Greying population changing housing
A report published by the Toronto-based Altus Clayton Research Group says it will be another 15 years before the senior "over 75" demographic bubble will have a major impact on homes and housing construction. The report examines the implications of the aging population for the seniors' housing market as the 21st century marches on.
For purposes of the research, seniors' housing is defined as accommodation developed and operated for profit and geared to those 75 or older -- such as retirement homes, apartments, assisted and independent living projects, but not government-regulated nursing homes or long-term care facilities.
According to the report, the majority of the aging population is sitting solidly in the age group of 55 to 74 years old. They are not considered seniors, but the "primary lifestyle buyer group." They are fuelling the recreation housing industry, and will remain the dominant group for the next decade.
"This represents the aging of the early baby boomers into this age cohort -- the oldest baby boomers were about 60 years old at the time of the 2006 census and the youngest about 40," says the report. "It's not until that baby boom starts to head into the 75 and over age groups that the boom in seniors' housing will take place."
The report suggests that Canadian builders should start making plans to provide housing for the approaching "seniors over-75 group". Not only is the population getting older, it's more solid financially and more demanding about what it wants its homes to look like and the amenities that are included.
"In some markets, lifestyle buyers [ages 55 to 74] have accounted for a larger share of new housing demand than would be expected based on demographics alone because local developers and builders increasingly offer housing specifically designed to attract these buyers," says the Altus Clayton report.
The report says developers should consider providing a wide array of tenure -- even in the same building. Not everybody wants to live in a studio apartment, so provide a selection of housing forms. Lifestyle and independence, regardless of physical limitations, are still the goal of seniors, so provide a selection of amenities.
Outside the residence, residents might just enjoy relaxing in an atrium or using some other type of common-area amenity. As residents age, they might require increased levels of health care. Developments should include accommodation for independent living right up to long-term care.
Many older Canadians really don't want to move. They're comfortable surrounded by friends and creature comforts. Because they have the financial wherewithal, they can have some renovations done to adapt to their changing needs.
September 26, 2007 in What's next (in real estate) | Permalink | Comments (1) | TrackBack
Moving back home
When Jeff Popham moved back to Victoria from Toronto, he -- like a lot of adult children -- ended up returning to his parent's house. Fortunately, they had an extra lot next door. For Popham's young family, high real-estate prices proved daunting in their search for a home. So, his parents offered their side yard as a site to build a new house. Jeff's mother, Joan, can now look out her sunroom window to see her two granddaughters playing in their front yard.
August 22, 2007 in What's next (in real estate) | Permalink | Comments (0) | TrackBack
The condo house?
It's a brand-new concept: labour-free home ownership
Down a tree-lined, brick-cobbled lane among the old manors of Toronto's posh Rosedale neighbourhood, the next step in the evolution of real estate is taking shape. Inside the sleek mansion at 1 May St., a woman is raising her voice over the crack squad of landscapers deployed across every square foot of the small front yard to demonstrate how the control panel of the house's "robot brain" commands a nervous system of heated floors and walkways, lighting, doors and sound systems.
The house can not only run itself, but manage its own affairs. The owner need never shop, clean, pay a bill or even answer the door. Everything has been taken care of. One of Toronto's most opulent homes may also be the answer to a commonplace question: should I buy a house or a condo?
August 13, 2007 in What's next (in real estate) | Permalink | Comments (0) | TrackBack
Visionary home search for Toronto.
RealEstatePlus.ca has just launched.
This is a ground-breaking event for the real estate industry in Canada. RealEstatePlus.ca employs some of the latest technologies — Web 2.0 for the initiated — to help people personalize their search for a new home. Combining customization functionality including flexible search parameters, saved searches, watch lists and alerts with advanced mapping technologies, users can gain deep insight about homes, neighbourhoods and cities before speaking with an agent.
The premise of the site is to enable users to search for homes in a way that is intuitive to them. As a result, all functionality is geared to personalizing the user experience – familiar terminology for neighbourhoods and geographic boundaries, search diversity for listings and neighbourhoods, intuitive search results and the ability to review both demographic and behavioural data. Because a home constitutes much more than the physical structure, RealEstatePlus.ca offers a 360 degree view of any home including the neighbourhood, the house itself, the people, amenities and cultural institutions.
The site is also designed to maintain a collaborative approach with users. It elicits feedback from users and promises to introduce new functionality and technology capabilities based on user demand.
The current Beta release is limited to the resale market in the City of Toronto but the RealEstatePlus.ca Team has an ambitious time-table for expansion.
Try it ... we know you will love it.
May 9, 2007 in What's next (in real estate) | Permalink | Comments (9) | TrackBack
Tenants have their "say"
Toronto slumlords are about to feel more pressure to improve their properties due to tenant reviews. Already feeling pressure from City Hall, slumlords now have to contend with myhood.ca, a new website that gives tenants a public avenue to alert fellow renters of slumlord buildings. Potential renters can read tenant reviews and determine which rental unit is right for them based on the positive and negative ratings submitted by fellow Torontonians.
“Just as Councilor Howard Moscoe’s plan to license Toronto landlords is the political response to slumlords, myhood.ca is the consumer response” said Jeff Hersh, founder of myhood.ca. With many positive reviews, not only does myhood.ca highlight slumlord buildings to potential renters, it also ensures that renters find quality rental units. as well.
Based in Toronto, myhood.ca gives potential renters the ability to search and evaluate apartment reviews and rental listings by Toronto neighbourhoods. In addition, myhood.ca brings together rental listings from online classifieds and property managers, helping renters save time in their search process.
April 30, 2007 in What's next (in real estate) | Permalink | Comments (1) | TrackBack
Blogging for Real Estate
With the recent changes in Internst technology, there is a big change coming in the way real estate marketing is done. Right now, Realtors have been very slow to adopt new technologies and that's a mistake.
How powerful would it be for a real estate agent in a city like Toronto to set up their own web site explaining the current industry trends, home values, local neighborhoods, or other information of interest? Sites like zillow.com are great for providing you with high-level information about home prices but still lack the "bird dog" like information that a local Realtor would have great insider information about.
See this Toronto Real Estate blog »
April 25, 2007 in What's next (in real estate) | Permalink | Comments (0) | TrackBack
Real Estate Trends Report
MLS: Industry Asset or Public Utility?
Looking back in time the MLS was supposed to be simple: A seller - a listing - an agreement to share - a buyer - a sale. Everyone benefited, including the buyers and the sellers. It was built as a B2B model, a cooperative among real estate brokers. Yet today when "all information should be free" everyone wants to promote the listing. As a result the MLS has evolved into a consumer marketplace and a quasi public utility. The proverbial horse is out of the barn.
March 20, 2007 in What's next (in real estate) | Permalink | Comments (0) | TrackBack
The Toronto market that will be
It's true that the population of Toronto, like the rest of the western world, is getting older -- but Toronto's population is not old now, and it won't be old two decades from now, when only 16 per cent of its residents will be 65 or over. That's a significant increase from the current 12 per cent, but not nearly enough to make seniors the dominant group.
Throughout the western industrialized world, young people are having fewer babies than their parents did and old people are living longer than their parents did. That demographic combination is the basis for the phenomenon of population aging, which means simply that the average age is increasing. But this process takes place gradually, so forecasts of dramatic change are usually off base.
It's easy to confuse old with older which is why some writers make false assumptions about population aging. In 1996, The Globe and Mail launched its hypothetical "Boomer Portfolio," a collection of stocks that seemed well positioned to benefit from the changing needs of aging boomers, the huge group born between 1947 and 1966 that comprises almost a third of the Canadian population. It was an interesting concept, but there was a flaw in the portfolio: it contained two companies, one in the nursing home business and another in the funeral business, that were decades away from attracting much business from boomers. In 1996, the boomers were aged 30 to 49, hardly prime candidates to become residents of nursing homes or cemeteries. Even in 2021, aged 55 to 74, not many boomers will be ready to move into nursing homes. And given that average life expectancy is now about 79, the funeral business won't take off until around 2030.
That said, it's a fact that the older boomers are nearing the stage of life when heart attacks, strokes, cancer, and other serious illnesses become more prevalent. Many boomers will die between now and 2021, while at the same time their children, the echo generation, will produce a mini-baby boom of their own. As a result of those demographic changes, Toronto two decades hence will no longer be boomer city.
The dwindling of the power of the boomers will probably be the most important demographic phenomenon Toronto will experience over the next two decades. Since the 1970s, the city has been a magnet for ambitious boomers from all over the country -- a cohort that, because it has so many members, has wielded tremendous power. Boomers triggered rent controls during the 1970s as they flooded into the housing market for the first time. In the 1980s, they sent real estate prices soaring. Then, during the 1990s, they discovered mutual funds and stocks, prompting the greatest bull market ever.
