Earlier this year, I voiced my disagreement with the real estate pessimists who said a real estate crash or bubble was forming. Click here to read more.
This same more positive outlook is backed up by CMHC’s latest Housing Market Insight report for Ontario courtesy of regional economist Ted Tsiakopoulos.
Below are some key highlights from CMHC’s report:
Continue reading “Real Estate Rebounds in June as Expected!”
Much has been made about CMHC’s Economists ‘Red Warning’ that was put out for the 4th quarter of 2016. Let’s take a look at what the report actually says.
CMHC’s economists have 3 categories of measurement that are of concern. Overheating, Price acceleration and Overvaluation.
VANCOUVER AND TORONTO
The Vancouver market had already been identified by CMHC as having moderate Overheating and Price Acceleration and Strong Overvaluation. Toronto now has the same issues with the same Overall Assessment of Strong evidence of problematic conditions.
Put another way, CMHC believes the Toronto and Vancouver housing markets are vulnerable. While this is cause for concern, there was also some other info in the report that we should be probably not overlook… Continue reading “Mortgage brief.. CMHC ‘red warning’.. what’s it mean?”
A few weeks ago, I attended CMHC’s Ontario Housing Market Outlook conference. This annual conference provides Financial experts with an insight into some of the best data available. Now, in case you didn’t know it, CMHC probably has the largest database of information in Canada. So when they publish stats and make forecasts, we need to listen.
This year’s speakers included Ted Tsiakopoulos, Regional Economist CMHC, Ed Heese, Senior Market Analyst CMHC, Dave McLean, President Mattamy Homes (Canada’s largest home builder) and Peter Zimmerman, Director of Development Freed Developments (highrise condo builders). I really enjoyed hearing Ted speak. His presentation was backed up by a wealth of stats. Let’s see if you agree about the forecast. Continue reading “CMHC’s Ontario Housing conference 2014 highlights: the news is good!”
This pic might best capture the image that comes to mind when I hear the phrase ‘real estate crash’. Don’t adjust your screen. This isn’t a hoax. This 12 story building collapsed in 2009 shortly after it was completed.
Note how the building remained intact after it fell. That is truly amazing. Clearly, it was well-built. But note the hollow concrete piers with no rebar. This is a great example of how even the best built building will fall if it has a weak foundation.
Our U.S. neighbors to the south learned about weak foundations in 2008. The U.S. sub-prime mortgage crisis was caused by Banks offering mortgages to anyone with a pulse. There was little to no qualifying for a mortgage. You could buy or refinance up 110% of the value of the home! Mortgages were being given to those that didn’t qualify. This was the root of the U.S. housing crash.
HOW DOES CANADA STACK UP?
But is this what the future looks like for Canada’s housing market? We keep hearing reports about the imminent Canadian housing bubble. It’s coming… soon… no, really. We’ve heard this continually for the last 5 years. You just have to wake up and turn on the TV, radio or computer. It’s full of Doomsday forecasters. But reality is very different. Listen to facts and forecasts from proven sources…. Take CMHC’s most recent report released in the 4th quarter of 2012. They are calling for a stable housing market in 2013. Average house prices will stop climbing and remain flat. Rental vacancy rates will stay low. Click here for CMHC’s Q4 report.
The forecast isn’t calling for any huge price drop as the media would have you believe. It’s boring news… but that’s good news for us. CMHC’s historical forecasts have been pretty accurate. And they probably have more data at their fingertips than any other organization. The Doomsday forecasters don’t seem to reference this report… but I suggest we give more consideration to accredited reports…
Speaking of Doomsday… I saw a good article in The Financial Post entitled ‘Are we worrying ourselves into a housing crash’? A great question… and they quote 2 of my favorite Economists and Financial Experts, Moshe Milevsky and Benjamin Tal. Both believe we won’t see a housing collapse like the U.S. had. The fundamentals are very different. But they think that if we keep talking about a crash, then it could speed up and prolong any housing slowdown.
