throughout the Greater Toronto Area,” said Toronto Real Estate Board (TREB) President Richard Silver. “The market has also become better supplied, with annual new listings growth outstripping that of sales. As this trend continues into 2012, we will see more balanced market conditions.”
The average price for November transactions was $480,421, representing an increase of almost 10 per cent in comparison to $437,494 in November 2010.
“Despite strong price growth this year, the housing market remains affordable in the GTA,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “The correct method of assessing affordability is to consider the share of the average household’s
income that is dedicated to mortgage principal and interest, property taxes and utilities. Currently, this share remains in line with generally accepted lending guidelines. Given this positive affordability picture, average price growth is forecast to continue in 2012, albeit at a more moderate pace.”
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