As we approach 2000, the boom is at the height of its influence. Boomers in their 40s and 50s are running the large corporations, governments and universities. To the chagrin of younger boomers (those in their 30s) and the baby busters (now in their 20s), older boomers are still clogging the hierarchies of all these organizations.
Yet the beginning of the end of the big generation's dominance is already evident. Companies are instructing their recruiters to give preference to younger people. Complaints of ageism are already being heard from boomers in their 40s and 50s who find themselves in the job market.
By 2021, all of that will be ancient history. Nobody will talk much about the baby boom any more. According to the projections of economist Tom McCormack of Strategic Projections Inc., people born after the boom in the GTA will outnumber boomers and those born before them by the year 2004. And by 2021, of the 6.4 million people in the GTA, 4.4 million will be post-boomers, 54 or younger; only two million will be boomers or pre-boomers. More significant, among those of voting and working age, the boomers and their elders will be outnumbered by younger Torontonians after 2013.
Let's take a closer look at how the dwindling of the boom and other demographic shifts will affect the real estate market in Toronto two decades in the future.
The front half of the boom, people born between 1947 and about 1957, have been lucky in real estate. In the late 1960s and early 1970s, when the first of them hit the rental market, a spacious apartment -- one floor of a house in the Annex, for example -- could be had for less than $200 a month. And when those same people were ready to buy, a solid Victorian house in a good downtown Toronto neighbourhood sold for $100,000 or less. House prices moved up during the 1970s, but it wasn't until most of the boom had flooded onto the real estate market in the 1980s that they really took off. At the same time, in response to boomer demand, the suburbs burgeoned. Toronto house prices peaked in 1989 and then plunged 25 per cent over the next two years, because most of the boomers who could afford a house had already bought one. Prices recovered moderately through the latter half of the 1990s after the recession ended and younger boomers, those born in the 1960s, could afford to move into the market.
The real estate frenzy of the 1980s already seems a distant memory, and demographics offer no reason to expect it to be repeated. In fact, the decade about to begin will be fairly quiet, because the bust, the group entering its house-buying period, is only about half the size of the boom.
A growing number of boomers will choose early retirement during the first decade of the millennium, but that doesn't mean they will want to sell their houses. Less than 20 per cent of retirees move out of their homes when they stop work; the other 80 per cent stay put, partly because they know the extra space freed up when the kids move out will come in handy when future grandchildren come to visit. Most people don't trade in their houses for more compact accommodation until they are in their 70s.
The real estate market will pick up during the second decade of the new century when the echo generation, which is larger than the bust, starts house hunting. For boomers who want to cash out of real estate, the arrival of their offspring in the real estate market will offer a window of opportunity that will last until about 2025. After that, the market will go soft again, because the following wave of house buyers, today's preschoolers, are a comparatively small cohort.
Boomers who play their real estate cards right, and enjoy a bit of luck as well, should be able to sell their house to a member of the echo for enough to buy a condo in the city and perhaps a country place as well. The trend toward splitting time between the city and semi-rural areas such as Collingwood and Kingston, will gather momentum as more of the boomer generation moves into its 50s. Some of those who move into exurbia will opt for communities built around golf courses. These will be adults-only communities, many with security gates that visitors have to pass through.
Gated communities are never going to be cool, and the aging boomers who decide to move into them are probably going to be a bit embarrassed about it. But boomers, as they age, won't be much different from earlier generations; older people have always been security conscious for two reasons -- they are more vulnerable physically then when they were young, and they have accumulated some things worth stealing. Besides, rental apartments and condos have had restricted entry systems for decades. Gated communities merely offer people who prefer to live in a house the extra security that apartment dwellers take for granted.
On the commercial side, the impact of the large echo generation will trigger new construction during the first decade of the new century, earlier than in the housing sector. That's because young people join the workforce about 10 years before they look for their first house. By 2021, the echo generation's workplace needs will have been accommodated. Then it will be the turn of the millennium bust, the group now emerging from the maternity wards, to enter the workforce, but that group will be too small to drive a great deal of new office construction.
Meanwhile, we can expect the trend toward renewal of old office structures and factories in the core to continue, partly because aging Torontonians will want to retain parts of the city that remind them of their youth. The late William Kilbourn, historian and city politician, liked to say -- only partly in jest -- that the Toronto-Dominion Centre, a work of the famous modernist architect Mies van der Rohe, should be designated a historic site so that it would not be destroyed in the name of redevelopment like so many other great Toronto buildings. By 2021, this set of towers, which dates from the 1960s when the boomers were very young, will be so designated.
Source: Footwork Consulting Inc.
January 24, 2007 in What's next (in real estate) | Permalink | Comments (2) | TrackBack
Tech trends rock real estate world
Citizen journalism, social networking and user-generated content are transforming the way real estate industry works.
Home buyers and sellers have seized much of the power once exclusively in the hands of real estate agents. But they're about to get stronger still. The changes to the real estate industry have come fast, with listings and valuations tools widely available for free on the Internet.
Old-style marketing won't cut it in the brave new world of real estate. Now, according to many of the participants of Real Estate Connect NYC 2007, a conference devoted to outlining the changes facing the industry, the industry is on the cusp of another technical revolution, one that revolves around that Time Magazine person of the year - YOU!
Real estate blogs, which have been around for a few years, exploded in popularity during 2006. These sites provide a wealth of unvarnished opinion, truths and half-truths about towns and neighborhoods all over the country - the inside dirt on restaurants, schools and crime.
"The rules have fundamentally changed," said Brad Inman, the host of Real Estate Connect and publisher of Inman News. "Social networking is lifting real estate and in the next 12 months it's going to overwhelm real estate. It's been happening since Craig's List started but it's only now coming to a head."
In the past, the real estate industry always had a gate-keeper mentality.
"Brokers prospered by not giving out information," says Dottie Herman, CEO of New York based broker, Prudential Douglas Elliman. "Clients came to them for information. This takes the industry to a whole different model."
Technology has made it very simple to start up, run and contribute to Web sites and that has let loose a flood of information that's increasingly well organized.
"Now we're seeing the aggregation of these conversations. [Consolidators] are taking feeds from lots of different blogs and outing it in one place by zip code or neighborhood," says Inman.
Take Outside.in for example. This two-month old Web site collects blogs from more than 3,000 neighborhoods in 55 cities. Posters can write about anything, including the quality of new real estate listings, how good the schools are, hot restaurants, even individual real estate agents.
These sites encourage content from readers. Don't like the spumoni at the local gelato house? Vent on line. Angry that your streets are going unswept? Become an Internet scold. Curious about that derelict house around the corner? Ask your blogger neighbors what they know about it.
Another site, Homethinking.com solicits reviews on agents. Like Yahoo! autos, where Accord owners can rank their satisfaction with their car purchase or TripAdvisor, where travelers can rate hotels, Homethinking posters are able to rate their real estate agents.
All this openness can make the marketplace much more transparent for consumers. It enables them to know market prices more accurately, to engage the most professional real estate agents available and to learn about individual towns or neighborhoods much more intimately and expeditiously than they could in the past.
As the new technology comes more into play, realtors will have to adjust. Many of the web sites have taken over some of the traditional services that real estate agents once provided.
It may be a difficult period in some markets. Not only are sales down, but alternate business models are making inroads into their business. For sale-by-owner sites, discount or fee-for-service brokers and brokers who pay buyer's rebates all may gain traction.
Inman says that real estate professionals have two choices when it comes to confronting the changes wrought by technical advances: engage it or pretend it isn't there.
It's easy to guess what route he recommends.
January 18, 2007 in What's next (in real estate) | Permalink | Comments (1) | TrackBack
Affordability to improve in 2007
Stable borrowing rates and a slight decline in utility costs provided little relief to homeowners as Canada’s housing affordability conditions deteriorated for the fourth consecutive quarter, says the latest Housing Affordability Index released by RBC Economics.
"Across Canada, housing affordability further eroded as rising house prices outpaced income growth in the third quarter of 2006," says Derek Holt, assistant chief economist, RBC, in a news release. "However, affordability is likely to improve slightly next year as the lagged effects of fourth quarter mortgage rate declines, easing energy price pressures and a topping out of home price appreciation will have a positive impact for home buyers."
"After three consecutive quarters of sharp deteriorations in affordability, the pace slowed for all home classes in almost every region of the country. Alberta’s housing affordability was the lone exception, but it will probably join the rest of the country next year," says Holt.
According to the RBC report, new home construction and house resales are expected to soften nationwide in 2007, alongside more reined-in expectations for house price gains. The overall volume of home sales activity should remain high while the majority of home equity gains enjoyed in recent years should also be retained.
In central Canada, affordability is already improving across some housing types despite softening incomes. For example, Toronto prices for two-storey homes and townhomes are flat compared to a year ago while bungalows are up mildly, and condo gains are weakening. However, British Columbia, Alberta, Saskatchewan, and most types of housing in Atlantic Canada, continue to see deteriorating affordability conditions, says RBC.
