Althought Alberta's economy remains solid, the number of people moving here is declining because of higher house prices and strengthening economies in other provinces, delegates to a one-day conference were told.
After reaching a record 85,911 people in 2006, net migration into the province is expected to total 65,000 this year before declining further to 58,000in 2008, said Richard Corriveau of Canada Mortgage and Housing Corp.
As Prairie region economist for the federal agency, he spoke at the recent Housing Outlook Conference.
"Despite the solid economic performance, the province's ability to attract migrants is diminishing in response to Alberta's escalating housing costs and improved economic conditions in British Columbia and Saskatchewan," he said. "Many recent arrivals from these provinces are now mooving back home".
Net migration is the inflow of people minus the outflow.
Saskatchevan has gone from "near recession" to one of the stronger economies ib the country, says Corriveau. But there is a downside to Saskatchewan's situation, he says.
"Despite an aggressive marketing campaign to bring people into the province, thought, the milk is starting to sour there" he says. "House price gains in Saskatchewan are leading the country."
The average price of resale homes in Alberta has gone from about $285,000 to a forecast of $355,000 this year. The price will likely climb to $379,000 in 2008, says CMHC. In terms of new homes, construction will likely pull back from a predicted 47,750 this year to 42,250 by the end of 2008 _ again in response to reduced demand and higher prices.
Corriveau said Ontario is now the largest contributor to Alberta's migration, in part because of the downturn in the fortunes of the eastern province's manufacturing sector.
Alberta will also have to rely more on offshore migration, he said.
"What we gained from B.C and Saskatchewan a year ago, we've given back because of the economic growth in those provinces," said Corriveau.
The expected revitalization of energy projects off the East Coast and the recent visit of a trade mission to Calgary could lure some people to return home.
While wages lag behind Alberta levels, housing prices are much lower.
He calls Alberta's net migration for 2006 an anomaly and adds the "significant" decline forecast over the next two years will bring migration back to more historical levels.
But Alberta will likely maintain the lowest unemployment rate in the country at 3,5 per cent, leading to additional wage pressure and a high rate of full-time job creation _ considered a beneficial factor for the province's housing sectors.
However, with the weakening migration and a record number of Albertans employed, businesses in the province will likely have a difficult time matching the payroll expansion of the last two years.
Healthy gains of five per cent last year and this year will be cut by more than half in 2008, says CMHC, with employment growth limited to 2,1 per cent _ the second weakest in 15 years.
"In fact, employment, migration and the rate of economic growth are all past the peaks and we will now see a return to 10-year averages," says Corriveau.
That will likely mean job growth of two per cent annually, migration of 40,000 to 50,000 per year, and economic growth in the mid-three-per cent range.
Sunday, December 2, 2007
Wednesday, November 28, 2007
Housing market pace predicted to decrease, published: November 24, 2007
The markets for both new and resale housing in Alberta are likely to decline this year and next, said a federal agency. The decline will be led by single family homes, which will continue to feel the impact of rising construction-related costs, lower migration of people to the province, and a dramatic increase in resale listings, said Richard Corriveau, Prairie region economist for Canada Mortgage and Housing Corp.
"The recent escalation in production costs will be a dominamt factor pushing single-detached housing starts lower, althought weaker net migration and a strong rebound in active resale listings will also contibute," he said.
Net migration is the inflow of people minus the outflow. Corriveau spoke to 650 delegates at the annual Housing Outlook Conference held recently at the Roundup Centre in the Stampede Grounds.
Following a record 31,835 construction starts of single-family homes in Alberta last year, there will likely be a decline of 12 per cent to 28,250 by the end of this year, says CMHC.
By the end of 2008, a further io-per-cent decline will bring the total down to 25,250 _ the lowest total in four year, it says.
"Fuelled by homebuyers seeking less expensive alternatives to the single-detachecd market, multi-family housing starts will climb to a 26 year high of 19,000 units this year," said Corriveau, adding that 2,000 fewer will be built in 2008.
