U.S. condos starts up

Groundbreaking on American homes hits two-year peak, building permits up for first time in five months.

Construction of new homes in the United States posted the biggest increase in more than two years in April. The growth was driven by a big jump in multi-unit and condominium construction but groundbreaking on single-family homes fell to a 17-year low.

The Commerce Department said yesterday that housing construction rose by 8.2 per cent to a seasonally adjusted annual rate of 1.03 million units. But analysts predicted the surprising rebound in April would be temporary given the headwinds builders are still confronting, from slumping sales to soaring home foreclosures.

"It is definitely too early to uncork the champagne on the long and winding road to more healthy housing-market conditions," said Brian Bethune, an economist at Global Insight. He said he did not expect housing activity to stabilize until the end of this year.

The prolonged slump in housing has been a major drag on the overall economy, raising worries that the country is in danger of falling into a recession.

A separate report yesterday showed that consumer confidence as measured by the University of Michigan/Reuters survey fell to a 28-year low of 59.5 in early May, down from 62.6 in April.

The drop was blamed in part on rising concerns about higher gas and food prices.

Strength in housing construction in April came entirely from a huge increase in apartment construction, which can be extremely volatile from month to month. Building of apartments, defined as two or more units, jumped by 36 per cent. The larger single-family sector dropped by 1.7 per cent to an annual rate of 692,000 units, the 12th consecutive monthly decline.

Applications for building permits, considered a good sign of future activity, also recorded an increase in April, rising by 4.9 per cent to 978,000 units. It was the first gain in permits in five months.

But economists believe housing construction will remain under pressure until builders have more success in reducing a huge backlog of unsold homes.

That effort is being made more difficult by a record wave of foreclosures as millions of borrowers lose their homes because they cannot keep up with escalating payments.

Even with the improvement, housing construction nationwide was 30.6 per cent below the level of activity a year ago.

May 18, 2008 in World View [of real estate] | Permalink | Comments (1) | TrackBack

Tim Hortons - Corporate Greed

This blog is usually about real estate but today I have to comment on the most egregious example of corporate greed that I have ever heard about.

The Canadian Press

LONDON, Ont.–Giving a free Timbit to a baby has cost a single mother of four her job. Nicole Lilliman, 27, was fired yesterday from her Tim Hortons job for giving one of the 16-cent blobs of fried dough to a tot. "I have been fired for giving a baby a Timbit," Lilliman said yesterday.

"It was just out of my heart – she was pointing and going `ah, ah...' I should have gone to my purse and got the change, but it was busy." Lilliman, who has worked at the store for three years, said she thought little of the incident since Timbits are often doled out to dogs and children. She said the baby was about 11 months old, and she gave her the treat to quiet her, since her mom – a Tims' regular – had been ``having a bad day." "I could see (the dismissal) if it was a sandwich or something," she said. "But it was a Timbit."

Three managers greeted her yesterday, saying she had been caught on video giving free food to a child. "They said, `Remember, Monday you gave out a free Timbit,' " she said. "I had to think, then I was like, `Oh yeah,' and I smiled because I thought I'd get a warning." Instead, she was fired for theft.

Giving food away is against the rules, said Tim Hortons district manager Nicole Mitchell.

The Timbits given to pets, Mitchell added, are usually "day-old and recycled."

I didn't know that you only gave stale Timbits to babies — I guess if they can't talk, they can't complain.

Postscript:

Tim Hortons responds to firing of staff member 

TORONTO, May 8 /CNW/ - In regards to the recent situation with the termination of a staff member in London, Ontario.

Unfortunately the action of the manager of this location was not appropriate nor grounds for dismissal. With an apology from management Ms. Lilliman has been rehired by the franchisee.

We sincerely apologize to our customers for this unfortunate incident.

For further information: Rachel M. Douglas, Director, Public Affairs, Tim Hortons, (905) 339-6277, douglas_rachel@timhortons.com

May 8, 2008 in World View [of real estate] | Permalink | Comments (8) | TrackBack

Housing markets on shaky ground

There's no shortage of housing markets that look like bubbles waiting to burst, but economists say Canada has become one of the safer places in the developed world to own residential real estate. In the aftermath of the global credit crunch Canada is less vulnerable to a large drop in house prices than any other major advanced economy except Austria, according to the Washington, D.C.-based International Monetary Fund's World Economic Outlook.

Canada and Austria were the only two of 17 countries included in the study in which house prices appeared to be at or lower than where they should have been at the end of the period from 1997 to 2007, Mr. Cardarelli said. His study was based on growth in house prices as a function of macro-economic issues including income growth and interest rates.

The study, house price growth was modelled as a function of the following: an affordability ratio, growth in disposable income per capita, short and long-term interest rates, credit growth, changes in equity prices and changes in the working age population. The study used data from 1997 to 2007.

A "gap" occurred when house prices were higher or lower than where these economic fundamentals suggested they should be.

Canada is in better shape than many other countries and home prices here aren't expected to drop this year, said Benjamin Tal, senior economist at CIBC World Markets Inc. But that doesn't mean home owners should expect, or want, to see the big gains of past years, Mr. Tal said.

"If we see continued double-digit price growth in Canada over the next two or three years then we would enter bubble territory, but this is unlikely," Mr. Tal said. "I believe this spring, for the first time in seven years, there will not be a sellers' market in Canada."

In the first quarter of 2008, home prices rose in every major Canadian market except Edmonton, according to recent data from Royal LePage Real Estate Services. The average price of a detached bungalow was $336,836, up 8.3 per cent from the year before. Two-storey homes rose 7.1 per cent to $400,647, and standard condo units by 6.9 per cent to $240,423.

Ireland, the Netherlands and the United Kingdom fared the worst in the IMF study, with house prices at the end of 2007 sitting about 30 per cent higher than what economic fundamentals would suggest. House prices have already started to fall in Ireland and the U.K., and other vulnerable countries identified by the study include France, Spain and Norway.