In B.C., housing affordability deteriorated for a fourth consecutive quarter, driven by a smalldecline in average monthly incomes, higher utility bills, and climbing house prices. In Alberta, the third quarter marked the sharpest broad-based quarterly deterioration in affordability since 1990 with erosion of 12 to 15 per cent for all home segments.
Commodity-related spin-off effects have created ample job opportunities, driven wages up and pushed unemployment to record lows, helping to fuel the residential housing market. However, the market is shifting away from excess demand and toward cooling price pressures, says the report.
In Saskatchewan, an increase in house prices, combined with a slight decline in household income this past quarter, led to a marginal deterioration in affordability. However, if rates continue to remain stable and price growth levels off, RBC says affordability is expected to improve across all sectors in 2007.
For the third quarter of 2006, Manitoba saw the strongest overall improvement in affordability for three out of four housing classes. It remains the most affordable province for townhouses and condos even though the townhouse sector witnessed a marginal deterioration.
In Ontario, dropping off from the growth peaks in house prices and incomes seen several quarters ago, the housing market has now cooled to more moderate levels, says the report. This cooling has been slow and steady, and should allow for homeowners to retain the bulk of their home equity gains going forward into 2007 and 2008, says RBC.
In Quebec, housing affordability erosion was less severe this quarter as income gains and utility relief managed to outpace house price growth. The level of sales is expected to continue to cool, while new home listings are expected to increase and price growth to slow to a gradual pace across the market.
Affordability remained relatively unchanged in the Atlantic regions, says RBC, thanks to house price growth leveling off and cooling household income gains. Following the trend taking place in other parts of the country, the pressures on Atlantic Canada’s housing market showed signs of balancing for the second half of 2006.
See the RBC Housing Affordability Index report [in PDF format]:
January 1, 2007 in What's next (in real estate) | Permalink | Comments (2) | TrackBack
Predictions for real estate in 2007
As a new year dawns, investors and homeowners alike are questioning if there are enough solid foundations in place to support more gains in the 2007 real estate market. Already, pent-up demand for housing in Canada is diminishing even in some of the hottest markets such as Calgary, said Bob Dugan, chief economist at the Canada Mortgage and Housing Corp., Canada's national housing agency.
"Growth in prices is starting to slow, and demand in these markets is less than it has been," he said.
But while resale home price increases are expected to register only about 3.1 per cent for both Ontario and Quebec in 2007, Alberta will still ring up a 12.6-per-cent increase over the whopping 29.4-per-cent the province saw this year, Mr. Dugan said.
Markets have matured in Ontario, Quebec and the eastern provinces, and Canada's economy will feel the pain as manufacturers and exporters face a slower U.S. economy and a higher Canadian dollar, some economists say. That all feeds concerns over demand for new and resale homes in Canada.
The number of new houses starting construction will probably decline to 210,900 in 2007 from about 227,900 this year, Mr. Dugan said. Even so, that number of new homes is still higher than the estimated 185,000 new households formed in Canada annually, he adds. As for resale homes, a streak of five straight years of record-setting prices came to an end last year, and will drop for this year and next, he said.
The bright spot for 2007, he said, will be found in the west, where workers are still flocking from all other areas of the country. "Definitely Alberta and B.C. were the two markets that pushed price pressures in Canada higher in 2006," he said.
"The story continues to be people moving from central and east towards the west." But even this champion has its limits, Mr. Dugan said.
"As we go forward we do expect that to decrease. It's going to be harder and harder for Alberta to attract workers," he added. "We don't expect to see the same MLS levels as we did in 2006, simply because there won't be the same number of people moving," he said.
As for British Columbia, the CMHC is calling for a more balanced market. The organization is predicting resale price appreciation slowing to 7.7 per cent in 2007, down from 17.2 per cent this year and 14.9 per cent in 2005.
Canadians shouldn't be too hung up over the U.S. housing market fallout, said Rossa O'Reilly, managing director of institutional equity research, and investment analyst for the real-estate sector at CIBC World Markets.
"We never had the run-up they had in the U.S.," he explains. "We didn't have the incredible lending policies that they had south of the border" such as a proliferation of zero-money-down house purchases.
Canada's interest rates are expected to stay steady through 2007, after the Bank of Canada kept its benchmark rate unchanged for a fourth-straight rate policy meeting, hinting that further changes are unnecessary because of "balanced" risks to the economy.
The target rate for overnight loans is 4.25 per cent, at its highest level since August 2001, but still a full point less than the comparable U.S. Federal Reserve's target.
Canada's target rate will likely remain unchanged at that level for a while, until a cut in the third quarter of next year, according to a collection of analysts surveyed by Bloomberg.
The CMHC predicts the fixed posted mortgage rate will go down to 6.4 per cent in the second quarter of 2007, before climbing in the final quarter. Predictions are made based on the five-year, fixed-term mortgage because about half of all mortgages across the country have a five-year, fixed-rate term.
"We're now facing 2007 with lower rates, and that brings down carrying costs" and helps keep up the pace of sales, Mr. Dugan said. Even so, with the price appreciation seen in Canadian housing in recent years, the cost gap between owning and renting is getting larger.
That bodes well for landlords, he notes, but perhaps not quite as well for renters or others looking to buy. He predicts a national rental vacancy rate of 2.7 per cent for this fiscal year, and expects that figure to edge slightly higher in 2007.
December 25, 2006 in What's next (in real estate) | Permalink | Comments (2) | TrackBack
2007 Home Sales Predictions
Existing American home sales are expected to rise gradually in 2007 from current levels, with annual totals comparable to 2006, while new-home sales will continue to slide, according to the latest forecast by the National Association of Realtors®. David Lereah, NAR’s chief economist, said there are mixed conditions around the United States. "Roughly three-quarters of the country will experience a sluggish expansion in 2007, while other areas should continue to contract for at least part of the year," he said. "Most of the correction in home prices is behind us, but general gains in value next year will be modest by historical standards."
"Buyers, especially first-time buyers, with the combined benefits of seller flexibility and an unexpected drop in mortgage interest rates, have a window of opportunity. These conditions will persist in many areas until early spring when inventory supplies are likely to become more balanced," Lereah said.
Existing-home sales, finishing the third-best year on record, are projected for 2006 at 6.47 million, a decline of 8.6 percent. In 2007, they’re expected to rise steadily from the current cyclical low and reach an annual total of 6.40 million, which would be 1.0 percent lower than this year’s total.
"By the fourth quarter of 2007, existing-home sales will be 4.6 percent higher than the current quarter," Lereah said.
New-home sales in 2006 are expected to fall 17.7 percent to 1.06 million, the fourth highest total on record, before sliding an additional 9.4 percent in 2007 to 957,000. Much of the contraction in the new housing market results from cuts in builder construction to support pricing for current inventories. In addition, high construction costs in many areas are minimizing potential profits.
Total housing starts for 2006 are likely to drop 12.3 percent to 1.82 million units, with another 15.1 percent decline in 2007 to 1.54 million.
The 30-year fixed-rate mortgage is forecast to gradually increase to 6.7 percent by the fourth quarter of 2007. Last week, Freddie Mac reported the 30-year fixed rate dropped to 6.11 percent.
The national median existing-home price for all of 2006 is projected to rise 1.4 percent to $222,600, with another 1.0 percent gain next year to $224,700. The median new-home price should ease by 0.5 percent to $239,700 this year, then rise by 0.8 percent in 2007 to $241,700.
"Keep in mind that overall home prices were still appreciating at double digit rates in the first quarter of this year – prices in this buyer’s market are temporarily a little below a year ago when we were in a strong seller’s market," Lereah said. "This correction is one of the factors drawing buyers into the current market, but most sellers are still seeing very healthy long-term gains."
The unemployment rate is expected to be 4.8 percent in 2007, after averaging an estimated 4.6 percent this year. Inflation, as measured by the Consumer Price Index, is forecast to be 3.4 percent for 2006 and 2.3 percent in 2007, while growth in the U.S. gross domestic product is likely to be 3.3 percent for all of this year and 2.3 percent in 2007. Inflation-adjusted disposable personal income is projected to grow 2.6 percent for 2006 and 3.5 percent next year.
December 13, 2006 in What's next (in real estate) | Permalink | Comments (0) | TrackBack
Canadian Housing Outlook
Scotiabank has realeased their Real Estate Trends Report which includes the following predictions for the Canadian residential real estate market.
For Canada, the risk of a major housing correction still appears low, though a more severe downturn in the United States would undeniably spill over to this side of the border though reduced export and hiring momentum. Canadian housing starts through the first ten months of 2006 are essentially on par with the prior year’s pace, with higher activity in the resource-rich Western provinces offset by a moderation in Central and Atlantic Canada. Existing home sales volumes are likewise tracking last year’s levels.
