Property news and information on Canada. Read our latest property related news articles on the Canadian property market and stay up to dat with how the market is affected by outside sources.

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The Bank of Canada’s surprise decision to cut interest rates has triggered a mortgage war amongst Canada’s major banks. Mortgage brokers reported that the Royal Bank of Canada had dropped its five-year fixed rate for qualified borrowers to 2.84% recently, while smaller, non-bank lenders are offering consumers even cheaper deals. That’s not attracting as much attention, though – RBC’s rate cut is probably a record for a major bank, according to Drew Donaldson, executive VP of Safebridge Financial Group. Robert McLister, founder of, said RBC’s new 3.84% rate for 10-year fixed-rate mortgages was he lowest in the country.

RBC spokesman Wojtek Dabrowski said the bank intended to ‘review the impact of the Bank of Canada’s rate decision,’ and that ‘individual product lines continue to make pricing adjustments in the regular course of business to ensure we provide competitive rates in the marketplace.’

Two other major Canadian banks, Bank of Nova Scotia and National Bank of Canada, also cut their rates in recent days and Toronto-Dominion Bank said it was dropping its posted 5-year fixed rate to 3.09% midweek, cutting 0.2% off the rate.

Part of the pressure on rates comes from falling bond yields. Canada’s government bond yields have fallen to historic lows in recent months. But part of it comes from the pressure on Canadian buyers as falling rates from the central bank meet rising property prices. Every cut to the interest rate a bank can make brings more buyers able to afford credit.

The danger here is that banks leave themselves perilously overextended in the event of a sharp drop in house prices. David Parkinson, economics reporter at Canada’s Globe and Mail, points out that ‘the oil sector has not only been leading the way in Canada’s export recovery, it has also been the big driver in business capital investment… that means the sector has been leading the way in the two key areas that the Bank of Canada has repeatedly identified as critical to sustaining Canada’s recovery.’

If oil is supporting Canada’s economy, and that’s supporting house price growth, what happens to house prices when the bottom drops out of oil prices?

That depends where you look. As a rule of thumb, Canada’s house prices are more affected by oil the closer they are to its production centre, Alberta, as you’d expect. Edmonton and Calgary’s house prices tend to track oil prices pretty closely. Other Canadian cities don’t. Prices in Toronto could actually benefit from lower oil prices, according to some experts, as slashed oil boosts US GDP and fuels both growth and immigration over the border.

The risk to the broader Canadian housing market is a drop in oil prices coupled with a crack in the foundations of the foreign investment and purchase that’s fuelling house prices in Vancouver and Toronto. Absent such an crack, Canada’s banks can fight their mortgage wars in peace.

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Canadian House

The Canadian Real Estate Association (CREA) has released its 2014-15 home prices and sales forecast, and it’s confusing.

Not much is expected to change in terms of sales volumes, according to CREA but prices are set to jump by a respectable 5.7% through the rest of this year, before levelling off to a negligible 0.7% in 2015.

The CREA report says that an unusually fierce Canadian winter resulted in a slow start to 2014 national sales activity, as energy and money that might otherwise have gone into moving house went instead to repairing damage, to the Canadian house and the Canadian psyche too!

As the first quarter of 2014 ended, CREA said sales momentum was constrained by a shortage of listings in a number of local markets. However, there was a rise in newly listed properties in April and May, supporting an increase in sales activity.

There’s usually a sharp jump in house buying at the beginning of Spring, but thanks to the effects of winter and a stock shortage, this didn’t come into effect until later in the season. Overall, the sales volume from March to May was roughly in line with averages, and the deferrals from earlier in the year are likely to have been depleted by now too. That means the strength of sales momentum in the months at the beginning of summer may not offer a true picture of what the year’s going to be like either.

CREA’s forecast for sales activity in 2014 is largely unchanged from its previous forecast, issued in March. However, interest rates were then expected to rise in the second half of the year, and it’s now thought that this change won’t occur until the end of the year. That means the balance of 2014 will still be a cheap-credit period when it’s a good time to buy a house.