A decline in interest rates is part of the reason Canadian home prices haven't shot past the country's economic fundamentals, Mr. Cardarelli said. Canada was also in the bottom five countries in the study in terms of real house price growth over the past 10 years, he added.

The U.S. came out better than many countries in the study, but that was partly because a correction was already under way there and this was captured by last year's data.

Fewer speculators and more conservative lending practices have helped protect Canada from a big housing market downturn like that in the U.S. and some European markets, said Sherry Cooper, chief economist at BMO Nesbitt Burns Inc.

"There's been a real market for flipping homes [in those countries]. We just haven't seen that develop at all in Toronto or even out West, where we have seen big increases in house prices," Ms. Cooper said.

In 2004, the U.S. was in the same state of "equilibrium" Canada is now in, but blew it when banks started providing exotic mortgages, creating an artificial demand for houses, Mr. Tal said.

Canadians should take this lesson to heart when considering products such as longer amortization mortgages and those with lower down payments, which add flexibility to the market but shouldn't be abused, Mr. Tal said.

"Remember that things were fine there [in the U.S.] in 2004. Then rates went up, and bankers with imagination created this bubble," he said.

What $750,000 will get you

In Toronto

4-bedroom detached home on a 51- by 93-foot lot

In Dublin

4 bedroom semi-detached home in Clonsilla

In London

A three-bedroom 1930s property in Neasden, England.

In Barcelona

An apartment

April 10, 2008 in World View [of real estate] | Permalink | Comments (2) | TrackBack

American home prices tumble

Freefall continues and likely to impact the Canadian market.

Across much of the United State, home values are dropping – even those backed by solid mortgages – and banks are repossessing more every day. Most experts say the dive won't hit bottom for another year and only after excess inventory is sharply reduced and credit markets improve.

"The housing value crisis is spreading and deepening," said David Abromowitz, a senior fellow at the Center for American Progress. "It has gone way beyond sub-prime borrowers stretched too far with bad loans and now has clearly extended into the housing markets more broadly."

U.S. home prices dropped 8.9 per cent in the final quarter of 2007 compared with a year ago, according to the Standard & Poor's/Case-Shiller home price index released earlier this week. That marked the steepest decline in the index's 20-year history.

"We reached a sombre year-end for the housing market in 2007," said Robert Shiller, one of the architects of the S&P/Case-Shiller index. "Home prices across the nation and in most metro areas are significantly lower than where they were a year ago. Wherever you look, things look bleak."

Many observers of the Canadian marketplace believe that our real estate market, particularly in the Toronto area, will soon follow the current trends in the United States.

March 2, 2008 in World View [of real estate] | Permalink | Comments (4) | TrackBack

Changing world housing markets

2007 in review and some forecasts for 2008

In 2007, the American housing market crashed, and Europe’s housing markets slowed. But house prices in Asia-Pacific gained momentum. Bulgaria saw the world’s strongest house price growth at 30.6% (15.4% in real terms) to end-Q3 2007 from a year earlier.

Shanghai’s red hot housing market continued to rebound, despite efforts by the government to cool the market. House prices rose by 27.85% to end-Oct 2007 from a year earlier; a significant turnaround from 0.6% drop in 2006.

Singapore registered an annual house price increase of 27.6% (24% in real terms) to end-Q3 2007, significantly higher than the 7.6% price increase over the same period in 2006. In real terms, Singapore was the world’s best-performing housing market, given inflation of only 2.66%.

House prices rose by more than 10% year on year (y-o-y) in nominal terms in several developing countries - the Philippines, Colombia, South Africa, and Hong Kong. However, when adjusted for inflation, price increases were generally substantially lower.

In Europe most countries registered unimpressive y-o-y house price changes in 2007, aside from Norway and Estonia.

Property prices in Ireland started falling in 2007, the first time in more than 15 years. The Irish housing market had the biggest and longest house price boom among developed countries in recent memory.

Urban land prices in Japan’s six largest cities rose by 7.75% during the first half of 2007. Although Japan’s national urban land price index fell by 1.48% during 1H 2007, this is an improvement from the 2.8% price fall in 2006. The Japanese urban land price index is generally believed to lag reality, so significant recovery is taking place in the Japanese housing market.

Interest rates

The recent house price slowdown in Europe and the US is mainly due to higher interest rates.

In Europe, the European Central Bank (ECB) raised its key interest eight times in 15 months. The repo rate was raised to its current level of 4% in June 2007 from its historic low of 2% in Nov 2006.

In the US, the Federal Reserve Bank raised its key lending rate 17 times in 24 months during 2004-2006. The US Federal Funds rate rose sharply from its historic low of 1% in May 2004 to 5.25% in June 2006.

As signs of strain on the housing market started to appear in mid-2006, the Fed kept its key rate at 5.25% for 14 months to Aug 2007.

When the US housing market boom turning to a bust, the Fed slashed key rates in September by 50 basis points and in October and December by 25 basis points, bringing the rate down to 4.25%.

The central banks of UK and Canada reduced key lending rates by 25 points in December 2007.

Some would say the Fed raised rates “too much, too soon,” and is now frantically reducing key rates to avoid recession. Others however suggest that weak oversight of US mortgage market lending is the primary cause of the present crisis, in combination with a structural shift toward off-balance sheet lending.

The ECB’s stubbornly slow rate adjustments, in contrast, have allowed the Eurozone’s diverse housing markets to adjust relatively smoothly. Only the most overpriced housing market, Ireland, has actually crashed, while the rest are mostly slowing.

US and Canada

The US housing market continues to weaken.

US home prices dropped 5% y-o-y to October 2007, to an average of US$207,800, based on sales recorded by the National Association of Realtors (NAR) (or 8.46% in real terms).