Still, as in the United States, affordability is becoming a bigger issue for many potential first-time homeowners. The lack of pent-up demand at this late-stage housing cycle is also restraining demand. As a result, we anticipate a gradual cooling in domestic housing starts and sales in 2007, with the Western provinces maintaining the performance edge. Inventory levels in both new and existing markets are less indicative of oversupply than in the United States, which should maintain positive, though more modest, nominal price appreciation.
December 2, 2006 in What's next (in real estate) | Permalink | Comments (0) | TrackBack
Future Real Estate Trends
Older parents are vying with their adult children to buy homes in vibrant communities that offer round-the-clock activities, a conference on real estate trends heard last week heard. And those communities are increasingly popping up outside of city centres, Stephen Blank, senior resident fellow of Washington, D.C.-based Urban Land Institute, last week told about 200 members of the Toronto wing of the organization.
"People want that greater convenience in their lives. The empty nesters are competing with their children to live in the 24-hour places, whether those are urban, or now there's even lots of suburban ones," he told an audience of about 100 investors and real estate industry executives.
Those communities include pedestrian-accessible retail, restaurants, parks, supermarkets and offices, he noted.
As suburban downtowns take off, public transportation becomes even more essential, Blank said.
"The unmarrieds, the young couples and the older adults are competing with each other to live in pedestrian friendly, 24-hour places where the car is no longer essential," he explained. "As more and more suburban places are assuming these urban characteristics, mass transportation becomes even more critical to future growth," he added.
The Urban Land Institute says there's a growing appetite for infill and mixed-use developments. "People want greater convenience in their time-constrained lives. Far-flung greenfield homes may cost less, but filling the gas tank burns holes in wallets," states a ULI document, Emerging Trends in Real Estate, 2007.
Infill developments will turn generations-old suburban areas into more vertical-looking urban centres. "Townhouses and apartments replace strip malls and some past-their-prime single-family subdivisions. Multi-family highrises spring up on pads around regional malls," the ULI document reads.
" Building "green" will become even more popular than it is today, Blank said. "Some say it's a fad, but I wouldn't count on it. We see more and more traction. More and more tenants and owners want to reduce costs and be environmentally conscious," he added.
The ULI document notes that while green buildings cost up to 10 per cent more to construct, energy savings can approach 35 per cent. Green strategies include insulated glass windows, green roofs, and photovoltaic cells to generate electricity.
"Stop fighting sticker shock on energy bills. Even if fuel prices decline temporarily, (we) need to reduce oil dependence and become more efficient. Global warming issues resonate, too," the document states.
November 25, 2006 in What's next (in real estate) | Permalink | Comments (0) | TrackBack
Canadian boomers rocking tradition
Retire those 'old age' stereotypes. Seventy is the new 60. Fine dining trumps early bird specials. Condo living challenges retirement home living. With more than 10-million Canadians now aged 50-plus, the shifting mindset of this demographic is resulting in changes within the country's housing market, and warrants special consideration, finds the Royal LePage 50-Plus Report.
In response to this evolution, Royal LePage Real Estate Services has launched of the Royal LePage Seniors Real Estate Specialist (SRES) Designation Program. The SRES designation is a North American real estate recognized designation, and Royal LePage will be the first organization in Canada to become a certified supplier, making it available to its Realtors in response to the changing housing needs, desires and options available to the 50-plus market.
"For previous generations, retirement came in a predetermined package. However, today's savvy 50-plus demographic is rejecting this archaic model and is instead seeking choices that better embrace their lifestyles," said Phil Soper, president and CEO, Royal LePage Real Estate Services. "Our first-to-market SRES program takes a holistic approach to servicing this demographic by empowering 50-plus clients with resources to assist in the planning, counselling and selling of their homes."
Currently, 28 per cent of Canadians that are now aged 50-plus intend to sell their home as part of their plans for making living arrangements in old age. Of this 28 per cent who intend to sell their home, the following are the main reasons cited for selling: concerned that their house will be too hard to maintain (67%), want access to equity (46%), plan to travel and do not want the responsibility of a house (38%), concerned that they will not be able to care for themselves (30%), and cannot afford to stay in their house (23%).
Of the potential sellers in the aged 50-plus bracket, 37 per cent plan to move into a smaller, more manageable home and will use the equity from the sale of their home to support retirement (86%), to travel (48%), to give it to their children (42%), and to purchase a recreational property (7%).
Added Soper: "One way that this group continues to defy conventional notions of 'old age' is by redefining how and where they want to live. Traditionally, when the time came for the 50-plus demographic to make a move, some popular choices were to downsize, move in with their kids or move into an assisted living facility. Today, with longer life expectancies, better health and more wealth, the 50-plus group have a plethora of options available to them and there is no longer one best practice."
"The 50-plus demographic represent the fastest-growing and largest single consumer group, and are changing the Canadian economic landscape and redefining the approach to business in almost every industry," said David Cravit, senior vice-president, marketing, Canada's Association for the Fifty-Plus (CARP).
Through specialty programs, such as The Home Depot's Independent Living Program, which provides products and services to homeowners with mobility issues, and by providing installation of specific products, such as grab bars, ramps and adjustable cabinets, home modification is much more easily accessible. As such, the 50-plus generation has the flexibility to comfortably live where they choose longer than preceding generations.
Continuing with this trend, financial institutions such as TD Canada Trust, are offering many more services and products targeted to the mature property owner. The Home Equity Line of Credit, for example, allows homeowners to borrow against their home equity and can be used for renovations, investments, or even retirement needs. With the right financial approach, retirement does not have to result in delay or a drastically reduced quality of life.
Generation gap or reality check? When asked, “At what age do you plan to retire from your job?” 20 per cent of Canadians aged 30-plus said between the ages of 56 to 60, while only 12 per cent of Canadians aged 50-plus said between the ages of 56 to 60. Perhaps the closer Canadians get to 'retirement age' the less realistic it becomes.
When it comes to lifestyle, 21 per cent of Canadians aged 30-49 plan to have a significantly more modest lifestyle upon retirement, compared to 36 per cent of respondents that are currently in the 50-plus age group.
Honing in on respondents aged 50-plus, 34 per cent said that spending time with family would be their primary focus during retirement, followed by focusing on their hobbies/interest (32%) and travelling (16%).
Regional and gender differences seem to make an impact as well. Residents in the Atlantic provinces (43%) appear the most family oriented when it comes to how they will spend their retirement years. Interestingly, 40 per cent of women said spending time with family will be their primary focus during retirement, compared to only 26 per cent of men. More men (36%) plan to focus on themselves, their hobbies and interests than women (28%).
The majority of 50-plus Canadians are content with the status quo. When asked, “If money were not an issue, how would you like to be living in your retired years?” the responses were, live just as I am now (59%), have two seasonal residences (17%), travel the world with no fixed address (11%), while buying a dream home, moving in with family and children, and relocating to another country each tied at three per cent.
November 20, 2006 in What's next (in real estate) | Permalink | Comments (0) | TrackBack
A "timbit" of home to Afghanistan
The Renfrew County Real Estate Board is appealing to REALTORS® across the country to join them in sending a little reminder of home to Canadian troops in Afghanistan this holiday season. The board hopes to send a five-dollar Tim Hortons gift certificate to each person serving in Afghanistan on behalf of Canadian REALTORS®.
"Canadian Forces Base Petawawa is within our board’s jurisdiction and we have witnessed the grief of the family members of those killed in action," says Pat Cleator, President of the Renfrew County Real Estate Board. "We would like to show the troops that we do appreciate their sacrifices" she said. "And what could be more Canadian than a Tim Hortons coffee and donut?"
Ontario Real Estate Association President Tim Lee has offered the resources of OREA to support this initiative. "I encourage every Canadian REALTOR® and real estate board to get involved regardless of their political thoughts. This is about supporting people, not policies" he said.
The board needs to raise $15,000 to provide this gift. A notice will be included informing the troops who the donation is from.
November 15, 2006 in What's next (in real estate) | Permalink | Comments (0) | TrackBack
Real estate predictions for 2007
Home buyers across the country will breathe a sigh of relief in 2007, thanks to a nationwide influx of new listings that is expected to slow price appreciation in major Canadian centres, says a report released by RE/MAX.
The RE/MAX Housing Market Outlook 2007 found that while the number of homes listed for sale is set to climb, demand will remain strong in the 17 markets surveyed, including Vancouver, Victoria, Kelowna, Calgary, Edmonton, Regina, Saskatoon, Winnipeg, Kitchener-Waterloo, Hamilton-Burlington, Toronto, Ottawa, Montreal, Halifax, Charlottetown, Saint John and St. John's. With few exceptions, projections for sales volume in 2007 match or fall short of peak performance reported in 2005 and 2006, with more balanced conditions - characterized by healthy inventory levels and less urgency in the market - expected to emerge.