Sales are forecast to reach as high as 463,400 units in 2014, a 1.2% increase on 2013. Compare that with CREA’s forecast figure of 463,700 for the year, or a 1.3% increase, and it seems their forecasts are pretty reliable.

CREA also expects sales to remain in line with 10-year averages. British Columbia is forecast to post the largest year-on-year increase in activity at 8.3%, while Alberta is expected to see a 3.8% rise in sales in 2014. Nova Scotia is forecast to see a 5.1% fall, Quebec a 1.7% fall and New Brunswick and Newfoundland to see falls of 4.2% and 2.6% respectively. Labrador is forecast to see a 2.6% fall.

The changes to Canada’s housing market take place against a background of improving jobs markets and a growing economy, with a slow and gradual increase in the interest rates of fixed and variable mortgages.

In theory this should benefit markets where sales are a little softer and prices a little more affordable. In Canada as a whole, the average house price is projected to rise by 5.7% to $404,300 in 2014, on the back of general growth, a delayed spring buying season, interest rates remaining low throughout the bulk of the year, and demand-led markets in certain areas, especially Calgary and Toronto. In 2015, the average price of a home in Canada is expected to rise to $407,300.

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Toronto has something to offer everyone. It is home to several diverse, luxurious, and historical neighborhoods that leave home buyers with a plethora of options. Home buyers looking for that ideal piece of Toronto need look no further than 5 luxurious communities; Bridle Path, Lawrence Manor, Chaplin Estates, Davisville and Willowdale East.  All 5 offer enticing combinations of value, prestige and access to the city.  There is something here for even the most discerning homebuyer.

Bridle Path: Average Home Price $2,234,881 CAD (April 2014)

Bridle Path is also known as “Millionaires Row” because many of the homes sell well in excess of a million dollars.  It is host to some of the wealthiest home owners in Canada as a result. Bridle Path contains an exclusive collection of homes nestled within the lush Don River Valley and surrounding parklands. This provides an ideal backdrop for these stately homes, many of which are situated on two-acre lots. There are few roads running through the community which gives the region a quiet and secluded feel while still being located close to shopping, schools and entertainment along Bayview Avenue.

Lawrence Manor: Average Home Price $1,388,570 CAD (May 2014)

Lawrence Manor was mostly farmland in the early 1900’s. The land was purchased by the Canadian Mortgage and Housing Corporation for residential development. At the time the Lawrence Plaza was the largest shopping center in Toronto, drawing attention to the newly developed area. The neighborhood is family oriented and is easily accessible by public transit and major highways.  It has a large Jewish community and it is home to Jewish schools and cultural centres, synagogues, restaurants and retail shops.

Chaplin Estates: Average Home Price $1,058,073 CAD (March 2014)

Right from the beginning Chaplin Estate was known and marketed as a high class residential district. There was a long list of building restrictions and by-laws such as those that excluded semi-detached homes. The area was first called Eglinton and was settled by the Chaplin family in 1860. The area hosts desirable examples of Tudor, Georgian and English Cottage Style architecture.  The majority of homes were built in the 1920’s and 1930’s. The neighborhood hosts few if any rental opportunities although occasionally a homeowner does choose to rent their home. Chaplin Estate has a wealth of shopping and entertainment options close by.  The luxury shopping center known as The Eglinton Way is located a short walk from Chaplin Estates. The Young Street shopping district is also close by.  Residentscan also enjoy the convenient amenities such as the North Toronto Community Centre. The main road is Eglinton Avenue which means that there are a number of transportation options available to residents such as the 2 subway stations and it is a 15 minute drive to the city center. Due to all these factors this neighborhood has become desirable with young families.