The Office of the Federal Housing Enterprise Oversight (OFHEO), which produces an arguably more widely-based index, saw prices rising 1.8% to end Q3 2007 from a year earlier, which translates to a fall of 0.6% when adjusted for inflation. 10 states in the OFHEO index experienced price falls, including Michigan (3.7%), California (3.6%), Nevada (2.4%), Massachusetts (2.3%), Rhode Island (2.2% and Florida (2.1%). Only two states registered house price growth of more than 10% y-o-y to end Q3 2007, Utah (12.9%) and Wyoming (11.8%).

Canada’s housing markets are also showing signs of slowing. The new housing price index rose 6.1% to end-Oct 2007 from a year earlier (3.7% in real terms), lower than the 11.4% (10.3% in real terms) y-o-y price rise to Oct 2006.

Europe

Most European housing markets slowed. Ireland’s house price plunge continued, with a 4.68% y-o-y drop to October 2007. When adjusted for inflation, the drop is more pronounced at 9.1%. The Irish housing market is vulnerable to interest rate changes, as 85% of mortgages are variable rate.

The Baltics performed quite well in terms of house price changes from a year earlier, but the latest quarterly data presents a picture of a region whose housing markets are in trouble.

In Latvia apartment prices have dropped by 7.7% to September 2007, over a quarter earlier. Lithuania’s apartment prices have stagnated at LTL 12,500 (US$5,213 or €3,620) per sq. m. in the last two quarters. In Estonia quarterly house prices increased by 23.4% y-o-y to Q3 2007, lower than the 28.6% growth to end-2006.

Norway’s housing markets are showing signs of nervousness, despite a strong performance this year. The house price index for the entire country increased 11.6% y-o-y to Q3 2007 (11.9% in real terms due to slight deflation). However, prices in the metropolitan area of Oslo-Baerum fell 0.5% from Q2 to Q3 2007. The housing market is facing more uncertainties as the Norges Bank raised its key policy rate by 25 basis points to 5.25% in December 2007.

Spain recorded 5.31% y-o-y house price growth to Q3 2007, the lowest rate of increase in nine years. Higher interest rates have dampened demand, and banks have become very careful in granting housing loans.

A slow down was also evident in the UK, though less sharp than expected. British house prices increased 9.7% y-o-y to Q3 2007, less than 2006’s y-o-y increase of 10.5%. When adjusted for inflation, the house price increase in Q3 2007 was 7.5%, slightly higher than the 7.3% rise in 2006.

House prices in Italy and Greece have also cooled. Mortgages in these markets are predominantly based on variable interest rates.

Although mortgages in Denmark, France and Germany are mostly based on fixed interest rates, their housing markets have nevertheless cooled. Other European countries which experienced house price slow downs are Sweden, Poland, Finland, Netherlandsand Switzerland. France has increased tax deductions on mortgage-loan interest rates, a measure expected to hold housing demand firm.

Asia

Housing markets in several Asian countries gained momentum during the first three quarters of 2007, reflecting to some extent continued recovery from the 1997 Asian Crisis.

The strong house price increases in Singapore, South Korea, and Japan have been mainly due to strong economic growth. Mortgage markets in Asia are generally underdeveloped. Hence the effect of interest rate movements on the housing market is indirect, channeled through over-all economic performance. With electronic goods as the main export of these countries, economic growth is expected to drop if the global economic recession occurs in 2008.

In the Philippines, demand for houses and condominiums has come mainly from families of Overseas Filipinos.

Price increases in China are subject to strong government intervention. Left unhampered, property prices would be expected to rise due to continued economic expansion and rapid urbanization. Adding fuel to the price boom are the Beijing Olympics in 2008 and World Expo in 2010 in Shanghai.

In Thailand, political problems have led to weak economic growth and falling property prices. Property price changes in Indonesia and Malaysia remain unimpressive. Although the national house price index in Indonesia was up 5.2% in nominal terms to end Q-3 2007, the index actually dipped by 1.2% in when adjusted to inflation. In Malaysia, the house price index rose 3.2% (1.7% in real terms) to Q2-2007 from a year earlier.

Pacific

Property prices in Australia continue to recover from the housing market slowdown during 2004 to 2005. The house price index for eight capital cities rose by 10.6% to Sept 2007 from a year earlier, slightly higher than the 10.1% annual increase in Sept 2006. Except for Sydney and Perth, Australia’s other major cities all registered house price increases of more than 11% y-o-y to Sept 2007.

The availability of housing finance combined with lack of supply fueled house price increases in 2007, despite rising interest rates. Population growth from immigration and the skills shortage in the construction sector also contributed to higher prices.

Double-digit house price increases are expected to persist in 2008 in Australia.

No drastic changes in immigration policy are expected, now that the Labor Party is in power, and new schemes to assist low income renters and house buyers are likely to increase demand for housing units.

Signs that New Zealand’s house price boom is coming to an end appeared in the second half of 2007. Although the national median house price rose 6.6% y-o-y to NZ$352,000 in Nov 2007, this was the lowest annual house price increase since Feb 2003.

The Reserve Bank of New Zealand (RBNZ) has raised its benchmark interest rate four times between March and July 2007 to 8.25%. The market downturn is expected to continue in 2008, and is expected to last until 2009.

Middle East and Africa

The depreciation of the US dollar against major currencies could be beneficial for the Middle East’s property markets. As the currencies of Gulf Cooperation Countries (GCC) are pegged to the US dollar, their property markets are getting cheaper as the US dollar depreciates – while everyone expects their currencies eventually to be revalued against the US dollar.

The biggest concern is oversupply. Dubai is swamped with new properties to be delivered in 2008 and 2009. A slump in demand from international buyers due to a global economic slowdown could exacerbate the problem. The speculative nature of its housing market makes Dubai highly susceptible.

In South Africa, the house price boom is coming to a halt. Annual house price growth peaked at 33% to end-2004. Since then, house price growth started decelerating, and was down to 13.6% y-o-y to end-Oct 2007. Adjusted for inflation, the house price index rose by only 5.3%. The slowdown was due to higher interest rates, lower economic growth, and to The National Credit Act, implemented June 2007, which imposed stricter rules on lending.