Nationally, 462,000 properties are forecast to change hands next year, making 2007 the third best year on record. After four years of double-digit gains, average price is predicted to climb a modest five per cent to $290,000 by year-end 2007, up from $275,000 one year ago. All but three of the markets surveyed (Kitchener-Waterloo, St. John's, and Charlottetown) are predicting further escalation in housing values, ranging from three to 10 per cent, in 2007.
"Affordability is one of the more serious issues facing today's real estate consumer, yet purchasers remain steadfast," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "Buyers are simply getting more creative in their approach to homeownership, considering alternatives to single-detached homes such as semi and row housing, town houses, and condominium apartments. They're also looking at peripheral areas located close to the city centre that provide a better bang for the buck. New mortgage products that extend the traditional 25-year mortgage amortization period to 30 and 35-years may also help them realize their goal of owning a home sooner rather than later."
Leading the country in terms of percentage increase in average price in 2007 are Calgary and Edmonton, with housing values rising 10 per cent to $385,000 and $265,900 respectively. Both markets experienced substantial upward pressure in pricing during 2006 - with Calgary climbing 40 per cent to $350,000 and Edmonton rising 25 per cent to $241,750.
"Strong economic fundamentals continue to fuel healthy residential real estate activity in markets across the country, despite what is happening south of the border," says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. "We are heading into another year of economic growth. Consumer confidence levels are strong. Unemployment levels are forecast to remain low. Oil prices are expected to hover at $60 per barrel. The Canadian dollar continues to climb. The Bank of Canada is holding the line on interest rate hikes. It's all positive."
In 2007, the highest percentage increase in unit sales is expected to occur in Saskatoon, where sales are forecast to climb seven per cent to 3,630 units. Edmonton is expected to place a strong second, with the number of homes sold climbing five per cent to a record 21,300 units. Regina and Hamilton-Burlington are tied for third place, both projecting a two per cent increase in unit sales to 2,950 and 13,800 units respectively. Vancouver, Kelowna, Winnipeg, Ottawa, and Saint John are all projecting sales volume on par with last year's levels.
October 24, 2006 in What's next (in real estate) | Permalink | Comments (1) | TrackBack
Ontario growth to sag
While Ontario sags, Alberta is expected to be Canada's top economic performer this year with the strongest growth rate in a decade at 6.3 per cent, says an economic outlook from Royal Bank. Alberta's growth is expected to slip to 4.5% in 2007.
"Alberta currently tops the rest of the country with the lowest unemployment rate and the fastest trend growth in retail sales, new home construction, residential building permits for future construction and manufacturing shipments," said Craig Wright, RBC's chief economist.
For the overall Canadian economy, RBC has revised its 2006 growth forecasts downward, with Ontario being sharply downgraded to last place among the provinces.
Alberta and British Columbia are now in first and second place, respectively, bumping Newfoundland and Labrador to third place for growth in 2006.
Canada's economy is expected to grow by 2.8 per cent in 2006 and 2.7 per cent in 2007, But Ontario's economic outlook has weakened, with expected growth of 1.5 per cent in 2006 and two per cent in 2007, according the forecast.
"Ontario's economic growth forecast has weakened and is facing further downside risks," said Wright. "The economy isn't far from being at a standstill, despite the drop in natural gas and oil prices, which should both serve to stimulate growth."
Much of Ontario's weakness was already evident in the first half of 2006, and more numbers on growth in retail sales, housing starts, building permits, housing resale activity, job growth, manufacturing shipments and exports, continue to underperform.
According to the report, the U.S. housing market has soured further and Central Canada's has joined this correction, although not to the same magnitude.
"Ontario's housing markets will be a drag on growth this year and next, with resale prices expected to modestly soften," Royal Bank said.
Furthermore, while Ontario's manufacturing sector should emerge much stronger towards the end of this decade, it will remain weak this year and next.
In addition, Ontario's auto sector awaits new production runs, thanks to recent investment announcements with production expected to stabilize in 2008. However, the sector faces a flat outlook for the remainder of the decade.
Looking beyond the Alberta's energy patch, agriculture is also contributing to that province's growth, with a greater likelihood that 2006 will see a higher quality crop and better crop prices than last year.
According to the report, inflationary bottlenecks have grown in recent months. Wages are now more than eight per cent higher than a year ago, and Alberta's rate of inflation now tops the country, up almost five per cent from a year ago. These are clear signs of overheating against a backdrop of labour and material shortages.
"For 2007, despite risks, we think Alberta will maintain the lowest unemployment rate, the fastest income growth, the strongest growth in retail sales, and the fastest growing workforce of any province in the land," said Wright.
October 23, 2006 in What's next (in real estate) | Permalink | Comments (1) | TrackBack
Consumer confidence eases
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ational consumer confidence – a significant indicator in projecting Canada’s housing market – is pointing to a gradual return to more normal activity levels over the coming year.
Confidence remains upbeat, but edged lower in the third quarter of 2006 compared to the second quarter. Consumer confidence receded in British Columbia, the Prairie region, Ontario and Quebec. By contrast, confidence held steady in the Atlantic region.
Consumer sentiment about making major purchases also declined in the third quarter of 2006, with fewer households saying it was a good time to make a major financial outlay in all regions except Quebec and Atlantic Canada.
While enthusiasm about making major purchases has been trending lower for more than two years, the outlook for household budgets and employment are only just beginning to edge down from peak levels.
Expectations for improvement in household budgets remain high, but the percentage of households that expect their budgets to deteriorate over the next six months increased in the third quarter.
The trend for employment prospects was similar. The outlook remains very positive, with a majority of respondents saying they expect the number of jobs to either increase or at least remain the same over the next six months. As with household budgets, there was an increase in the percentage of Canadian households that believe the employment situation will worsen in the coming months.
Sentiment about the hiring outlook dimmed most notably in Ontario, Quebec and the Atlantic region. The less positive outlook regarding hiring in those regions likely reflects an increased recognition by consumers that economic growth in those regions is forecast to be considerably weaker next year than in the Western provinces.
The Conference Board of Canada measures consumer confidence on a monthly basis.
October 10, 2006 in What's next (in real estate) | Permalink | Comments (0) | TrackBack
Considered Flipping Real Estate?
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ooking to make some "easy" money? A recent survey indicates that nearly one-quarter of respondents have considered flipping(*) houses as a source of income. And, while 44 per cent of respondents perceive house flipping as difficult, 40 per cent reported knowing someone who has flipped a house. In addition, 31 per cent of polled Canadians are interested in the house flipping trend in general.
To capitalize on this growing interest, HGTV is launching The Big Flip, a new reality-style program that follows two friends as they take on the challenge of flipping as many houses as possible in one year. The series features Randy Mackay, a 13-year veteran of the contracting business and John Stassen, who has no building experience and who recently sold his IT business to try and make a living flipping houses.
"The Big Flip is a series that takes an inside look at a growing real estate trend," says Anna Gecan, Vice President, Content, HGTV. "Many of our viewers have considered house flipping as a money-making endeavour. Randy and John's experiences will help viewers avoid costly mistakes buying, fixing and selling houses, and it makes for highly entertaining and suspenseful television viewing."
Regionally, the survey results indicate that British Columbia residents are the most likely to know someone who has flipped a house (at 49 per cent), compared to only 13 per cent of respondents in Quebec. Furthermore, 72 per cent of British Columbia participants agree with the statement that house flipping can be a very profitable business, compared to 55 per cent of Quebeckers. Sixty-two per cent of Ontario participants agreed with this statement.
"We've come a long way in the past year and have realized that flipping houses is certainly not everybody's game," says Randy Mackay of The Big Flip. "You need to have some construction experience, you need a good real estate agent who knows the area and, most of all, you have to be prepared to win and lose."
The online survey of 1200 English TV viewers from across Canada, ages 25 to 54, was conducted for HGTV by Vision Critical in order to assess perceptions and trends in regards to house flipping. The results can be considered to be accurate to within 2.8%, 19 times out of 20.
(*) To "flip" a house is defined as the act of buying a real estate property and re-selling it for profit a short time later after making significant improvements.
HGTV is an Alliance Atlantis Network. More information on The Big Flip can be found on www.hgtv.ca.
October 3, 2006 in What's next (in real estate) | Permalink | Comments (2) | TrackBack
Billion dollar reduction in spending
CMHC programs reduced by $45,000,000.
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he federal government has outlined $1 billion in savings it expects to make over the next two years. This commitment was made in the March 2006 Federal Budget. Another $1 billion in savings will be extracted through unidentified "tighter management" measures within the next two years.
The first $1 billion of savings will come from programs the federal government says "are not delivering value for money, programs that didn't spend all the money allocated, work that could be done more efficiently outside the government, and programs that don't meet the needs of Canadians".