To me, Canada is like the 12 story building, strong and intact. The U.S. was like the foundation…hollow and weak. Let’s make sure understand the differences before we write off our housing market.
As always, I welcome your questions and comments.
Steve Garganis 416 224 0114 email@example.com
CMHC issued a report that says the economy will expand at a moderate pace over the next few years, as reported in The Spectator. The Bank of Canada should also keep it’s trend setting rate low until mid 2013. This means Variable mortgage and secured lines of credit rates will remain low.
The report also says the average house price in Canada is expected to hit $368,900 this year. But, a closer look at the Greater Toronto Area market shows that house prices are climbing much faster. A lack of supply and a pent up demand, together with record low interest rates are fueling price increases. Reports of homes being sold above asking are popping up outside of Toronto.. including Milton, Georgetown, Oakville, Burlington and Hamilton.
If you’re in the market for a home, my advice would be to not wait til the Spring market. The market is now. Experienced realtors are telling me they have priced a 5% increase in the first 2 months of 2012. Waiting could cost homebuyers $18,000 or more.
FIXED MORTGAGE RATEShave started to climb. Earlier this week we saw RBC and TD pull their special mortgage rate offers… BIG SIX Banks don’t like to compete in the wholesale mortgage market with mortgage brokers… when these 2 banks realized no other BIG SIX bank was offering this rate, they quickly withdrew the offer… read this article... the BIG SIX banks are calling a truce? What does that mean…? Don’t you want your banks to compete? And that last paragraph by BMO’s Frank Techar is priceless.. “We went to 2.99 per cent to draw attention to the benefits of having a mortgage with a maximum amortization of 25 years”. This does make me a laugh a little… BMO’s NO FRILLS mortgage was a way to gain market share and entice borrowers into a restricted and closed mortgage product… Mortgage Brokers already had access to this rate and a NO FRILLS product through another lender… but it’s not a great product and the restrictions are costly…Most brokers will not recommend or even offer this product to their clients.
The ripple effects of this ‘truce’ are that wholesale mortgage rates have started to climb… ING and National Bank have also increased their rates. This could be temporary but if the Greeks get their act together and the U.S. economy starts to improve, we will see rate hikes…. My advice is get your mortgage preapproval now…. These are historical low interest rates… I’m not sure they will be here for much longer.
On April 14, I attended the annual Independent Mortgage Brokers Association (IMBA) annual conference. We were fortunate to have Canada Mortgage and Housing Corporation’s (CMHC) Regional Economist, Ted Tsiakopoulos, share his outlook on the economy, real estate and interest rates.
Click here for the entire presentation. This is a summary of CMHC’s outlook:
- No evidence of housing bubble.
- housing market is stabilizing in Ontario.
- we won’t see the growth in prices as in years past.
- this outlook is still uncertain given all the global events, both political and economic.
- credit growth is slowing.
- Interest rates will rise as economy improves.
The good news is that there doesn’t seem to be a housing bubble. Interest rates will gradually return to normal. And we don’t seem to be taking on as much personal debt as the government and media has led up to believe in the recent months.
As reported earlier today, TD was the first to raise fixed rates… they are up by 0.25%.. The TD Canada Trust Broker rate is 3.94% and can be held for 120 days… TD has been out of the game with their 5 year fixed rate for some time… Most Lenders are offering 3.49%….. But this will most definitely go up as the Bond yields are over 2.30%…click here for the chart.
There is another option that is less talked about. A major Bank is offering a 180 day rate hold on a 5 year fixed rate for 3.73%… this may not be for everyone, but it’s an option for anyone looking to buy but hasn’t found a house… or for those with a long closing…
Interesting, CMHC released their 4th quarter forecast and were calling for moderate activity in 2011… but they also said low mortgage rates will help to drive the housing market….This latest increase shouldn’t cause panic…these are still record low interest rates… But we’ll have to follow the trend and see if CMHC makes any adjustment in their forecast…