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The Journal Business Staff of edmontonjournal.com has put together an article designed to show how steady prices in Edmonton’s housing market have put to rest fears of a real estate bubble in the city.
Taking into consideration the latest data from the Royal LePage House Price Survey, that shows that at the end of July, August and September, detached bungalows in the Edmonton area rose an average of 0.9 per cent year-over-year to $311,429 while standard two-storey houses increased 3.4 per cent to $338,571, their conclusion is that the market is “stabilizing.”
“For most housing types, prices have increased slightly from where they were a year ago,” said Ken Shearer, a broker with Royal LePage Noralta Real Estate, in a release. “However, we are currently witnessing a levelling off of prices after the quick recovery that began in 2009 and continued through until the spring of this year. To put it in simple terms: prices fell last year, rose quickly through spring and summer of 2010, then dropped back down.”
Price differences varied by neighbourhood and home type. Clareview, for example, saw an average detached bungalow fall 9.1 per cent to $250,000 year-over-year but a standard two-storey increase by 22 per cent to $360,000.
In Clareview a standard condo dropped 11.1 per cent to $160,000. In Riverbend/Terwillegar, bungalows increased on average 15.8 per cent to $440,000 while the average two-storey rose 11 per cent to $390,000. Prices for all housing types remained flat in St. Albert.
Phil Soper, chief executive of Royal LePage Real Estate Services, said that while annual price growth was slightly lower than five per cent in the last quarter, it’s basically in line with that level when factoring in a lower rate of inflation.
In the early part of this year and latter part of 2009, double-digit price growth, year-to-year, was the norm. The Canadian Real Estate Association recorded a surge of more than 20 per cent in October 2009.
These strong gains, as the economy was rebounding from recession while enjoying historically low interest rates, had some fearing Canada was experiencing a housing bubble.
“A few weeks or a few months of unusually high period-over-period price increases after a recession is completely normal,” Soper said. “And it’s no bubble.”
The Royal LePage report is the latest showing the Canadian housing market in stable territory.
CREA recently reported home sales rising in September for the second straight month. Prices of homes sold through the Multiple Listing Service (MLS) were flat compared with a year earlier and ahead 1.9 per cent from August.
And Statistics Canada recently said that new-home prices in August were up 0.1 per cent, even as most economists expected a decline by as much.
However, despite the positive trends of the Canadian housing market, many analysts have warned against looking to housing as a primary, long-term investment strategy, and are instead recommending diversification.
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Read more:
http://www.edmontonjournal.com/
Interest Rates Forecasts from the Big 5
Canadian Mortgage Trends has just published a compilation of Canadian interest rates forecasts for the last part of 2010 from each of Canada’s Big 5 banks.
The “Big Five Banks” is a colloquial expression for the five biggest banks that dominate the banking industry in Canada (Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal and Canadian Imperial Bank of Commerce).
All 5 Banks are classified as Schedule I banks, that is, domestic banks that operate in Canada under government charter, and they are all operationally headquartered in Toronto, Ontario. The banks’ shares are widely held, with any entity allowed to hold a maximum of twenty percent.
Below you’ll find a summary of their latest year-end interest rate projections
(For a more detailed summary and more information, please visit the original post from Canadian Mortgage Trends at:
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/10/canadian-interest-rate-forecast.html):
Latest Overnight Rate Forecast
Bank 2010 2011
BMO 1.00 2.25
CIBC 1.00 1.75
RBC 1.00 2.25
Scotia 1.00 1.75
TD 1.00 2.00
Year-end Avg 1.00 2.00
Chg vs Today 0.00 +1.00
(All figures rounded to the nearest 1/4 point increment.)
Latest 5-Year Government Bond Yield Forecast
Bank 2010 2011
BMO 2.03 3.05
RBC 2.45 3.50
Scotia 1.85 2.50
TD 2.30 3.10
Year-end Avg 2.16 3.04
Chg vs Today +0.29 +1.17
(CIBC’s 5-year bond forecast was not available.)
Variable-Rate Mortgage Forecast
Most analysts now expect 5-year variable rates in the 3.25% range by year-end 2011.
Fixed-Rate Mortgage Forecast
Banks forecasts suggests deep-discounted 5-year fixed rates could rise to roughly 4.24% by year-end 2011.
Below you’ll find a summary of the latest year-end interest rate projections from each of Canada’s Big 5 banks. Use them only as a rough guide because rate outlooks have considerable margins of error.
Latest Overnight Rate Forecast
The Bank of Canada’s overnight target has a direct impact on variable mortgage rates.
Bank 2010 2011 BMO 1.00 2.25 CIBC 1.00 1.75 RBC 1.00 2.25 Scotia 1.00 1.75 TD 1.00 2.00 Year-end Avg 1.00 2.00 Chg vs Today 0.00 +1.00
(All figures rounded to the nearest 1/4 point increment.)