Through greater "efficiencies in the administration of CMHC programs", the budget for CMHC housing programs is being reduced by $45 million over two years. In 2005, CMHC spent $658 million on housing programs. Prior to this announcement, the corporation projected $676 million in program spending for 2006. Specific details about the CMHC cuts have not been released.
The Commercial Heritage Properties Incentive Fund pilot project will end early – saving the federal government $2.9 million. This was a $30 million pilot program was created in November 2003 to encourage and support the preservation and rehabilitation of commercially viable heritage properties in Canada. Under the program, taxable Canadian corporations apply to the CHPIF to be reimbursed for 20 per cent of the eligible costs they incur to rehabilitate a historic property for commercial use – up to a maximum of $1 million.
Elimination of excess funding for real property renewal for federal government buildings will also result in savings of $5 million over two years.
The single largest saving, at almost $380 million, will be made by reclaiming unspent money. Elimination of the visitor rebate program, which allows foreign visitors to claim GST refunds, is the single largest program cut at $78.8 million. The total savings amount to less than one per cent of the federal government's program spending.
September 26, 2006 in What's next (in real estate) | Permalink | Comments (1) | TrackBack
A Passion for Property
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e all know the meaning of home, the longing for a durable habitation — shelter from the storms of life — that is bred into our bones. Home, be it ever so humble or grand, has proverbially been a man’s castle and a woman’s refuge, offering up a haven in a heartless world, an anchor for the restive and the domesticated alike. No wonder that the adorable little alien E.T. wanted ever so badly to get back to it, even though his "home" happened to be around the corner in outer space. Or that Dorothy yearned with all her might to return to the family farmhouse in Kansas. As the French philosopher Gaston Bachelard observed in his book "The Poetics of Space," the "virtues of shelter are so simple, so deeply rooted in our unconscious," that houses can be said to stand in for the poetic imagination itself. They serve as the embodiments of our inner life, Bachelard wrote, containers for fancies: "the house shelters daydreaming, the house protects the dreamer, the house allows one to dream in peace."
Or so at least used to be the case, before our collective relationship with the idea of home changed — gradually at first, as is the way of all such cultural shifts, and then ever more strikingly — into something other than it once was, something charged with an almost sexualized power, suffused with an insatiable quality of appetite. These days, it would appear that the image of home, our own solitary home, no longer suffices to hold our imaginations. Sometime during the past 10 years, beginning around the dot-com boom, we have — whether as studio dwellers or longtime renters, co-op board members or condo subletters, inhabitants of the suburbs or the cities — become, in the phrase of the Edwardian novelist John Galsworthy, men and women of property, both real and theoretical. We have, regardless of our occupations and other interests, been infected with Real Estate Lust, a condition whose symptoms include a compulsive scanning of real estate ads and an incessant discussion of who paid what for how much, as well as a fascination with the size and shape — down to the number of bedrooms, closets and bathroom windows — of apartments and houses that belong to people other than ourselves. We have wandered out when no one was looking to play in fields of ever-greater square footage, pursuing McMansion visions, getting caught up in the mindset not of proprietary homeowners but of acquisitive real estate agents and developers.
September 25, 2006 in What's next (in real estate) | Permalink | Comments (0) | TrackBack
Consultations on MLS rule changes
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he real estate Boards and Associations of The Canadian Real Estate Association have voted overwhelmingly to continue discussion and research to find a national consensus on resolution of MLS® trade mark issues. A series of proposed MLS® rule changes were presented at a CREA Special Assembly in Halifax on September 20th, but the recommendations were referred to the Association Board of Directors for further study and consultation. A report to members will next be provided during the CREA Annual Meeting in March 2007.
The Canadian Real Estate Association owns the Multiple Listing Service® and MLS® trade marks in Canada. The trademarks are licensed to CREA members for use in the marketing of real property.
"The proposed amendments to the MLS® rules presented at the CREA Special Assembly in Halifax were developed to protect the trade mark, and for no other reason" said Alan Tennant, FRI, President of The Canadian Real Estate Association.
"Some reports have suggested the proposed rules would mean higher fees for consumers, or the elimination of some real estate broker business models. The MLS® Rules and the proposed amendments do not restrict or determine the fees or commissions that REALTORS® may charge. They are also flexible enough to permit a wide range of business models for real estate," the CREA President added. "This is a trade mark issue".
"The proposed amendments, prepared with the guidance of expert legal counsel, were recommended to CREA as the best way to protect the MLS® trade marks."
CREA considers the MLS® and Multiple Listing Service® trade marks as highly valuable assets. Under its Rules, as the sole owner of the trade marks, CREA has the right as well as the obligation to ensure compliance with the conditions governing the use of the MLS® trade marks.
The Multiple Listing Service® has been a valuable real estate tool in Canada for more than fifty years. There have always been three "pillars" or basic requirements for a listing to qualify for inclusion on a real estate Board’s Multiple Listing Service®. It is CREA’s view that consumers and REALTORS® both benefit from these basic features of MLS®.
The three existing requirements or "pillars" for a listing to qualify for the Multiple Listing Service include some offer of compensation between REALTORS®; continuous agency relationship during the term of the MLS® listing; and accuracy of information. If a listing goes into the Multiple Listing Service®, a member REALTOR® is required to verify the accuracy of information in the listing.
Canadian consumers have also relied on the MLS® trade marks for generations as signifying highly professional and ethical real estate services. REALTORS® in Canada have spent hundreds of millions of dollars advertising their services in association with the MLS® trade marks.
"The more extensive the requirements or pillars to qualify as an MLS® listing, the better CREA would be to defend the MLS® trade marks," Association President Alan Tennant added. "At the same time, we realize that this has to be balanced against minimizing any potential Competition Act concerns. It was the Association’s view the proposed amendments strike an appropriate balance between what we would like to see to protect the trade marks, and what could lead to Competition Act issues."
September 22, 2006 in What's next (in real estate) | Permalink | Comments (1) | TrackBack
Home resales lowest since 2004
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he pace of home resales in the United States fell a sharper-than-expected 4.1 per cent in July to their lowest level since January 2004 as the downturn in the U.S. housing sector accelerated, the National Association of Realtors said.
U.S. home resales fell for a fourth consecutive month to a seasonally adjusted annual rate of 6.33 million units in July from a downwardly revised 6.60 million-unit pace recorded in June.
The July pace was 11.2 per cent below the July 2005 pace of 7.13 million.
Analysts had expected home resales to slow to 6.55 million units from June's originally reported rate of 6.62 million.
The national median home resale price for all housing types was $230,000 (U.S.) in July, up 0.9 per cent from July 2005, in the slowest year-on-year price gain since May 1995.
The supply of homes for sale at the end of July jumped sharply by 3.2 per cent to 3.86 million units. This represented 7.3 months supply, the highest since April 1993.
August 24, 2006 in What's next (in real estate) | Permalink | Comments (0) | TrackBack
Federal tax cuts welcome
GST impact on residential & commercial real estate
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he Canadian Real Estate Association says the tax cuts outlined in the 2006 Federal Budget will ease the tax burden on individual Canadians, and reduce some costs associated with buying and owning a home.
“These tax cuts will put money back in the pockets of Canadian families and will help increase consumer confidence about making big ticket purchases, such as buying, furnishing, or renovating a home ” says Pierre Beauchamp, Chief Executive Officer of The Canadian Real Estate Association.
“The reduction in the GST rate to six per cent will reduce the costs associated with buying or selling a home, and will help to make ownership more affordable,” adds Beauchamp. The GST is charged on professional services used by consumers during the course of a housing transaction – including fees paid to lawyers, appraisers, home inspectors and REALTORS®. The tax is also charged on moving costs, renovations, and the purchase of furniture and major appliances.
The GST is also paid on new homes, and the amount new home buyers will save with the reduction is significant. The one per cent reduction in the GST rate will save a homeowner $1,280 on a new home priced at $200,000 when the exisiting GST New Housing Rebate is also included.
The timing of the GST cut, scheduled for July 1, 2006, is not expected to have any short-term impact on the housing market. “The GST cut will apply to contracts signed after May 2nd “Pierre Beauchamp says “ and there is always a cycle in a real estate transaction, and many buyers who sign after May 2nd would not plan to take posession until after July first anyway.”
The reduction will also benefit anyone who buys or leases commercial property – particularly for businesses that do not collect the GST, as the tax is a direct cost. The Chair of the National Commercial Council of The Canadian Real Estate Association, Winnipeg REALTOR® Mark Thiessen, explains that “when the GST was introduced, it immediately added seven per cent to the costs of occupancy of leased premises. It also added seven per cent to the purchase price of commercial real estate, or value proportion thereof for commercial and residential mixed properties.”
“This is extremely important to note for businesses that do not collect GST, as this is a direct cost” Thiessen added.