Despite the expected dcline, the proportion of multi-family housing starts to total starts will likely hold at 40 per cent, the same as expected for 2007 and the highest proportion since 1982.
In terms of resale housing, a surge in activity in the firts half of this year will likely place this year's expected total of 74,000 sales close to last year's record of 74,350.
Sales peaked during the spring of this year as buyers bought in anticipation of further price increases and higher mortgage rates.
But it didn't work out the way.
"Since then, a surge in listings has slowed the rate of price growth considerably and buyers have become increasingly resistant to the recent runup in prices," said Corriveau. "Consequently, sales are now on a downward trend _ and in the face of weaker migration, this trend will continue in 2008, with sales falling five per cent to 70,000."
Following large double-digit price hikes for the past couple of years, price increases in Alberta's resale market are likely to slow in 2008, said Corriveau.
In 2006, there was a record gain of 31 per cent. It is expected to be followed by a 24 per cent jump this year _ most of that attributed to sales earlier in 2007 _ bringing the average price to $355,000.
Due to the number of active listings in the marketplace, combined with weaker demand, price growth in 2008will likely be limited to seven per cent, bringing the price to $379,000.
In Calgary, construction starts of single-family homes will likely slip to 7,250 in 2008, down from 8,000 this year, with the average price likely to climb to $550,000, up from this year's expected average of $475,000.
Meantime, multi-family construction starts will dip from 6,250 this year to 6,000 next year.
Construction of single-family homnes in Edmonton is expected to decline to 6,700 starts, down from this year's likely total of 7,800, while average prices will likely increase $60,000 in 2008 from this year's forecast of $440,000.
Multi-family construction is expected to decline to 5,700 units in 2008, down from this year's expected total of 6,750.
"The recent escalation in production costs will be a dominamt factor pushing single-detached housing starts lower, althought weaker net migration and a strong rebound in active resale listings will also contibute," he said.
Net migration is the inflow of people minus the outflow. Corriveau spoke to 650 delegates at the annual Housing Outlook Conference held recently at the Roundup Centre in the Stampede Grounds.
Following a record 31,835 construction starts of single-family homes in Alberta last year, there will likely be a decline of 12 per cent to 28,250 by the end of this year, says CMHC.
By the end of 2008, a further io-per-cent decline will bring the total down to 25,250 _ the lowest total in four year, it says.
"Fuelled by homebuyers seeking less expensive alternatives to the single-detachecd market, multi-family housing starts will climb to a 26 year high of 19,000 units this year," said Corriveau, adding that 2,000 fewer will be built in 2008.
Despite the expected dcline, the proportion of multi-family housing starts to total starts will likely hold at 40 per cent, the same as expected for 2007 and the highest proportion since 1982.
In terms of resale housing, a surge in activity in the firts half of this year will likely place this year's expected total of 74,000 sales close to last year's record of 74,350.
Sales peaked during the spring of this year as buyers bought in anticipation of further price increases and higher mortgage rates.
But it didn't work out the way.
"Since then, a surge in listings has slowed the rate of price growth considerably and buyers have become increasingly resistant to the recent runup in prices," said Corriveau. "Consequently, sales are now on a downward trend _ and in the face of weaker migration, this trend will continue in 2008, with sales falling five per cent to 70,000."
Following large double-digit price hikes for the past couple of years, price increases in Alberta's resale market are likely to slow in 2008, said Corriveau.
In 2006, there was a record gain of 31 per cent. It is expected to be followed by a 24 per cent jump this year _ most of that attributed to sales earlier in 2007 _ bringing the average price to $355,000.
Due to the number of active listings in the marketplace, combined with weaker demand, price growth in 2008will likely be limited to seven per cent, bringing the price to $379,000.
In Calgary, construction starts of single-family homes will likely slip to 7,250 in 2008, down from 8,000 this year, with the average price likely to climb to $550,000, up from this year's expected average of $475,000.