Israel’smarket is showing signs of recovery. The average price of owner-occupied dwellings rose 4.6% (2.5% in real terms) to Q3 2007 from the previous quarter. However, it is still 0.5% (1.9% in real terms) lower than its level in Q3 2006.

FORECASTS FOR 2008:

Europe

Buying housing in much of Europe should be avoided in 2008, because housing is relatively highly valued, having seen a long period of price appreciation (graphs here). The Baltics has been rising for a long time as a result of strong economic growth, but rental yields have fallen strongly - avoid.

Some areas of Eastern Europe are still good value, however. Just because Eastern European housing markets have been booming for a long time, does not necessarily mean that the boom is over.

In Bulgaria, Sofia has attractive yields despite the absurd over-hyping of areas such as the ski resorts. In Romania, Bucharest is still attractive, with good yields. In Slovakia, Bratislava remains attractive and undervalued, as are other areas of the country. Budapest’s housing market is recovering, and we think it is sustained by low price-rent ratios. Turkey, Greece and other coastal areas in Southern Europe are still undervalued.

Middle East & Africa

Investors should avoid Dubai, because of the overhang of property due for delivery in 2008 and 2009, except possibly detached houses. The newly-opening Gulf countries such as Abu Dhabi and Oman could eventually produce good returns.

The GPG believes Egypt is attractive. We are much less interested in beach resorts (its too hot on the West coast of the Red Sea in summer!) than in Cairo, where prices are low by regional standards, gross rental yields are among the highest in the world, taxes are low, and transaction costs are reasonable. The downside? An increasingly repressive and unpopular regime.

The GPG also likes Jordan. Despite strong price rises pushed by Iraqi refugees and Gulf money, rental yields in Amman are still spectacular, and taxes are low. Amman is not the most exciting place, but under the liberal economic regime of King Abdullah, GDP growth has been quite good at 4% a year over the past 5 years.

South Africa is rapidly cooling, after more than five years of double digit house price increases. The housing market is likely to be dampened by political uncertainty associated with the 2009 election, given the pro-redistribution rhetoric of front-runner Jacob Zuma.

Asia-Pacific

Property prices in much of Asia are still undervalued compared to pre-Asian crisis levels, despite strong increases in 2007.

China is unfortunately not open to investment, and non-resident foreign buyers of dwellings are no longer welcome (though developers still are). While Beijing’s property prices will probably peak in 2008 after the Olympics, Shanghai is still preparing for the World Expo in 2010. With yields at 8% Shanghai’s prices have nowhere to go but up, unless the government intensifies its intervention.

Cambodia could be a proxy for China. Strongly tied to the Chinese economy, Cambodia is open, has high yields, relatively low transaction costs and low taxes, though investors must be prepared for only an indirect acquisition of land due to constitutional limitations on foreign purchases.

The resolution of Thailand’s political crisis in 2008 could open opportunities, after two dismal years. Gross rental yields are good at 7%-8%, income taxes are relatively high but acceptable (compared to the Philippines), the market is pro-landlord. Under better management Thailand could do very well. Indonesia is attractive, but has problems as an investment destination - there are high yields in Jakarta, but very high transaction costs and high rental income taxes. The Philippines too has high yields, but similarly discouragingly high transaction costs and high rental income taxes.

Japan’s housing market is recovering strongly. While Tokyo’s gross rental yields are unattractive at around 4.7%, the price momentum is positive, the law is strongly pro-landlord, there are low-ish transaction costs, and low rental income tax. The recently announced tighter regulation of new dwellings could lead to faster property price appreciation.

In Singapore the GPG believes gross rental yields are now too low, at 2% to 3%. Nevertheless, Singapore is attracting (and admitting) more foreign-born workers – which is positive for prices. Hong Kong’s yields are somewhat higher (around 3% to 5%), and the US$ peg will mean Hong Kong will follow lower US$ interest rates, which should boost the housing market.

In Australia, we expect house price increases to persist in 2008. No drastic changes in immigration policy are expected, and new schemes to assist low income categories will likely increase housing demand. In New Zealand, we expect the market pause to continue.

Latin America and Caribbean

Much of the Caribbean seems overvalued and likely to be affected by any slowdown in leading US sectors, such as the banking industry.

The top picks for Latin America are Argentina (Buenos Aires still has excellent yields, and the economy is growing strongly), Uruguay (piggy-backing on Argentina as usual), and Colombia, which we believe is recovering politically and will soon be attractive to US buyers. Countries in the ‘second home’ diaspora of the US will remain attractive, as they are significantly less expensive than the Caribbean.

Source: Global Property Guide

January 5, 2008 in World View [of real estate] | Permalink | Comments (3) | TrackBack

U.S. home sales plunge

Worsening house market slump is heightening fear that the American economy may be thrust into recession

The United States housing market plunged deeper into despair last month, with sales of new homes plummeting to the lowest level in more than 12 years. The slump worsened more than most analysts expected, heightening fears that the country may be thrust into a recession.

New-home sales tumbled 9 per cent in November from October to an annual sales pace of 647,000, the commerce department said yesterday. That was the slowest sales pace since April 1995.

"It was ugly," said Richard Yamarone, an economist at Argus Research. "It is the one sector of the economy that doesn't show any signs of life. It doesn't look like there is any resuscitation in store for housing over the next year."

Over the year and countrywide, new-home sales tumbled 34.4 per cent, the biggest annual slide since early 1991 and stark evidence of the painful collapse in the once-high-flying housing market.

"I think you can classify what we are seeing in the housing market as a crash," said Mark Zandi, chief economist at Moody's Economy.com. "Sales and home prices are in a free fall. The downturn is intensifying."

The median sales price of a new home – half sold for more, half for less – fell to $239,100 (U.S.) in November, down 0.4 per cent from a year earlier. Would-be home buyers have found it more difficult to secure financing, especially for "jumbo" mortgages exceeding $417,000.

