Canada Housing and Mortgage Corporation (CMHC) has released the 2010 Canadian Housing Observer, a detailed annual review of housing conditions and trends in Canada and of the key factors behind them.

The annual Housing Observer report examines the state of Canada’s housing from a variety of perspectives, combining national coverage with provincial/territorial and metropolitan detail and discussing influences on housing demand, current market developments, housing finance, housing affordability, and other topics.

Some of the highlights of the 2010 report are:

• Housing-related economic activity accounted for $307 billion in 2009, over one-fifth of Canada’s total gross domestic product.
• The residential construction sector is comprised of  numerous labour-intensive small businesses—some 71,000 residential construction firms and 158,000 specialty trade contractors in 2009—that can enter and exit the sector with relative ease, thanks in part to the relatively modest investment in fixed capital required for prospective firms and the extensive use of subcontracting.
• Canada’s Economic Action Plan in Budget 2009 provided a  total of $7.8 billion in tax relief and funding of actions to stimulate the economy through housing. When provincial contributions are taken into account, the total stimulus value is $9.2 billion.
• The Government of Canada commitment in figures:
  • 2008 of $1.9 billion over five years to invest in housing and alleviate homelessness
  • Canada’s Economic Action Plan (Budget 2009) which announced a one-time investment of more than $2 billion over two years to build new and repair existing social housing
  • Up to $2 billion over two years in low-cost loans to municipalities through CMHC to fund housing-related municipal infrastructure projects.
• Real estate—which includes principal residences and second homes—accounts for over 40 per cent of the assets of households.
• Throughout Canada, mortgage arrears remained low and mortgages remained available.
  Historically low mortgage interest rates benefited home buyers as well as those renewing or refinancing their existing mortgages.
• By October 2009, the use of the Bank of Canada’s regular short-term liquidity facilities had declined to nearly half of the level of its peak use of $40 billion in December 2008.
• The Insured Mortgage Purchase Program had lower auction volumes in 2009 than in 2008, and was ended in March 2010. It resulted in purchases through auctions of $69 billion of National Housing Act Mortgage-Backed Securities
• Sales of existing homes through the Multiple Listing Service® (MLS®), which had trended lower in 2008, began to recover in January 2009. Overall, MLS® sales reached 465,251 units in 2009, up from 431,823 in 2008.
• Historical lows in interest rates, when coupled with a small inventory of existing homes listed for sale, helped to push the average MLS® price up by 5.0 per cent in 2009 to $320,333.
• To a large extent, resale price gains in 2009 reflected a rebound back to levels that prevailed prior to the economic downturn. In particular, measured from the fourth quarter of 2007 to the fourth quarter of 2009, resale home prices rose 7.1 per cent. This translates to an average annual rate of price growth of 3.5 per cent over this period, which is in-line with average historical rates.

Read More:
2010 Canadian Housing Observer

With the world economy stuck in between a recession that’s over and a sustained recovery that has yet to arrive, Mark Carney has some hard choices to make this fall.

There is near unanimity that the Bank of Canada Governor will lift the benchmark interest rate tomorrow for a third consecutive time, to 1 per cent. There’s also a growing consensus that the bank will then pause at its Oct. 19 decision while Mr. Carney spends more time assessing the durability of the rebound. But the market is already looking – with great uncertainty – at what comes after that.

The question is how long that pause will be, and if last week’s economic data are any guide, it is nearly impossible to answer with confidence. Some of the numbers have given Mr. Carney – the only Group of Seven central banker to raise rates this year – plenty of reasons to hold his fire tomorrow. Others seemed to give him a green light to keep raising rates.

A report last Tuesday from Statistics Canada showed the economy slowed sharply in the second quarter, with exports losing momentum as a result of sluggish overseas demand as companies, households and governments repair their balance sheets and spend cautiously. Meanwhile, inflation in Canada is tame, and the main drivers of growth – housing, government stimulus and consumer purchases – are giving the economy less of a boost.

On Friday, though, the picture in the vital U.S. market seemed a shade less fragile. American companies hired more workers than anticipated in August, data from the Labour Department showed, sending stocks higher and leaving analysts to hurriedly push aside any talk of a “double-dip” recession.

The case for Mr. Carney to plow ahead with another step away from emergency-low rates was already decent. A Canadian slowdown was always expected, even if the second quarter’s 2-per-cent annual growth rate was worse than the most pessimistic estimates. Business investment picked up, meaning the private sector – which has helped the economy recoup most of the jobs lost during the slump – is starting to fill the void left by the fading impact of stimulus and the cooling real estate market.

The bank’s main rate is still a long way from the 3.5 to 4 per cent that most consider “neutral.” And unlike the U.S., much of Europe and Japan, low interest rates and healthy banks have worked to re-ignite spending – so much so that many Canadians’ debt loads have risen even as de-leveraging takes hold in the rest of the developed world.

“The risk of keeping rates too low for too long is probably a little more pressing in Canada,” said Michael Gregory, a senior economist with BMO Nesbitt Burns. “You’ve got jobs, you’ve got a healthy banking system, and you’ve got consumers that do still have some capacity to take on more debt. That’s why Canada has to be a little bit more careful, a little bit more pre-emptive, in dealing with interest rates than the other central banks.”

Read more:
http://www.theglobeandmail.com

“I do believe in the American Dream,” said President Bush in 2002. “Owning a home is a part of that dream, it just is. Right here in America, if you own your own home, you’re realizing the American dream.”

Bush was echoing a theme that reaches back at least to Herbert Hoover: When the government encourages homeownership, the story goes, it strengthens individuals and communities and thereby fosters the American Dream.

Fast forward to 2010, and yesterday home sales in the U.S. broke a new record, plunging by 27% in July.

The U.S. housing market is at a point where it seems to be dragging the United States down as if the country were some hapless satellite of the old Soviet Union that refuses to face the facts. The game is over, the old regime is technically dead.

American home ownership, artificially created over decades by trillion-dollar government-backed loans, guarantees and regulation, continues to operate under the old rules. Somehow, the mess that Washington created is still thought of as the mess that Washington can still fix.

Millions of Americans face foreclosure, the value of their homes below the value of their nominal mortgages. Lenders are carrying mortgages that have little or no value, or writing them off. Foreclosures accounted for 22% of total house purchases in July.

The only real hope for a revival in the market is a return of buyers with confidence in the economy and in an environment where prices reflect the market rather than more government flim-flam support.

The American Dream, that has lured tens of millions of all nations to our shores in the past century has not been a dream of material plenty, though that has doubtlessly counted heavily. It has been a dream of being able to grow to fullest development as a man and woman, unhampered by the barriers which had slowly been erected in the older civilizations, unrepressed by social orders which had developed for the benefit of classes rather than for the simple human being of any and every class.

James Truslow Adams
“Epic of America”

Read more:
http://www.financialpost.com

http://www.marketoracle.co.uk