Meantime, multi-family construction starts will dip from 6,250 this year to 6,000 next year.
Construction of single-family homnes in Edmonton is expected to decline to 6,700 starts, down from this year's likely total of 7,800, while average prices will likely increase $60,000 in 2008 from this year's forecast of $440,000.
Multi-family construction is expected to decline to 5,700 units in 2008, down from this year's expected total of 6,750.
Hot Properties "VACATION", published: November 24, 2007
Almost brand new and only a block off one of Alberta's best beaches, this $439,900 listing in Sylvan Lake was built in 2006, but it has a real cottage feel to it with stone pillars and a verandah out front and vaulted ceilings inside.
The two-storey has 1,456-square feet of space with a large master bedroom on the main floor. The ensuite has a jetted tub.
The stylish kitchen has dark maple cabinets, stainless steel appliances, black granite countertop and bamboo flooring.
There are three more bedromms upstairs, ample room for all the guests you you get when you purchase this resort town home.
MLS#269895
_Compiled by Michele Jarvie, Calgary Herald
The two-storey has 1,456-square feet of space with a large master bedroom on the main floor. The ensuite has a jetted tub.
The stylish kitchen has dark maple cabinets, stainless steel appliances, black granite countertop and bamboo flooring.
There are three more bedromms upstairs, ample room for all the guests you you get when you purchase this resort town home.
MLS#269895
_Compiled by Michele Jarvie, Calgary Herald
City housing market to cool published: Friday, Nov.2, 2007
CMHC predicts drop in housing starts and existing home sales provincewide in 2008.
Red Deer's housing market will lose some of its sizzle in 2008, predicts Canada Mortgage and Housing Corp.
The national housing agency is forecating a decline in both residential construction starts and sales of existing homes in the city next year _ a trend expected to occur provincewide.
CMHC is projecting that the number of housing starts in Red Deer will reach 1.700 this year. Of these, a record 1.0125 will be single-detached homes, with 575 to be units in multi-family projects.
These figures are up from 2006, when there were 1.095 single-detached starts and 334 multi-family starts for a total of 1.429.
For next year, CMHC expects 1.525 housing starts in the city: 1.050 single-detached and 475 multi-family. That would represent a 17 per cent decrease in multi-family housing starts and a 10.3 per cent decline overall.
"The reason for the drop-off in multi-family starts is most likely due to the lower net migration we're seeing across the province," said Lindsay Kendall, CMHC's market analyst for the Prairie and Territories region.
Speaking from Edmonton, where CMHC was conducting its annual Alberta housing outlook conference on Thursday, Kendall explained that newcomers tend to rent or buy lower-priced homes in multi-family buildings. So as their numbers decline, so does the incentive for developers to invest in such projects.
Kendall said Alberta has been drawing many people from Saskatchewan and British Columbia, but with a strengthening of the economies in those provinces, people there are staying put. And those who previously moved to Alberta might be tempted to return to their home provinces.
Relative to other mid-sized cities in Alberta, Red Deer is probably less afected by this phenomenon, said Kendall. That's because of its desirable location between Calgary and Edmonton.
"We're seeing a strong population growth as well as employment growth, especially with full time job creation, which is supporting this strong housing demand."
As for the resale market, CMHC anticipates that 2007 will end with a total of 5.400 multiple Listing Service sales of residencial properties in Red Deer. The average price of these will be $204,977.
The high 2007 sales volumes have been fueled by a scarcity of residential land in Red Deer, which is pushing buyers into used market. Also boosting sales have been the high selling price, which attracted a lot of homes onto the market.
Looking forward, CMHC expects MLS sales to decline slightly to 5.350 transactions in 2008. But the average selling price should continue to climb, reaching $297,500 next year.
The decline in MLS sales in Red Deer next year is expected to be one of the smallest decreases in the province, said Kendall. She pointed to the city's advantageous location as a big reason for this.
"It's been a destination of choice for migrants entering into the province, so you'll still see that strong housing demand."