Unsold homes have piled up, which will force builders to cut back even more on construction and look for ways to sweeten the pot to lure prospective buyers. The housing market's plunge has followed five years of record-breaking activity from 2001 through 2005.

December 29, 2007 in World View [of real estate] | Permalink | Comments (2) | TrackBack

Top 10 Real Estate Searches

Yahoo! Canada today released its list of the most popular search terms of 2007 that included the top real estate related searches.

The Top 10 Real Estate Searches:

Canadians typed in MLS more then any other term. Search for real estate terms spiked proving that we still have a booming interest, if not a booming market. True to our conservative values, search for mortgage calculators, rates and brokers were in the top three. Canadians clearly do their research before jumping into the market.

1. MLS
2. Real Estate
3. Mortgage Calculator
4. House Plans
5. For sale by owner
6. Mortgages
7. Mortgage Rates
8. Houses for Sale
9. Mortgage Brokers
10. Foreclosures

December 3, 2007 in World View [of real estate] | Permalink | Comments (1) | TrackBack

Slow American housing recovery

America's housing slow down will be a long haul and a full recovery won’t occur until at least some time in 2009, according to a new report by Housing Predictor, which forecasts more than 250 local housing market futures in all 50 U.S. states.

The report comes on the heals of a Yale University economist warning to Congress that there may be future shocks to the nation’s housing markets.

Economist Robert Shiller, who authored a book warning of the real estate market collapse four years ago told Congress he feared that “the collapse of home prices might turn out to be the most severe since the Great Depression.”

“The decline in house prices stands to create future dislocations, like the credit crisis we have just seen,” he told the Senate’s joint economic committee.

The present real estate slow down has evolved into a crisis with tightening credit standards for home buyers seeking mortgages. The slow down in the housing market is gaining momentum with slower sales in the majority of markets tracked by Housing Predictor, while foreclosures are at a record high.

Former Federal Reserve Chairman Alan Greenspan said he would not be surprised if home prices fall in double-digit decreases over the next year. Deflation in U.S. home prices of that scale nationally would be unprecedented in U.S. history, and would have severe economic repercussions, costing many times the economic damage of the subprime mortgage melt down that started the present financial crisis.

The Housing Predictor analysis indicates inventory levels of homes, condos and land for sale in the majority of states markets are increasing with more foreclosures hitting the market.

See the full story on the U.S. housing market recovery forecast »

September 25, 2007 in World View [of real estate] | Permalink | Comments (4) | TrackBack

The ultimate real-estate deal?

Look south

Canadian buyers seeking their dream home are taking advantage of a strong loonie and sliding U.S. home prices to buy south of the border. U.S. real-estate agents say there's been a noticeable pick-up in Canadian interest in places such as Arizona and California, just as demand from American buyers is drying up. And it's not just more attractive conditions in the U.S. that are luring snowbirds — it's also because Canadian real-estate prices are relentlessly rising.

“We're experiencing a strong influx of Canadian buyers,” said Brian Culhane, one of the founders of ScottsdaleParadise.com, a real-estate firm in Arizona. “Recently it seems like, as our lending market slowed and Canadian prices have really gone up, particularly in Calgary...where people can't get a decent house without paying through the nose, this is a decent opportunity,”

He gets about five “solid” Canadian buyer leads a week and that's well above last year's level. A national spokesman for Re/Max in the U.S. also said he's seeing a pickup in Canadian buyers.

Canadian buyers seeking their dream home are taking advantage of a strong loonie and sliding U.S. home prices to buy south of the border.

Double-digit price declines and rising inventories in some neighbourhoods over the past year don't hurt either. Across the U.S., about 17 per cent of owners say their homes have lost value.

In Canada, meantime, home prices have set records this year. National new house prices are about 8 per cent higher than last year.

“Now is a great time for Canadians to buy their dream vacation properties in the U.S.,” said Sherry Cooper, chief economist at BMO Nesbitt Burns, in a report Friday.

“With our dollar near par and U.S. sellers anxious to deal, top-end properties now seem relatively inexpensive in luxury locations—particularly in comparison to similar quality homes, with less ‘vacation-potential' in Canada.”

U.S. property taxes and condo fees are also more affordable compared to new luxury condo developments in Toronto, Calgary or Vancouver, she added.

Given Canada's aging population and growing group of retirees, housing in locations such as Nantucket, Martha's Vineyard, Kiawah Island, Aspen, Tao, Scottsdale, Las Vegas, Naples, Miami and Palm Beach “has never been cheaper for Canadians (in real exchange-adjusted terms) and the selection has never been better in both new and existing properties.”

August 30, 2007 in World View [of real estate] | Permalink | Comments (4) | TrackBack

Florida realty market goes south

Great deals abound in southwest Florida due to credit crunch

Phone books that were delivered but never opened rot away next to empty driveways and overgrown lawns, telltale signs that once-booming southwest Florida is now the centre of the U.S. housing storm. Until two years ago, middle-class retirees vied with property speculators for houses and apartments in Cape Coral, a town near Fort Myers on Florida's sun-drenched Gulf Coast. Now almost every other house on some of its streets has a for-sale sign outside.

With a bloated inventory of unsold homes and a growing number of homeowners forced by mortgage delinquencies to sell – thanks to the subprime crisis and ensuing credit crunch – southwest Florida's once-warm clime for property has turned stone-cold.

Linda Setterlund, 61, owns a pristine three-bedroom, two-bath, Cape Coral house that has been on the market for about a year. At a reduced asking price of $183,900 (U.S.), she said, the house had been priced to match what she and her husband owed on it, after moving in three years ago with a 30-year fixed mortgage.

Setterlund said she and her husband had decided to leave the area to join family in Tennessee, but their decision was also prompted by growing real estate taxes and skyrocketing homeowner insurance rates after an active 2005 hurricane season.

"They're saying that we're heading for a recession but I think we're past that," said Setterlund, referring to the housing glut and its effect across much of south Florida. "I think we're headed more into a depression."