The Federal Budget also announced $1.4 billion to address the needs for affordable and native housing, two REALTOR® issues of high priority. These issues are addressed in four different areas of the budget, including creation of three third-party trusts. One trust fund provides $300 million for northern housing; another trust provides another $300 million for off-reserve aboriginal housing. The largest third-party trust fund will allocate $800 million as a one-time investment for provinces and territories to use for affordable housing.
Few details on how the fund will operate were included in Budget documents, and REALTORS® will be watching the implementation of the fund closely to see how the money will be used.
“Building new housing units is one solution to the affordable housing needs of Canadians, but is not necessarily the best solution. Housing needs are complex, and there are a number of factors that need to be considered, including the ways we can use existing housing stock to meet the needs of most Canadians,” says Beauchamp.
The Canadian Real Estate Association has encouraged the development of a comprehensive national housing strategy for several years. REALTORS® have recommended measures to address tax and regulatory barriers that impact the affordability of housing, and have voiced their support for long-term, stable funding for the Residential Rehabilitation Assistance Program. REALTORS® have also supported the development of a national demonstration project to help low-income earners access homeownership.
May 4, 2006 in What's next (in real estate) | Permalink | Comments (0)
Boomer Demand Growing
The greying population will seriously bolster Canadian recreational property markets in 2006
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he RE/MAX Recreational Property Report, which highlights activity in 40 major Canadian centres, found that older boomers are fueling unprecedented demand for recreational properties in 67 per cent (27) of markets surveyed during the first quarter of 2006. Never before have those aged 50 plus been such a strong segment of the recreational property market.
"Baby boomers have played a key role in real estate markets across North America since the early 1970s," says Michael Polzler, Executive Vice President, Regional Director, RE/MAX Ontario-Atlantic Canada. "In fact, they've influenced everything from education, to politics, to the stock market over the past five decades. It comes as no surprise that boomers have now set their sights on recreational property. Frankly, it makes perfect sense. They believe in real estate as an investment and view recreational property as a relatively safe bet."
Boomer demand has also sparked an upswing in starting prices for three-bedroom, winterized recreational properties on waterfront lots. Virtually every market surveyed reported an increase. Once again, the most expensive markets are found in the West, with Whistler ($1.1 million), Salt Spring Island ($1 million), Shuswap Lake ($1 million), Kelowna (Lake Okanagan - $1 million), Penticton ($800,000 - $1 million), Sylvan Lake ($800,000 - $850,000) and Vernon ($800,000) representing the top seven. Ontario's Bala/Port Carling area in Muskoka ($500,000 - $550,000) is the most expensive recreational property market in Ontario-Atlantic Canada. Some of the most affordable oceanfront properties can be found on Canada's east coast, where starting prices are under $200,000.
"We've been expecting the first-wave of aging boomers for quite some time," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "They've paid their dues, they've contributed to society. These 'seasoned citizens,' the oldest of which turns 60 in 2006, are now looking to enjoy the fruits of their labour. Some are selling houses in major centres and making their way north, south, east, and west for their retirement years but others are keeping their homes and buying vacation properties for themselves, their children, and future generations."
Limited inventory levels have been reported in approximately 50 per cent of markets surveyed. Most markets, however, are reporting recreational property sales for the first quarter of this year on par or ahead of 2005 levels.
Teardown activity is rampant in most areas of the country, as baby boomers construct year-round lakeside dwellings that offer all the comforts of home. Renovation is also occurring at full-tilt in markets across the country.
"This is a generation that has had it all," says Polzler. "They've been the major force behind sales of luxury goods since the booming 1980s. Their homes reflect their success, whether they are in the city or the country."
May 1, 2006 in What's next (in real estate) | Permalink | Comments (0)
Boomers drive demand
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he full impact of an aging baby boom generation is hitting recreational property markets across the country, according to the 2006 RE/MAX Recreational Property Report. The report highlights activity in 40 major Canadian centres, and found that older boomers are fueling unprecedented demand for recreational properties in 67 per cent of markets surveyed during the first quarter of 2006.
"Baby boomers have played a key role in real estate markets across North America since the early 1970s," says Michael Polzler, Executive Vice President, Regional Director, RE/MAX Ontario-Atlantic Canada. "In fact, they've influenced everything from education, to politics, to the stock market over the past five decades. It comes as no surprise that boomers have now set their sights on recreational property. Frankly, it makes perfect sense. They believe in real estate as an investment and view recreational property as a relatively safe bet."
"We've been expecting the first-wave of aging boomers for quite some time," adds Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada.
Limited inventory levels have been reported in approximately 50 per cent of markets surveyed. Most markets, however, are reporting recreational property sales for the first quarter of this year on par or ahead of 2005 levels.
Teardown activity is rampant in most areas of the country, as baby boomers construct year-round lakeside dwellings that offer all the comforts of home. Renovation is also occurring at full-tilt in markets across the country.
"This is a generation that has had it all," says Polzler. "They've been the major force behind sales of luxury goods since the booming 1980s. Their homes reflect their success, whether they are in the city or the country."
Boomer demand has sparked an upswing in starting prices for three- bedroom, winterized recreational properties on waterfront lots. Virtually every market surveyed reported an increase. The most expensive markets are found in the West, with Whistler ($1.1 million), Salt Spring Island ($1 million), Shuswap Lake ($1 million), Kelowna (Lake Okanagan - $1 million), Penticton ($800,000 - $1 million), Sylvan Lake ($800,000 - $850,000) and Vernon ($800,000) representing the top seven.
Ontario's Bala/Port Carling area in Muskoka ($500,000 - $550,000) is the most expensive recreational property market in Ontario-Atlantic Canada. Some of the most affordable oceanfront properties can be found on Canada's east coast, where starting prices are under $200,000.
Although aging boomers are leading the charge for recreational properties, younger boomers and Generation X have also bolstered demand for properties from British Columbia to Newfoundland. Many of these purchasers are seeking more affordable properties and are willing to travel a distance to realize their goals and objectives.
International purchasers from Europe, Asia, Australia, and New Zealand are fueling demand for big-ticket recreational properties in Salt Spring Island, Whistler, Sylvan Lake, Bala/Port Carling, and Newfoundland. Americans, particularly those in the northern U.S. states, continue to play a major role in the sale of recreational properties across the country. The higher Canadian dollar has done little to dissuade buyers as prices for recreational properties in the U.S. reach peak levels.
To view the report , click here.
April 26, 2006 in What's next (in real estate) | Permalink | Comments (2)
Real Estate Bubble Watch
WESTERN HOUSING MARKETS ON FIRE, WHILE SOFT-LANDING UNFOLDING IN CENTRAL CANADA, SAY TD ECONOMISTS
C
anada’s housing markets remain robust in early 2006, with prices in the first quarter rising at a year-over-year pace of close to 10 per cent. However, the national figures mask a major regional story. In Western Canada, real estate has been on fire, while in Central and Atlantic Canada housing appears to be cooling.
Sales in Ontario, Quebec and the Atlantic remain high, but the pace of price growth has slowed. This is consistent with the view that a speculative bubble never developed in these regions and the moderation in housing activity is likely to remain orderly.
Within the West, much of the strength has been supported by strong fundamentals. Although the risk of speculative pressures is present, the prevailing level of affordability does not suggest that housing in Victoria, Edmonton, Calgary, Saskatoon or Winnipeg has become frothy.
Vancouver has the greatest bubble-like qualities, with prices rising at a 22 per cent annual pace in the first quarter of 2006, average home prices reaching close to half a million dollars and affordability deteriorating to the worst level in the country. The Vancouver real estate market is clearly vulnerable to any deterioration in buyer sentiment, but the good news is that the economic fundamentals for Vancouver are likely to remain solid over the coming years, limiting any softening in the price environment.
TORONTO – Like so many other recent economic indicators, the national housing statistics mask a great divide emerging from a regional perspective said TD economists in the latest issue of Housing Bubble Watch. The report is available online at www.td.com/economics. "Canada’s housing markets remained robust in early 2006, despite slightly higher mortgage rates. However, the dominant theme lurking beneath the national average results is clear signs that speculation has picked up in Western Canada, while housing markets in Central Canada appear to be coming in for a soft-landing," remarked Craig Alexander, Vice President and Deputy Chief Economist, TD Bank Financial Group.
With new listings hard pressed to keep up with the elevated level of existing home sales, real estate conditions at the national level remain relatively tight. As a result, the national average price of existing homes continues to climb at a vigorous pace, rising in the first quarter of 2006 at an estimated pace of close to 10 per cent year-over-year – not much different from the experience over the past few years and well above any assessment of a sustainable rate. "Based on long-term factors, including demographics and income growth, the average annual increase in national home prices is likely to be around four per cent in the coming decade, so the recent high single-digit and low double-digit gains cannot persist indefinitely," remarked Alexander. "But, the key issue is whether the adjustment to a more sustainable trend is gradual. The good news is that this is what appears to be happening in Central and Atlantic Canada."