Red Deer's housing market will lose some of its sizzle in 2008, predicts Canada Mortgage and Housing Corp.
The national housing agency is forecating a decline in both residential construction starts and sales of existing homes in the city next year _ a trend expected to occur provincewide.
CMHC is projecting that the number of housing starts in Red Deer will reach 1.700 this year. Of these, a record 1.0125 will be single-detached homes, with 575 to be units in multi-family projects.
These figures are up from 2006, when there were 1.095 single-detached starts and 334 multi-family starts for a total of 1.429.
For next year, CMHC expects 1.525 housing starts in the city: 1.050 single-detached and 475 multi-family. That would represent a 17 per cent decrease in multi-family housing starts and a 10.3 per cent decline overall.
"The reason for the drop-off in multi-family starts is most likely due to the lower net migration we're seeing across the province," said Lindsay Kendall, CMHC's market analyst for the Prairie and Territories region.
Speaking from Edmonton, where CMHC was conducting its annual Alberta housing outlook conference on Thursday, Kendall explained that newcomers tend to rent or buy lower-priced homes in multi-family buildings. So as their numbers decline, so does the incentive for developers to invest in such projects.
Kendall said Alberta has been drawing many people from Saskatchewan and British Columbia, but with a strengthening of the economies in those provinces, people there are staying put. And those who previously moved to Alberta might be tempted to return to their home provinces.
Relative to other mid-sized cities in Alberta, Red Deer is probably less afected by this phenomenon, said Kendall. That's because of its desirable location between Calgary and Edmonton.
"We're seeing a strong population growth as well as employment growth, especially with full time job creation, which is supporting this strong housing demand."
As for the resale market, CMHC anticipates that 2007 will end with a total of 5.400 multiple Listing Service sales of residencial properties in Red Deer. The average price of these will be $204,977.
The high 2007 sales volumes have been fueled by a scarcity of residential land in Red Deer, which is pushing buyers into used market. Also boosting sales have been the high selling price, which attracted a lot of homes onto the market.
Looking forward, CMHC expects MLS sales to decline slightly to 5.350 transactions in 2008. But the average selling price should continue to climb, reaching $297,500 next year.
The decline in MLS sales in Red Deer next year is expected to be one of the smallest decreases in the province, said Kendall. She pointed to the city's advantageous location as a big reason for this.
"It's been a destination of choice for migrants entering into the province, so you'll still see that strong housing demand."
Friday, September 14, 2007
Calgary Herald article
Housing crisis could spread: bankers
Alister Bull, Reuters
Published: Saturday, September 01, 2007
Weakness in the U.S. housing market could trigger an international slide in home prices that depresses the sector for years, a top housing specialist warned central bankers Friday.
"The United States, as the premier example of a capitalist economy, has the potential to lead price expectations down in many countries," said Robert Shiller, in a paper presented at the Kansas City Federal Reserve's monetary policy conference in the mountain resort of Jackson Hole, Wyo.
"It is not improbable that we will see such large real price declines extending over many years in major cities that have seen large increases," Shiller said.
Unpredictable U.S. housing prices "could reverse and head back up," says Prof. Robert Schiller.
Unpredictable U.S. housing prices "could reverse and head back up," says Prof. Robert Schiller.
Central bankers, economists and academics from around the world have gathered here to discuss the relationship between housing and monetary policy against a backdrop of global financial turmoil.
Fears about contagion from troubles in the U.S. subprime mortgage market have hit credit availability and threaten to slow economic growth.
Shiller, a professor of economics and finance at Yale University, said the dramatic rise in house prices witnessed in a number of advanced economies created serious challenges, and it was very tough to predict what lay ahead.
"The implications of this boom and its possible reversal in coming years stands as a serious issue for economic policy-makers. It may be hard to understand from past experience what to expect next, since the magnitude of the boom is unprecedented," he said in prepared remarks, released to the media prior to delivery.