Davisville:  Average Home Price $704,659 CAD (March 2014)

Davisville brings a small town feel to the heart of the city.  This is a “planned neighborhood” in Toronto’s evolving urban sprawl and will remain untouched by the rapidly rising condo developments.  The homes in the area were mostly built in the 1920’s and retain the Edwardian and English Cottage style charm of that period.  Homes are situated on narrow lots that allow each home to have a small yard. The area is predominately made up of two demographic niches, young families and aging couples.  Seniors make up approximately 20% of the population, with some staying in the same home for over 30 years.  Young families benefit from the close proximity of several public and private schools.

Willowdale East: Average Home Price $687,902 CAD (February 2014)

According to an infographic by Real Estate Brokers, Slavens & Associates the average price of a detached home in this area is $1,330,637 and the average condo price is $552,356. Willowdale East has seen the older bungalows being slowly replaced by newer homes as the area experiences a rebirth. The majority of the residents are first generation Canadians. Newcomers to the area have been attracted to the well regarded schools which have specialized arts programs. Restaurants and retail shops reflect the increasing levels of diversity in the area.

Bridle Path, Lawrence Manor, Chaplin Estates, Davisville and Willowdale East all offer unique levels of luxury and convenience.  Toronto is a proven world class city with many options for anyone to choose from. Each neighborhood has features and amenities that any buyer could fall in love with.  Regardless of needs, buyers should be able to find an ideal home in one of these luxurious neighborhoods.

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The top end of Canada’s real estate market is set for a boost from rising numbers of mobile, wealthy individuals looking for both residences and investment opportunities.  That’s the news from Frank Knight, a global property consultancy based in London.

In a report published last week, Frank Knight identified both the highest concentrations of wealth creation, and the likeliest places for the new money to be spent.  They estimated that the number of ‘High-Net-Worth Individuals’ (HNWIs), defined as ‘someone with $30m or more in net assets,’ would increase by 50% in the coming decade, pointing out that the numbers of such people had risen by 5% in 2012 alone.  The key locations for wealth creation were identified as being in Asia and Latin America, and the most popular markets for property investment were London and New York.

Liam Bailey, Head of Residential Research at Frank Knight, said: ‘The largest concentration of wealth is currently based in the established centres of North America and Europe, but there is set to be rapid growth in Asia, Latin America and the Middle East.  In the next decade we will see the biggest increase in ultra-wealthy individuals in cities such as Sao Paulo, Beijing, and Mumbai.’

Mr. Bailey went on to note that ‘according to a survey of advisors with 15, 000 ultra-wealthy clients, London and New York are still the most important destinations in the world.’  In London’s case especially, that’s explained in large part by its status as a ‘safe haven’ for investors seeking places to put their money that aren’t affected by the fluctuating markets, tax initiatives and economic downturns of the USA and Europe.

Of course, that puts Canada in a good position to benefit from the growth in the number of HNWIs.  But they will increasingly look away from their traditional markets. That’s partly because of pressure on prices, in both London and New York, and partly because of a globally limited stock of luxury property.  ‘Demand is ever rising,’ as Frank Knight’s report has it, ‘while the stock of desirable locations remains virtually static.’

Andrew Hay, head of global residential property at Frank Knight, told the Globe and Mail last week that the current weakness in Canada’s luxury real estate market is ‘probably a temporary thing.’  Over the long term, Mr. Hay predicted that Canada would become a prime location for luxury investment.  Along with other likely growth markets such as New Zealand and Australia, ‘the rule of law, strong domestic balance sheets, political stability’ were likely to top the list of reasons why investors chose these markets, but Mr. Hay thought the clincher might be that ‘they are lovely places to live.’

And there are already signs that the market is being affected by the flow of money from newly minted HNWIs, primarily Asians.  According to Sotheby’s International Realty Canada, Calgary led Canada in sales growth in luxury properties.  ‘The trend has been upward and we don’t see any sign of that changing for awhile,’ said Ross Macredie, president and chief executive of Sotheby’s Canada.