Setterlund and other local residents, many of them retirees from the U.S. Midwest, complained of low wages in the Fort Myers area, where leading employers include the Publix supermarket chain and the school board.

There was a nearly 27-month supply of existing single-family homes on the Fort Myers market last month compared with a three-month supply at the height of the local boom in housing in August 2005, according to Denny Grimes, a top real estate agent in Fort Myers.

At the same time, more than 40 per cent of single-family homes were listed at prices below $250,000 versus just 18 per cent at the market peak.

Making things worse, Grimes said, builders were still churning out new housing units at big discounts in and around Fort Myers, where many investors bought houses during the boom market without ever considering the long-term cost of holding properties.

Fort Myers "is by far the worst housing market that we're in," said Larry Sorsby, executive vice-president and chief financial officer of home builder Hovnanian Enterprises Inc.

Ever the realtor, Grimes said now may be the time for buyers to seek opportunity in adversity.

While business is slow for Grimes and other realtors, it has been booming for Jonas Elliott, a so-called "short sell" specialist at Southwest Florida Home Buyer Services in Fort Myers.

Elliott buys properties, from banks or other lenders, that are at a risk of foreclosure, usually at a large discount, and then "flips" them at a profit. "In this particular county I have about five years of good business," he said. "We have a ton of inventory, a ton of new properties coming into inventory."

He said losses on local properties have not been limited to medium-income retirees and "snowbirds" escaping harsh northern winters. One of Elliott's current customers is about to swallow a $1.5 million loss on four properties he could no longer afford to finance.

August 15, 2007 in World View [of real estate] | Permalink | Comments (0) | TrackBack

Royal LePage to hit the U.S. market

The real estate firm Royal LePage Franchise Services Fund is poised to jump into the troubled U.S. housing market, after reporting second-quarter profit more than doubled. The fund - which reported profit of $3.6-million or 36 cents per unit compared with a year-earlier profit of $1.5-million or 15 cents per unit - is currently shopping around for a major regional real estate company in the U.S.

CEO Philip Soper said it's an ideal time to make a buy at a reasonable price. "Certainly it's a much better time to make an acquisition at the bottom of the market," Mr. Soper said, adding he's in talks with companies in various regions.

"It's just taking some time to find the right target," Mr. Soper said, noting it's not just a matter of price. He said Royal LePage is also looking for a corporate leadership team that will share the Canadian company's vision.

Mr. Soper said the growth in royalty revenue exceeded the fund's expectations, and he attributed the surprising strength in housing unit sales in the Toronto area -- after a flat period in 2006 in particular -- to a smooth transition from a manufacturing-based economy to one that is service-based. "It was well above predictions and yet price increases remain," Mr. Soper said. "It really does indicate this market has some legs in a healthy way."

See article in the Globe and Mail »

August 9, 2007 in World View [of real estate] | Permalink | Comments (0) | TrackBack

U.S. new home sales plunge

Sales of new homes fell in June by the largest amount in five months as the housing industry continued to struggle with its worst downturn in 16 years. The Commerce Department reported that sales of new single-family homes dropped by 6.6 per cent last month to a seasonally adjusted annual rate of 834,000 units. The decline was more than triple what had been expected and was the largest percentage drop since sales fell by 12.7 per cent in January. Sales are now 22.3% below the level of a year ago.

The median price of a new home sold last month dropped to $237,900 (U.S.), down by 2.2 per cent from a year ago. It was the biggest year-over-year price drop since a 6.5 per cent fall in April. The median price is the point where half the homes sold for more and half for less.

The big drop in new home sales followed a report Wednesday showing that existing home sales dropped by 3.8 per cent in June to a five-year low. The weakness reflects spreading troubles in the mortgage market as more borrowers are defaulting on their loans, dumping those homes back on an already glutted market. In addition, banks and other lenders are tightening standards, making it harder for prospective buyers to qualify for loans.

Economists believe the weakness in housing could linger through the rest of this year until a huge overhang of unsold homes is worked down. For June, the inventory of unsold new homes was unchanged at 537,000 units.

July 27, 2007 in World View [of real estate] | Permalink | Comments (0) | TrackBack

Eurozone housing markets cool

Eurozone demand for house loans has dropped sharply, supporting the European Central Bank's view that property markets are cooling - so far in an orderly manner. Demand for housing loans to households "fell significantly" in the first three months of this year, the ECB reported in its latest bank lending survey for the 13-country region. It said that the decline was driven mainly "by a sharp deterioration in the assessment of housing market prospects".

The survey showed a much larger number of banks reporting declining demand for house loans than reported increases, and that the difference was the largest since the survey began in 2003.

Eurozone housing markets have varied considerably in recent years, with countries such as Spain, Ireland and France seeing rapid growth while German prices have remained flat or even fallen. The ECB's survey results fit with anecdotal and other data pointing to a general slowdown in house price growth in those countries that have seen the fastest increases.

However, the latest ECB survey showed banks had become more optimistic about the outlook, expecting net demand for loans to improve slightly in the second quarter of this year.

Seven increases of a quarter percentage point in the ECB's main interest rate since December 2005 have contributed to the slowdown. But so far, the eurozone has avoided any sharp correction that might have damaging economic consequences, although worries remain about the vulnerability of the Spanish market in particular.

Last week, John Hurley, Ireland's central bank governor, said the available evidence pointed to a "soft landing in the Irish property market". He forecast that Irish house prices would grow by at a rate in "low single figures" this year, after reaching 15 per cent last year.

For the eurozone as a whole, Jean-Claude Trichet, ECB president, pointed to a gradual slowdown in the growth of actual lending to households for house purchases, which fell to an annual rate of 8.9 per cent in March, from more than 10 per cent at the end of last year. This represented "a certain cooling down," he said.

The ECB is expected to raise its main interest rate by another quarter percentage point, to 4 per cent, in June, and economists have generally pencilled in another such increase by the end of the year.