The decline in U.S. house prices picked up speed in the second quarter, falling 3.2 per cent on the S&P/Case-Shiller national home price index, after a 1.6 per cent drop in the previous three months.
A big part of the problem for policy-makers was the role of psychology in driving up house prices, leading to a speculative bubble that was much more prone to a swift correction impacting a number of otherwise unconnected housing markets.
"Speculative markets are inherently unpredictable, and . . . the incipient downturn in the United States could reverse and head back up," said Shiller.
He cited the experience of the London property market, where prices doubled between 1983 and 1988 and then went into freefall, losing 47 per cent by 1996.
However, prices there then took off again, pausing briefly in 2004 and 2005 before resuming an upward march that defeated forecasts and has defied explanation.
© The Calgary Herald 2007
Alister Bull, Reuters
Published: Saturday, September 01, 2007
Weakness in the U.S. housing market could trigger an international slide in home prices that depresses the sector for years, a top housing specialist warned central bankers Friday.
"The United States, as the premier example of a capitalist economy, has the potential to lead price expectations down in many countries," said Robert Shiller, in a paper presented at the Kansas City Federal Reserve's monetary policy conference in the mountain resort of Jackson Hole, Wyo.
"It is not improbable that we will see such large real price declines extending over many years in major cities that have seen large increases," Shiller said.
Unpredictable U.S. housing prices "could reverse and head back up," says Prof. Robert Schiller.
Unpredictable U.S. housing prices "could reverse and head back up," says Prof. Robert Schiller.
Central bankers, economists and academics from around the world have gathered here to discuss the relationship between housing and monetary policy against a backdrop of global financial turmoil.
Fears about contagion from troubles in the U.S. subprime mortgage market have hit credit availability and threaten to slow economic growth.
Shiller, a professor of economics and finance at Yale University, said the dramatic rise in house prices witnessed in a number of advanced economies created serious challenges, and it was very tough to predict what lay ahead.
"The implications of this boom and its possible reversal in coming years stands as a serious issue for economic policy-makers. It may be hard to understand from past experience what to expect next, since the magnitude of the boom is unprecedented," he said in prepared remarks, released to the media prior to delivery.
The decline in U.S. house prices picked up speed in the second quarter, falling 3.2 per cent on the S&P/Case-Shiller national home price index, after a 1.6 per cent drop in the previous three months.
A big part of the problem for policy-makers was the role of psychology in driving up house prices, leading to a speculative bubble that was much more prone to a swift correction impacting a number of otherwise unconnected housing markets.
"Speculative markets are inherently unpredictable, and . . . the incipient downturn in the United States could reverse and head back up," said Shiller.
He cited the experience of the London property market, where prices doubled between 1983 and 1988 and then went into freefall, losing 47 per cent by 1996.
However, prices there then took off again, pausing briefly in 2004 and 2005 before resuming an upward march that defeated forecasts and has defied explanation.
© The Calgary Herald 2007
Thursday, March 29, 2007
Interesting article in the Calgary Herald on Saturday, March 24th
Road to real estate wealth paved with research
Budding moguls need good advice
Rakshande Italia, CanWest News Service
So, you want to invest in real estate and get rich fast? You're living in an infomercial. Experts say the secret to successful real estate investing is research, research, research.
Review your moves, get good advice and look for clues in sources such as the new Canadian census data. The payoff is twofold: ongoing cash flow and capital appreciation.
Herewith, 10 steps to becoming a real estate mini-mogul:
1. Evaluate your current exposure. "People who already own a house should make sure they evaluate the percentage of real estate exposure already in their investment portfolio and then decide if they want to invest more," says BMO economist Michael Gregory. "Evaluate whether the benefits you earn from tax breaks on your second house are worth the risks associated with investing more."
2. Identify what is it you want from the property. "Do you want to make a quick $30,000 in a very short period of time or would you be happy with earning $800 to $1,000 a month for the rest of your life?" asks Ozzie Jurock, former president of Royal Le Page and a Vancouver- based real estate author and TV personality. Jurock says investing in smaller towns is a good bet because even if the property doesn't substantially appreciate, one can always be assured of a fixed income for life through manageable rents.