Mr. Macredie cited Sotheby’s research showing that ‘Calgary is really starting to become a city of high net worth people and investment coming into the country,’ and pointed to Sotheby’s own Top-Tier Real Estate Report, a biannual study aimed at highlighting market trends for Canadian luxury properties, which indicates that the market for luxury homes across Canada is expected to gain momentum and ‘generate increasing demand from local and international buyers.’  In Calgary listings of properties over $1m were up 38% from 2011 and sales in the same category were up 21%, according to the Calgary Herald.  ‘High-end neighbourhoods like Elbow Park and Glencoe were among those to see strong demand,’ according to Sotheby’s.

What has been Calgary’s experience in 2012 is now expected to be repeated throughout Canada’s major cities, but especially Vancouver, according to Mr. Hay.  And there should be good news for high-end real estate outside of metropolitan areas, according to Don Campbell, a senior analyst at Real Estate Investment Network in Vancouver.  ‘You are starting to see the wealthy not being concentrated in the hear of old Toronto and [Vancouver’s] West Van and British Properties,’ Mr. Campbell said.

Photo credits: Brian via Flickr

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House Prices Have Supported Prosperity, But Might Be About to Fall

Canada has been one of the few major economies worldwide to avoid a housing crash in the years since 2008.  But some commentators call the strong housing market that has supported Canada’s enduring prosperity a bubble, and there are even signs that it may have already begun to burst.

In Vancouver, sales have fallen and listings have risen.  In August, the number of sales in the Greater Vancouver area fell by 21.4% from the previous month.  July saw a 11.2% drop from June, June a 17.2% drop from May.  In Vancouver the average house price is now 12% down from a year ago.  Additionally the rise in prices year-on-year was the smallest since 2009, and January 2013 saw the fifth month-on-month fall in prices nationwide.

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Sothebys Canada

Ned Goodman’s 360 VOX Corp. has made a move into the real estate market with the purchase of Sotheby’s International Realty Canada.  360 VOX Corp. said it had entered into an agreement to acquire a group of Canadian real estate businesses, including Sotheby’s International Realty Canada, Sotheby’s International Realty Quebec, and Blueprint Global Marketing.

According to a release, the group is involved in ‘listing, marketing and selling real estate,’ including condominium developments resort properties and homes.  Sotheby’s specializes in high-end residential properties.  Blueprint Global Marketing works with the Sotheby’s International Realty, listing and selling international developments.  The group’s roster includes some 300 high-end real estate agents that the merged entity hopes will grow to be 1,500 or more in the next few years.

Mr. Goodman, who owns 24% of 360 VOX, has been said by someone close to the deal to have helped shape it.  The deal will see the transfer of $3.65m in cash and 54.25m common shares in 360 VOX, which is about 27% of the company’s issued shares prior to the transaction.

Though Mr. Goodman doesn’t appear to share their concerns, the Canadian housing market has some analysts worried.  Ottowa ordered alterations to the terms and conditions of mortgage loans in July this year, reducing the repayment period to 25 years and reducing the cap on home equity loans from 85% to 80%.  Additionally there’s been overproduction of housing in Canada, with building outstripping the formation of new households.

CIBC’s Avery Shenfeld sees the combination of ‘recent changes in mortgage insurance rules, lofty prices that make taking the plunge a bit less attractive (particularly for speculators), and the end of a catch-up period in which construction has outpaced the trend in household formation’ to result in a slowdown of the housing market by 2013.  However, CIBC’s Benjamin Tal says Canadians shouldn’t expect a ‘US-style housing meltdown.’

Mr. Tal covers the data showing the disparity between Canada’s house prices – which he says ‘continue to defy gravity’ and Canada’s household debt, which is now at 163%, the kind of level seen in the US before the 2008 crash.  However, Mr. Tal goes on the offer an alternative analysis, observing that debt-to-income measurements alone are a ‘headline grabber,’ rather than a ‘serious analytical tool,’ and that over the past decade housing starts exceeded household formation in Canada by about 10%: ‘In the US, the gap during the decade leading up to the crash was almost 80%.’