May 14, 2007 in World View [of real estate] | Permalink | Comments (0) | TrackBack

American home prices drop

Recovery seen coming later this year

American home price declines this year are going to be steeper than earlier forecast because of the drop in subprime mortgage lending and the adoption of stricter lending standards, the National Association of Realtors said this week.

The group revised its forecast for home prices and sales. The 2007 median price for an existing home likely will drop 1 per cent to $219,800 (all figures U.S.) from 2006, the Chicago-based association said in a report. The median price for new homes is seen falling $100 to $246,400, the first decline since 1991.

See article in the Toronto Star »

May 12, 2007 in World View [of real estate] | Permalink | Comments (3) | TrackBack

Now that sucks ...

For those of you not in the loop, today, April 15, is the third annual That Sucks Day. Designed to celebrate failure, frustation and futility (and that's just the f's) it is built upon the observation that: "Rigorous scientific studies have shown that 10 out of 10 people will die."

Now that sucks!

April 15, 2007 in World View [of real estate] | Permalink | Comments (0) | TrackBack

International House Price Survey

Hottest markets Vancouver, Calgary and Edmonton compare with New York, London and Paris

First-time home buyers who work in the downtown business districts of Canada's largest cities generally pay less per-square-foot for their homes and enjoy shorter daily commutes than their peers in cities around the world, according to a survey by CENTURY 21 Canada in 31 international cities. Don Lawby, President of CENTURY 21 Canada, says the survey's price-per-square-foot comparisons showed that Canada has six of the 10 least expensive and only three of the 10 most expensive housing markets surveyed for entry-level home buyers working in the downtown business districts.

For example, St. John's and Quebec City had the lowest and second-lowest per-square-foot prices of all 31 cities surveyed, at $55 and $93 respectively. The two lowest per-square-foot prices for international cities were Istanbul, Turkey and Sydney, Australia, at $94 and $105 respectively. Daily commutes were 10 minutes and 20 minutes for St. John's and Quebec City, while daily commutes for Istanbul and Sydney were 15 minutes and 75 minutes.

At the other end of the price scale, Vancouver was fourth most expensive at $577 per square foot (five-minute commute), Calgary was sixth most expensive at $500 (20-minute commute) and Edmonton was 10th most expensive at $322 (20-minute commute). Paris was the most expensive at $1,051 per square foot (five-minute commute), London was fifth most expensive at $532 (17-minute commute) and New York was eighth most expensive at $375 (45-minute commute).

"Generally, major cities in Canada offer incredible values with great home prices and reasonable commute times available to entry-level buyers who are working in the downtown business districts," Lawby says.

The homes selected are representative of the typical entry-level homes chosen by first-time buyers who work in the downtown core in each of the cities. Price per-square-foot comparisons provide a basic measure of price-to-size value. This survey of typical entry level homes was done in conjunction with a survey on typical executive homes around the world. The homes selected for inclusion in the survey are based on the knowledge and experience of CENTURY 21 brokers in each of the 31 cities.

When comparing prices to sizes of the homes, the CENTURY 21 survey found that the 10 least expensive housing markets as ranked per-square-foot for first-time buyers are St. John's, $55; Quebec City, $93; Istanbul, $94; Halifax, $97; Charlottetown, $104; Sydney, Australia, $105; Bogota, $114; Mexico City, $119; Moncton, $127; and London, Ontario, $132.

The 10 most expensive housing markets per square foot in the world for entry-level home buyers working in the downtown business districts are Paris, $1,051; Moscow, $688; Seoul, $630; Vancouver, $577; London, England, $532; Calgary, $500; Athens, $375; New York City, $375; Tokyo, $325; and Edmonton, $322.

Canada's two largest cities ranked near the middle of the 31 cities: Montreal, at $276 per square foot is ranked 13th and Toronto, at $209 per square foot, is ranked 16th.

Canada

In Vancouver, a typical choice for a first-time buyer would be a 475-square-foot studio condominium with one bath in trendy Yaletown priced at $274,000 ($577 per square foot) and a 10-minute walk to the downtown core, Canucks' or BC Lions' games, or the Seawall on False Creek.

In Calgary, a typical first-time buyer would choose a one-bedroom, one-bath 500-square-foot apartment in Mission or Connaught priced at $250,000 ($500 per square foot) and a 10-minute drive or 20-minute walk to the downtown business core and the Calgary Tower.

In Montreal, a typical choice for a first-time buyer would be a three-bedroom, one-and-a-half-bath 780-square-foot condominium in the heart of the downtown priced at $215,000 ($276 per square foot) and 10 minutes from the business core and Canadiens' games at Bell Centre.

In Toronto, a typical choice for a first-time buyer would be a three-bedroom, two-bath 1,100-square-foot townhouse on a 2,500 square-foot lot in Mississauga priced at $230,000 ($209 per square foot) and 60 minutes west of the Bay Street financial district and the CN Tower.

A typical Winnipeg first-time buyer would choose a three-bedroom, two-bath, 1,200-square-foot home on a 6,000-square-foot treed lot in River Heights, Fort Rouge, priced at $180,000 ($150 per square foot) and 12 minutes by car from Portage Avenue and Main Street, the downtown focal point.

In Halifax, a typical first-time buyer would choose a three-bedroom, one-and-a-half-bath 1,500-square-foot home on a 4,500-square-foot lot in Timberlea priced at $145,000 ($97 per square foot) and a 25-minute drive to the downtown or to Citadel Hill overlooking the harbour.

In St. John's, a typical first-time buyer would choose a three-bedroom, one-and-a-half-bath 3,300-square-foot home on a 5,000-square-foot lot in the community of Paradise priced at $180,000 ($55 per square foot) and a 10-minute drive to the downtown and two kilometres from Signal Hall overlooking the city.