3. Ignore national statistics. Focus on the numbers and trends that directly affect your market. Check if population growth, average income and job creation are faster than the provincial average, say experts. Also key is whether a major transportation improvement is occurring nearby. And don't let a single booming industry (such as automotive) or one high-growth sector (such as oil) influence long-term investing decisions.
4. Is the area's affordability index in the hot zone (between 25 and 39 per cent)? RBC puts up a free affordability index chart on its website that can help investors. Experts say you don't want the property to be too expensive or too cheap: Too cheap and the renters become buyers; too expensive and property values may stall.
5. Buyer beware is still the golden rule, says Maria Britto, former president of the Brampton Board of Trade, and realtor at Remax Realty Specialists Inc. brokerage. Keep on top of real estate rules by contacting the governing bodies in the industry, such as the Canadian Real Estate Association, says Britto. For example, recent rule changes mean agents now need to sign contracts with buyers in an arrangement similar to what they do with sellers.
6. Use an experienced broker. Once you get your research done, use a broker who specializes in buying and selling houses for real estate investing.
7. Start small. For the first-time investor, Britto recommends trying a free-hold townhome (which doesn't have maintenance fees). "These are not only affordable, but there's always a good supply and demand for them and they can give you an affordable income," she says. This holds true in bigger cities such as Toronto, Vancouver, Montreal and Calgary, where immigrant populations are high. New immigrants prefer to rent for their first few years in the country and they tend to choose locations close to transportation systems, malls and grocery stores.
8. Is the location forward looking? Don Campbell, author of 97 Tips for Canadian Real Estate Investors, says it's crucial to determine whether the provincial and local political leadership creates a "growth atmosphere." One way to tell is by looking at whether the region's economic development office is helpful. If it's difficult to deal with, you can assume it will be the same in its dealings with potential employers looking to move to the area, says Campbell. Also, check to see whether the area's infrastructure -- sewers, commercial and industrial space -- is being built to handle future growth.
9. Is the area attractive to baby boomers? Check whether there are lifestyle options such as parks, recreation or water facilities nearby. The 2006 StatsCan census data shows that places such as Wasaga Beach and a neighbouring Ontario township called Tiny have seen an increase in population of 21 and 19 per cent, respectively, since the last census as baby boomers move in.
10. Think suburban. The 2006 census report talks of the suburbanization of Canada. Larger lots and lower real estate prices are drawing more people to the suburbs and bedroom communities that are mushrooming across the country. For example, Chestermere, outside Calgary, has grown by 148 per cent.
© The Calgary Herald 2007 Published: Saturday, March 24, 2007
Budding moguls need good advice
Rakshande Italia, CanWest News Service
So, you want to invest in real estate and get rich fast? You're living in an infomercial. Experts say the secret to successful real estate investing is research, research, research.
Review your moves, get good advice and look for clues in sources such as the new Canadian census data. The payoff is twofold: ongoing cash flow and capital appreciation.
Herewith, 10 steps to becoming a real estate mini-mogul:
1. Evaluate your current exposure. "People who already own a house should make sure they evaluate the percentage of real estate exposure already in their investment portfolio and then decide if they want to invest more," says BMO economist Michael Gregory. "Evaluate whether the benefits you earn from tax breaks on your second house are worth the risks associated with investing more."
2. Identify what is it you want from the property. "Do you want to make a quick $30,000 in a very short period of time or would you be happy with earning $800 to $1,000 a month for the rest of your life?" asks Ozzie Jurock, former president of Royal Le Page and a Vancouver- based real estate author and TV personality. Jurock says investing in smaller towns is a good bet because even if the property doesn't substantially appreciate, one can always be assured of a fixed income for life through manageable rents.