However reassuring Mr. Tal’s analysis is, there’s less comforting news coming in from the market.  Home sales fell 15% in September, to their lowest level since 2001, and there’s trouble on the horizon for the Canadian banking sector too.

Ratings agency Moody’s Investor Service placed almost all of Canada’s major banks on review for a downgrade on Friday, based on its concerns about the country’s mounting household debt levels.  Institutions like the Bank of Montreal and Toronto-Dominion Bank are facing downgrades over concerns Moody’s describes as ‘concerns about high consumer debt levels and elevated housing prices, macro-economic risks, capital markets activities and bank-specific factors.’  Moody’s vice-president, David Beattie, said in a statement that Mody’s saw the banks as ‘more vulnerable to increased risks to the Canadian economy.’

However, Robin Connors, the CEO of 360 VOX, sees things a different way: ‘The markets are in flux,’ he says, ‘but the industry is reinventing itself.’  Mr Goodman agrees, saying that he sees the recreational property sector as a good opportunity in its own right, and thinks it will eventually meld into the wealth management industry.  And Mr. Connors points to 360 VOX’s investments in ski-in, ski-out developments in the French Alps, which analysts predicted would end in disaster.  ‘People said, ‘You guys are out of your minds, European markets are in the bucket’,’ Mr. Connors recalled.  But the first phase of that development sold out, proving ” to 360 VOX at least ” that their customers are still ready to spend.  ‘Those people are still buying,’ Mr. Connors notes.

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The Canadian housing market continues to function in a consistently insensitive manner.  It’s like it fails to realize that the rest of the free world is hurting, and this persistent, and seemingly abnormal, growth is bound to cause more offense than awe. The Canadian Real Estate Association (CREA), only yesterday, released some more upsetting news the country’s home sales have risen once again (by 1.2% in October), and the overall industry outlook too remains sanguine (1.4% higher sales expected overall in 2011 vs. those in 2010). What is Canada doing differently? Are Canadians a particularly hopeful bunch, or is there something more sinister at play? Why is it that owners and buyers alike have not taken to renting with as much fervor as their American and British friends so apparently have?

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According to reports demand is increasing in the Edmonton housing market, underpinning prices as the market looks to have finally bottomed.

Meanwhile, Goldman Sachs, after being the anti-sheep on Wall Street for month, predicting a weak demand and a “deflationary spiral” while other Wall Street giants including Morgan Stanley turned bullish, is now saying that “underlying demand is now accelerating sharply” and is currently on pace to grow at a 5% rate in the fourth quarter,” as it ups its fourth quarter growth forecast from 2.5% to 3.5% in a note to clients.

Looking at the Edmonton story, it would seem to be a Microcosm of what is happening across the American economy.

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The influential Organisation for Economic Cooperation and Development has said that Canadian housing “looks” overpriced both in terms of price-to-income and price-to-rent ratios.

“Canadian house prices, or at least some regional or local housing markets, notably those of Toronto and Vancouver may still reflect excess demand conditions,” says the Paris based OECD in their annual review of the Canadian economy.

According to data, the average price of a Canadian home is 5 times the average Canadian’s salary (net). This ratio is 35% higher than the long term average.

But the OECD was more concerned that Canadian’s may be overstretching themselves in the low-interest-rate environment. According to the report by 2012 some 7.5% of Canadians will be vulnerable to interest rate rises, unless household borrowing slows.

The report says: “High household indebtedness also implies a growing vulnerability to any future adverse shocks. Household credit growth needs to slow down!”

It’s a funny old tale; the Canadian housing market, which never boomed during the global housing boom, and then boomed during the global housing bust. The OECD explained their beliefs on why this happened.

“For one thing, Canadians entered the cycle with less debt than their U.S. counterparts. Secondly, they had access to a banking sector still willing to extend credit at favourable rates. And lastly, subprime mortgages never made up more than 5 per cent of new issues, compared with 33 per cent in the United States at the peak.”