East of Manitoba, house prices are now experiencing softer growth than the national average, with the annual rate of appreciation in several markets cooling to the mid-single digits. "But it’s important to note that this is not a reflection of any substantial drop in sales activity. Indeed, with affordability still attractive from a historical perspective, existing home purchases remain near record levels in a number of markets," observed Alexander. Instead, potential buyers have been given more choice as an increasing supply of product (both from the new and resale housing market) is helping to alleviate the price pressures that hung over the market in the past. “This soft-landing in price growth provides some evidence that these markets did not previously experience a speculative bubble that required a correction – an argument we have been making for more than a year," stated Alexander.
The outlook for housing in Central Canada and the Atlantic will depend greatly on what happens in the new home market. “So long as developers stay attuned to the softening in demand and do not engage in speculative building, real estate markets should remain relatively balanced and home prices should not experience a decline,” commented Alexander. And, certain locations should continue to fare better than the average. For example, supply pressures created by zoning/building restrictions are expected to be supportive to parts of the Greater Toronto Area – such as the downtown core and around the ‘Green Belt’.
In contrast to Central and Eastern Canada, housing conditions in Western Canada remain very tight and are showing increased signs of speculation. Activity has become so intense that home price growth has accelerated to over 20 per cent in year-over-year terms in some markets. Much of this outsized growth can be attributed to the high level of commodity prices, which have lit a fire under the economies of the resource-based West, thereby substantially propping up housing demand relative to available supply.
Thus, strong economic fundamentals, together with capacity constraints on the supply side, largely explain the lofty price growth in most Western markets. "However, when economic conditions are booming, it can also create the perfect breeding ground for speculative price bubbles to form. That’s because in such an environment, housing market participants are at greater risk of developing a case of irrational exuberance, especially if they expect that such exorbitant price gains will continue indefinitely," warned Alexander.
The risks appear to be greatest in Vancouver, where average home prices are rising at a 22 per cent year-over-year pace and have now reached close to half a million dollars. This has deeply eroded affordability and it has likely contributed to the decline in the B.C. personal savings rate deep into negative territory.
However, the story is very different in many other Western cities. In contrast to Vancouver, home price growth in Victoria has recently slowed to 13 per cent from well above 20 per cent last year, likely reflecting diminished foreign buying. “Housing in Calgary and Edmonton has also been on fire, but housing affordability has not deteriorated by much in Alberta, suggesting that the rapid ascent of home prices can be more fundamentally supported,” noted Alexander. The reason for this is that Alberta’s booming economy has also generated significantly stronger income growth.
The bottom line is that there is considerable momentum to the housing markets in the West. It will be important to monitor for signs of any intensification of speculation in these markets. However, strong economic conditions should limit the erosion in affordability and should constrain any softening in home price growth in the future. "The best outcome would be if housing markets in Western Canada in the future can mimic the current soft-landing unfolding in Central and Atlantic Canada," concluded Alexander.
April 7, 2006 in What's next (in real estate) | Permalink | Comments (1)
Ajax Realtor is a blogging pioneer
The "new idea" to gain an edge with consumers
I
n the old school of real estate, farming for prospective clients meant knocking on doors. The oldest methods in the book include sitting at a Sunday open house and making cold calls.
Now there's blogging.
Call it a sign of the times, but the ubiquitous Web has created a new marketing tool called blogging -- or Web logging.
For Fraser Beach the broker of record at Select/Plan Real Estate located in the Toronto suburb of Ajax, it's just another medium for reaching a prospective client. He says his 2-year-old blog, Toronto at Home, gives him the chance to stand out from the crowd.
"There are so many ways to advertise real estate now, and there's so much competition in every medium," he said. "This is a back-door way of advertising. It makes me look like an expert in my area."
In his Bog, Beach shares the dos and don'ts of buying or selling a home, along with tidbits of market news, what to expect when moving to Toronto, and other industry trends.
He's positioning himself as a Toronto real estate expert by writing about the various neighborhoods in that area. It's also a way to introduce himself, by promoting in his blog the affordable commission plan that his brokerage offers.
More than 75 percent of people looking for real estate begin their searches online, according to a 2005 survey by the National Association of Realtors (American), prompting most agents to establish some sort of Web presence. Blogging takes that a step further, and is a growing trend amoung web-savvy real estate professionals.
"It's becoming my primary marketing tool. Toronto at Home has brought me clients from Ajax and Hong Kong", Beach states.
And it you know it works ... because you're reading it now.
March 24, 2006 in What's next (in real estate) | Permalink | Comments (2)
Calgary riding a real estate boom
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emand for industrial real estate in Calgary jumped significantly in 2005, pushing up rents and propelling the city higher in a worldwide ranking, according to a new study by consultancy Cushman & Wakefield.
The city moved up nine places to 23rd in the ranking of the world's 122 most expensive cities for industrial and warehouse space. Average gross rents were $10.14 per square foot per year in Canada's oil and gas capital.
"Rising oil and gas prices are behind a city-wide boom and have led to greater demand for industrial space," said Chris Anderson, vice-president and general manager of Cushman's Calgary office.
"Calgary's vacancy rate for prime industrial space fell to 3.5 per cent by the end of last year," he added. "This is a very strong market that is undergoing dramatic growth. With this kind of momentum, we expect that rents will continue to move upwards."
London's Heathrow area is the most expensive location in the world for industrial and warehouse space, the study found, with total occupancy costs for one square foot of space hovering at $31.27. Tokyo ranked second, with occupancy costs of $20.06 a square foot. Dublin and Moscow came third and fourth.
Calgary tied Hong Kong for the title of top gainer, with each rising nine places in the rankings. Hong Kong now ranks 11th.
The figures were released on the same day as statistics from the Institute of Canadian Real Estate Investment Managers, showing that investment returns on industrial properties in Calgary were 21.3 per cent in 2005.
That compares with an average return of 17.6 per cent across the country, and to 16.8 per cent in Toronto.
March 16, 2006 in What's next (in real estate) | Permalink | Comments (0)
Is US housing 20% overvalued?
J
an Hatzius, an economist at Goldman Sachs & Co., just wrote an interesting report that should make anyone who bought at the top in a bubble market feel a little queasy. By his calculations, Hatzius believes that given the sharp rise in housing prices, coupled with the rise in mortgage rates, that home prices are about 20% overvalued at present. Hatzius isn’t predicting an outright plunge in prices. He believes the bubble could be unwound either through a stretch of time where prices stay stagnant until incomes catch up (which is what he calls, in econo-speak, his “baseline assumption”), or a significant drop in interest rates. Or through an outright decline in home prices.
Of course, all markets aren’t created equal. Hatzius believes the biggest overvaluations are in overheated markets like California, which he believes are overvalued by 30% to 40% based on the historical relationship between housing prices, interest rates and incomes. (Going city by city, he thinks Boston is 27% overvalued, Chicago 20%, Las Vegas 34% overvalued, LA and Miami are both...
Continue reading "Is US housing 20% overvalued?"
March 8, 2006 in What's next (in real estate) | Permalink | Comments (0)
Real Estate Bubble? What Bubble?
A
n article in Time Magazine concludes that reports of the bursting of the real estate bubble may be somewhat premature. The magazine says 2005 was another banner year for real estate. What’s more, Time says the growth was not in isolated spots. Citing data from Office of Federal Housing Enterprise Oversight, all but one of the 275 major metropolitan areas the agency surveyed showed rising housing values from 2004 to 2005. Still, there are signs of caution. "The market’s been incredibly strong," says OFHEO’s chief economist, Patrick Lawler. "But the rises we’ve seen over the last couple of years just aren’t sustainable."
March 7, 2006 in What's next (in real estate) | Permalink | Comments (2)
Videoblogging Your Home
L
et’s say you run a “digital video branding company,” which produces online videos for companies and organizations. Let’s also also say you have an unusual home you need to sell because you are moving to Massachusetts, but your Connecticut market is slowing. Let’s say you’ve heard about this blogging thing.
If you were Marco Greenberg, founder of Reel Biography, you’d put it all together to create video blog real estate ads, on a site called Bloggers Lane. It is intended to be a repository of videos of homeowners and their agents showing off homes. Mr. Greenberg is in talks with various real estate agencies to use the service as an additional marketing tool.
It’s hard to say this is a winner. But it is one more example of the entrepreneurial energy channelling technology to change real estate.
By the way, the homeowner in the video, Mr. Greenberg’s wife, may look familiar. That’s actress Stacy Nelkin. The Internet Movie Database says her claim to fame is that as a teenager she had a relationship with Woody Allen and became the basis for the Mariel Hemmingway character in “Manhattan.”
March 5, 2006 in What's next (in real estate) | Permalink |