Latest 5-Year Government Bond Yield Forecast
Government bond yields drive 5-year fixed mortgage rates.
Bank 2010 2011 BMO 2.03 3.05 RBC 2.45 3.50 Scotia 1.85 2.50 TD 2.30 3.10 Year-end Avg 2.16 3.04 Chg vs Today +0.29 +1.17 (CIBC’s 5-year bond forecast was not available.)
Variable-Rate Mortgage Forecast
Most analysts now expect the Bank of Canada to remain on the sidelines until 2nd quarter 2010. On average, major economists now predict a 100 basis point increase in the overnight rate over the next 15 months. Their outlooks, if accurate, imply a 4.00% prime rate by December 31, 2011. Prime rate is currently 3.00% and the 10-year average of prime is 4.50%.
Based on a 75-basis-point discount from prime, these forecasts suggests 5-year variable rates in the 3.25% range by year-end 2011.
Fixed-Rate Mortgage Forecast
Banks foresee 5-year bond yields climbing 117 basis points in the same 15-month timeframe. That would put the 5-year yield at 3.41% by the end of next year. The 10-year average of the five-year yield is 3.93%.
Assuming a typical 120 basis point spread above yields, these forecasts suggests deep-discounted 5-year fixed rates could rise to roughly 4.24% by year-end 2011.
Taking the Mortgage with you
According to the recent TD Canada Trust 2010 Repeat Home Buyers Report, as well as packing up their worldly goods, one-third of home buyers also take their mortgage with them when they move house.
Before deciding if it is a good idea to port your existing interest rate and terms and conditions to the new place, mortgage advisors say, check rates and penalties and ask yourself how long you plan to stay in your new home.
“If you’re going to live there for the remaining term of your existing mortgage then it makes sense [to port] because you save yourself the penalties,” says Farhaneh Haque, mobile mortgage specialist, TD Canada Trust, Toronto. “You want to consider the cost of the penalty in real dollars versus the savings on the interest rate on the new property if the rate [you would get on a new mortgage] is lower. If you save more than the penalty that you pay today, then financially it makes sense for you to bite the bullet now and move into the new mortgage taking it at the current rate.”
Next question is how much equity do you have, and will you need more than your current mortgage to buy the new residence. Advisors say check the details of your mortgage but that many lenders will do what is known as “blend and extend.”
“Say, today you have a $250,000 mortgage at 3.59% over 35 years, you’re going to be able to maintain that portion of your mortgage,” says Karen Blomquist, mortgage specialist with Mortgage Intelligence in Calgary. “Let’s say rates go up to 7%. Rather than renegotiating a brand new mortgage of say $350,000 at 7% … they’ll take the $250,000 at the 3.59% that you are enjoying today and then they’ll take the additional $100,000 and put it at the new rate and do a combination rate overall.”
The bottom line is that although most prime mortgages are portable nowadays, you must make sure to read the small print to understand the possible restrictions, as well as being aware of any fees attached to the porting of the mortgage.
Please do not hesitate to contact us if you need assistance to evaluate the available options.
Read more:
http://www.nationalpost.com/
5 Quick Tips to reduce energy and save money
As the cost of energy becomes a substantial burden in our budget, it is comforting to know that by exercising some care and common sense, there are simple ways to use less energy, spend less money, and reduce your carbon footprint, all while keeping all home utilities functioning.
By using less energy you are contributing to helping preserve the environment. Many power plants are fueled by oil, coal and natural gas, so the less energy we use, there is less pollution in the air, less risks to our health, less smog and acid rain and more of a brake on the pernicious effects of climate change.
To help Canadian homeowners reduce energy and save money the October issue of Consumer Reports Canada offers these quick and practical energy-saving tips:
- Program your thermostat. By reducing your energy use at night or when you’re not home, you can save up to 20 per cent on yearly heating and cooling bills.
- Unplug when not in use. According to the magazine, between “five and 10 per cent of residential electricity goes to devices that draw power when they’re off or in standby mode.” Time to unplug the video games, kids.
- Stop pre-rinsing. Running dirty dishes under the tap before throwing them in the dishwasher wastes close to 30,000 litres of water a year — and that doesn’t include the cost of heating the water.
- Cold water works. Several laundry soap manufacturers offer cold-wash detergent designed to remove stubborn stains and dirt without having to use scalding hot water. To further reduce costs, switch to off-peak hours and only wash/dry full loads.
- Fix leaky ducts. Seal and insulate heating and cooling ducts throughout your house to prevent energy loss. It could save you hundreds of dollars a year.
For more energy-saving tips, please visit these helpful websites: