|
Call Now! 1-866-932-8412 or
Email: info@mortgagegirl.ca |
Canadian existing home sales rose in September for a second straight month while average prices reversed the falling trend with a 1.9% increase from August, the Canadian Real Estate Association said in its latest report.
Seasonally adjusted unit sales rose to 33,913 homes from 32,933 units in August, the group said. Sales in September were 20 percent below year-ago levels and the average price for a home was little changed at C$331,089 ($329,180), the group added.
“Supply and demand are rebalancing, and that’s keeping prices steady in many markets,” said Georges Pahud, president of CREA.
The interest-rate environment continues to help the housing market. While the prime lending rate has jumped after the Bank of Canada raised its overnight lending rate three times since June to 1 percent from a record 0.25 percent, long-term rates continue to fall. Canada’s mortgage rates are now close to the lowest since the Korean War The central bank said in July it expects housing to contribute 0.6 percentage point to Canada’s 3.5 percent growth this year.
Most analysts now expect the Bank to hold off on any further rate hikes this year while it gauges the effects of recent tightening on the domestic economy, and watches the very uncertain situation south of the border. However, the overall tone of the Bank’s statement was more hawkish than expected, and this has led some economists to suggest this may not be the last hike of the year. Much will depend on economic data out over the next month and a half in advance of the Bank’s next decision on October 19th.
“Mortgage lending rates eased in the third quarter, which helped support sales activity over the past couple of months,” said Gregory Klump, chief economist with CREA. “Interest rates are going nowhere fast, so home ownership will remain within reach for many homebuyers.”
 |
 |
 |
 |
 |
 |
Competition Bureau and Realtors reach landmark agreement
The Competition Bureau announced yesterday that it had reached an agreement in principle with the Canadian Real Estate Association (CREA), which will allow for home sellers to pay for only those services they want from their real estate agents. Previously, under the rules established by CREA, consumers had to opt for an entire set of services, a practice the Competition Bureau deemed anti-competitive.
The agreement could change radically the terms under which Canadians buy and sell homes. “If ratified, the agreement will ensure that consumers have the ability to choose which services they want from a real estate agent when selling their home, and to pay for only those services,” said Melanie Aitken, Commissioner of Competition. It also provides much-needed flexibility for real estate agents by ensuring that they have the ability to offer the variety of services and prices that meet the needs of consumers.”
“Since challenging CREA‘s rules, the Bureau’s goal has always been to achieve a long-term solution that would strengthen competition in the residential real estate brokerage services market,” added the Commissioner, “This resolution, if ratified by CREA‘s membership, achieves this goal.”
The deal caps off more than four years of feuding between the industry and the federal watchdog.
In February, the Competition Bureau formally challenged CREA’s practices, claiming they “limit consumer choice” and prevent real estate agents from offering lower cost services to customers. At the heart of the complaint was the Multiple Listing Service, which is owned by CREA and is responsible for about 90% of home sales in the country.
The real estate group fired back, accusing the commissioner of tarnishing the reputation of the profession with unfounded condemnations of its practices.
But many industry observers said the public relations war was unwinnable for CREA and that its days of rejecting “a la carte” services were numbered. Meanwhile, CREA maintained that, despite the agreement, its rules did not “prevent or restrict a broad range of business models.” The association said that “in CREA’s view, the consent agreement reflects this reality and would avoid unnecessary and expensive litigation proceedings.”
Read more:
For general enquiries, please contact:
Information Centre
Competition Bureau
819-997-4282
Toll free: 1-800-348-5358
TTY (hearing impaired): 1-800-642-3844
www.competitionbureau.gc.ca
Enquiries/Complaints
Sales of existing homes up for the first time since March
Sales of existing homes in Canada in August rose 4.1 from July, the first monthly increase since March, the Canadian Real Estate Association said Wednesday. The industry group said 32,807 homes changed hands in August, with most of the monthly gains concentrated in the two biggest markets, Ontario and British Columbia.
The number of new residential listings on Canadian MLS® Systems also edged up 1.9 per cent on a seasonally adjusted basis in August compared to the previous month. Despite having edged slightly higher in all provinces except Alberta, new listings remain 16 per cent below the peak reached last April on a national basis. The average price of homes sold via Canadian MLS® Systems in August was $324,928, which is on par with the same month last year ($324,843).
Average home prices eased slightly in Alberta and New Brunswick in August, but gains in every other province exceeded the national increase. Average price rose or was stable in nearly two-thirds of all local markets on a year-over-year basis, although for the remainder of the year, CREA said it expects sales to slow.
“Activity rose sharply over the second half of 2009 and reached levels that are unlikely to be matched in the final four months of 2010, so year-to-date comparisons are forecast to turn down in the coming months,” the report said.
The group also cautioned against further tightening of mortgage regulations, saying rising interest rates and a projected slowdown in job growth are already primed to slow the housing market.
“Rising interest rates and a projected slowdown in job growth mean that the Canadian housing market is expected to continue to cool,” said Georges Pahud, CREA’s President. “This is overlooked in recent commentary that suggests further changes to mortgage regulations may be needed. A further tightening of regulations could negatively impact Canada’s softening housing market and consumer confidence.”
Read more:
http://creanews.ca
The effect of rising Interest Rates on Real Estate
National Bank of Canada worries that the impact of rising interest rates on the residential housing sector “could be dire” in Canada.
According to economists Matthieu Arseneau and Yanick Desnoyers,
“Though the Bank of Canada has done well to set its rate normalization process in motion, the fact remains that the stakes at play are high, with home prices and household debt at record levels relative to income, … The residential real estate sector, which is extremely sensitive to interest rate fluctuations, could have the wind knocked out of its sails if interest rates do nothing more than normalize.”
The two economists studied previous periods of rising rates, given that the Bank of Canada last week began hiking its benchmark overnight rate from the emergency low it used to fight the recession. The fall in rates increased the borrowing capacity of Canadian families, they said, in turn helping to drive home prices to levels that, as a percentage of personal disposable income, have never been higher.
“Whereas a 100-basis-points increase would have meant an extra $101 in 1994, the same hike would amount instead to $177 today,” they said, looking at the impact on a three-year mortgage. “… In order to take into account the fact that household ability to pay has changed over time, we represented this amount as a [percentage] of the income of a two-parent double-income with children family. Accordingly, the impact of a 100-basis-points increase in the three-year rate on monthly mortgage payments is 18 per cent higher today than it would have been in 2004 and 14 per cent higher than it would have been in 1994.”
Meanwhile the Canadian Real Estate Association is now saying that 2010 sales will not be as strong as previously forecast. Nonetheless CREA expects 490,600 sales through the Multiple Listing Service in 2010, a 5.5% jump from a year earlier and the second-best year on record.
“With interest rates soon expected to rise, Canada is widely believed to be entering a typical demand-driven downturn due to recent prices increases and rising interest rates,” said Gregory Klump, chief economist with CREA. “A downward trend in national sales activity combined with an increase in listings will result in a more balanced market. In keeping with the return of a balanced housing market and typical demand-driven housing market cycle dynamics, prices will remain stable.”
Mr. Klump emphasized that Canada’s mortgage market remains “solid,” and that conservative lending practices mean the country will not experience the same type of correction the United States has had where prices have fallen as much as 50% in some markets.
Last month, CREA issued a report debunking the theory put forward by a number of commentators that the Canadian housing market was headed for a major correction. The report came on the heels of an analysis from Canadian Imperial Bank of Commerce senior economist Benjamin Tal that housing prices in Canada were 14% overvalued.