Despite these realities the Canadian government acted quickly in introducing stimulatory measures to the housing market, which turned out to be far more than was needed (for the reasons given above). Low interest rates and other measures including a first time buyer tax credit caused house sales to soar and prices to grow massively, including a 24% increase in prices in 2009.

Fears quickly emerged that the market may be overheating, and that Canadian’s may be borrowing more than they would be able to afford when rates started to rise again. The government started to take measures to cool the market this year.

Sales saw a huge drop when the tax credit ended, and it emerged that the tax credit had caused people to bring their purchases forward leaving a lull in sales for months after it ended. And the government has also tightened the criteria for government insured mortgages twice. But the OECD believes they may need to do more.

OECD suggestions included: larger down payments on all federally insured mortgages and forcing banks to disclose how “sensitive” their mortgage revenues are to rate hikes.

“Lending standards and the framework for mortgage insurance are the right tools to contain this cycle,” says the OECD.

The Canadian Association of Accredited Mortgage Professionals, which represents brokers across the country, disagrees sternly with the OECD:

“We believe new mortgage insurance rules from Ottawa would be a solution looking for a problem,” says Jim Murphy, CEO and president of CAAMP. “The real estate is already cooling with sales down and prices that are stable.”

Murphy says the government has already tweaked mortgage regulations twice and there is “No need for a third time.”

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Alberta CanadaThe Canadian Real Estate Association has downgraded its growth forecast. This is no shock in the current climate, but what is shocking is that the CREA is now predicting that Canadian property prices will be falling again in 2011.

The Canadian property market shocked the many people who thought it would be infected by the US housing crash, by turning out to be one of the least affected markets in the world, and further, one of the few markets in the world to record strong house price growth in 2009.

That run though, CREA now says, peaked in the fourth quarter of last year, at which point things started to slow.

CREA now expects 490,600 sales through the Multiple Listing Service in 2010. While this is a 5.5% jump on last year, and the second-best year on record, sales are expected to fall by 8.5% in 2011.

“The revision reflects a weaker-than-expected start to the year in British Columbia, and recent developments that pulled forward the timing as to when sales are expected to ease in other provinces,” the group said in a statement.

The reason given for the revision is factors — namely government attempts at cooling the market — which have forced buyers to act quickly, bringing sales numbers forward and leaving bigger gaps behind them.

One such factor is the new mortgage rules enacted in April. The government said that from April 18th 2010, Canadians buying homes with mortgage default insurance on mortgages of less than 5 years would have to qualify based on the benchmark rate for a five-year fixed-rate closed mortgage.

This meant that borderline borrowers would get less cash for their homes, because they must qualify based on a rate that is 6% today. On mortgages of five years and over, buyers would qualify based on their contract rate, which is as low as 4.25% for a five-year mortgage based on discounting.

The rules would force many consumers out of variable rate mortgages tied to prime, which even after yesterday’s Bank of Canada rate hike, stood at 2.5%.

“The changes prompted some homebuyers to finance their home purchase before the new regulations took effect in April, which pulled forward a number of sales that would have otherwise taken place at a later date,” said CREA.

What’s more, the Bank of Canada finally increased its key interest rate on Tuesday (June 8). Some expect this to impact on the market, but not for a long time according to CREA:

“Interest rates are expected to rise slowly and at a measured pace during a new era of government spending restraint, so home financing will remain within reach for many homebuyers,” said Georges Pahud, CREA president.

CREA now says the market peaked in the fourth quarter of 2009 and predicts that the average price of homes sold through the MLS next year will be 2.2% lower than this year at $318,300. CREA now expects a growth of just 1.6% this year compared to 2009.

CREA’s earlier forecast was for a rise of 5.4% in 2009, but the lower sales activity in British Columbia, — including Vancouver, the country’s most expensive market — drove down the national numbers. In fact, only B.C. and Ontario are not expected to post price gains in 2011.

“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.