World financial centres

In Paris, a typical first-time buyer would choose a one-bedroom, one-bath, 258-square-foot apartment near the Etienne Marcel subway station in the centre of the city priced at $271,136 ($1,051 per square foot) and a five-minute walk to Palais Royal and the Centre Beaubourg museum.

In Seoul, a typical first-time buyer choice would be a three-bedroom, two-bath, 890-square-foot view apartment in Yongin, Gyeonggi Province, priced at $560,357 ($630 per square foot) and a 60-minute commute to the business core.

In Moscow, a typical first-time buyer choice would be a one-bedroom, one-bath, 323-square-foot apartment priced at $222,000 ($688 per square foot) and a 30-minute commute to the business core.

In London, a typical first-time buyer choice would be a three-bedroom, one-bath, 860-square-foot townhouse in the community of Croydon priced at $457,862 ($532 per square foot) and a 17-minute commute to the business core.

A typical New York City first-time buyer would choose a four-bedroom, two-bath, 1,400-square-foot home on a 5,562-square-foot lot priced at $525,397 ($375 per square foot) in Nassau County and 45 minutes from the Wall Street financial district by subway or car.

For a Tokyo first-time buyer, a typical choice would be a three-bedroom, one-bath, 1,076-square-foot home on a 1,184-square-foot lot at Tsudanuma in Chiba prefecture priced at $349,000 ($326 per square foot) and 50 minutes by train to downtown Tokyo.

In Sydney, a typical first-time buyer choice would be a three-bedroom, two-bath, 3,660-square-foot home in Kellyville priced at $384,669 ($105 per square foot), 75 minutes from the downtown and 30 minutes from the Sydney Opera House.

In Shanghai, a typical first-time buyer would choose a two-bedroom, one-bath, 1,076-square-foot apartment in the Pu tuo District, near middle ring road priced at $150,170 ($140 per square foot) and 60 minutes to the downtown core.

April 12, 2007 in World View [of real estate] | Permalink | Comments (2) | TrackBack

American home prices falling

February sales hit seven-year low

Prices of single-family homes across the nation depreciated in January compared to a year ago, the worst results in more than 13 years, a housing index released Tuesday by Standard & Poor's showed. The data underscored disappointing sales data released by the aaFederal government on Monday.

The S&P composite index showed a drop of 0.7 percent from a year ago in the price of a single-family home based on homes tracked over time in 10 metropolitan markets. In January 1994 the index dropped by 0.9 percent compared to January 1993, S&P said.

For its 20-city composite index, prices fell 0.2 percent. That data has been collected since 2001. Government sales figures reported Monday showed that the number of home sales in February fell to the lowest level in seven years, and followed an even larger drop of nearly 16 percent in January.

The downward trend is reflected in data across the nation while certain cities such as San Diego, Detroit, Boston, Phoenix and Tampa have done worse. Seattle and Portland, Ore., meanwhile, show some resistance to the downturn.

Federal Reserve governors watch housing as one of the most important indicators of the health of the overall economy. Economists fret that the slump in housing will drag down growth as the slowdown affects consumer spending and the construction industry. Last Wednesday, Fed governors held the benchmark interest rate in place at 5.25 percent, meaning that the prime interest rate used by commercial banks will stay at 8.25 percent. It was the sixth meeting in a row the Fed has held rates steady.

On Monday, the Commerce Department reported that sales of new single-family homes fell 3.9 percent in February to a seasonally adjusted annual rate of 848,000, the slowest sales pace in nearly seven years. The February decline followed an even larger 15.8 percent drop in sales in January, which had been the largest one-month plunge in 13 years, another sign the market has not yet found a bottom.

March 28, 2007 in World View [of real estate] | Permalink | Comments (0) | TrackBack

Living Narrow

There is a townhouse in Manhattan at 75 1/2 Bedford Street, that must be one of the narrowest dwelling structures on the planet.

The townhouse is 12 feet wide -- or should that be narrow. Talking about 1 foot for wall thickness on either side, the occupants are left with 10 feet to move around in.

Now that could reduce urban sprawl.

March 20, 2007 in World View [of real estate] | Permalink | Comments (2) | TrackBack

The over-night conversion

The Air Canada Centre is the home venue of the Toronto Maple Leafs and the Toronto Raptors. In as little as eight hours, a crew of 18 to 25 workers can transform the NHL ice to NBA hardwood. This video, recorded in a time span of over 16 hours, is compressed to under 3 minutes.

February 27, 2007 in World View [of real estate] | Permalink | Comments (0) | TrackBack

American home prices declining

Existing-home sales in most states were down from year-ago levels in the fourth quarter, marking the likely bottom for the current housing cycle, while prices in many areas corrected as a result of sellers’ willingness to negotiate, according to the latest quarterly surveys by the National Association of Realtors®. Total existing-home sales including single-family and condo, were at a seasonally adjusted annual rate of 6.24 million units in the fourth quarter, down 10.1 percent from a 6.94 million-unit level in the fourth quarter of 2005. Even with the general decline, six states showed increases in the sales pace from a year ago and one was unchanged. Complete data for three states were not available.

In the fourth-quarter, metro area single-family home prices, examining changes in 149 metropolitan statistical areas, show 71 areas had price gains from a year earlier, including 14 metros with double-digit annual increases, and 73 areas had price declines; five were unchanged.

David Lereah, NAR’s chief economist, said it appears the fourth quarter was the bottom for the current housing cycle. “This information confirms 2006 was the year of contraction, and hopefully the fourth quarter was the bottom of this current business cycle,” he said. “Home sales are leveling at historically high levels, and examination of data within the quarter shows home prices stabilizing toward the end. When we get the figures for this spring, I expect to see a discernible improvement in both sales and prices.”

The national median existing single-family home price was $219,300 in the fourth quarter, down 2.7 percent from a year earlier when the median price was $225,300. The median is a typical market price where half of the homes sold for more and half sold for less. For all of 2006, the median price rose 1.4 percent to $222,000.

February 23, 2007 in World View [of real estate] | Permalink | Comments (0) | TrackBack