3. Ignore national statistics. Focus on the numbers and trends that directly affect your market. Check if population growth, average income and job creation are faster than the provincial average, say experts. Also key is whether a major transportation improvement is occurring nearby. And don't let a single booming industry (such as automotive) or one high-growth sector (such as oil) influence long-term investing decisions.
4. Is the area's affordability index in the hot zone (between 25 and 39 per cent)? RBC puts up a free affordability index chart on its website that can help investors. Experts say you don't want the property to be too expensive or too cheap: Too cheap and the renters become buyers; too expensive and property values may stall.
5. Buyer beware is still the golden rule, says Maria Britto, former president of the Brampton Board of Trade, and realtor at Remax Realty Specialists Inc. brokerage. Keep on top of real estate rules by contacting the governing bodies in the industry, such as the Canadian Real Estate Association, says Britto. For example, recent rule changes mean agents now need to sign contracts with buyers in an arrangement similar to what they do with sellers.
6. Use an experienced broker. Once you get your research done, use a broker who specializes in buying and selling houses for real estate investing.
7. Start small. For the first-time investor, Britto recommends trying a free-hold townhome (which doesn't have maintenance fees). "These are not only affordable, but there's always a good supply and demand for them and they can give you an affordable income," she says. This holds true in bigger cities such as Toronto, Vancouver, Montreal and Calgary, where immigrant populations are high. New immigrants prefer to rent for their first few years in the country and they tend to choose locations close to transportation systems, malls and grocery stores.
8. Is the location forward looking? Don Campbell, author of 97 Tips for Canadian Real Estate Investors, says it's crucial to determine whether the provincial and local political leadership creates a "growth atmosphere." One way to tell is by looking at whether the region's economic development office is helpful. If it's difficult to deal with, you can assume it will be the same in its dealings with potential employers looking to move to the area, says Campbell. Also, check to see whether the area's infrastructure -- sewers, commercial and industrial space -- is being built to handle future growth.
9. Is the area attractive to baby boomers? Check whether there are lifestyle options such as parks, recreation or water facilities nearby. The 2006 StatsCan census data shows that places such as Wasaga Beach and a neighbouring Ontario township called Tiny have seen an increase in population of 21 and 19 per cent, respectively, since the last census as baby boomers move in.
10. Think suburban. The 2006 census report talks of the suburbanization of Canada. Larger lots and lower real estate prices are drawing more people to the suburbs and bedroom communities that are mushrooming across the country. For example, Chestermere, outside Calgary, has grown by 148 per cent.
© The Calgary Herald 2007 Published: Saturday, March 24, 2007
Thursday, March 22, 2007
News from Calgary Herald Published: Wednesday, March 21, 2007
U.S. housing woes won't hurt our homes and native land
As Canadians read alarming headlines about overstretched U.S. homebuyers threatening that country's financial system, they can keep one comforting thought in mind: it's simply not happening here.
The term "subprime," once an obscure bit of financial jargon, has become a staple of business news reporting over the past few weeks.
It refers to those with marginal credit who have nevertheless managed to take part in an American residential real estate boom, thanks to lenders who stretched lending standards to the limit and past.
Now, these shaky mortgages are going sour, just in time to hit the U.S. economy when it's already slowing.
Canada has its own economic strains, and if these housing problems take down the stock market or the U.S. economy, we'll certainly feel some pain.
But not as much as our neighbours, largely because mortgage and housing markets, which are fundamental to the financial position of consumers, look quite solid in Canada.
Benjamin Tal, an economist at CIBC World Markets, has kept a close eye on the mounting stresses evident in the U.S. mortgage market and has come to two key conclusions.
First, there's no excuse for anybody to be surprised at the troubles in the U.S, which could be predicted months ago -- like the arrival of a freight train that's already visible on the horizon.
Second, there's no parallel in Canada, whose mortgage lenders remained safely stodgy even as those in the U.S. went wild in a speculative market where it seemed impossible to lose money -- until the market crumbled last year.
Says Tal: "They really pushed the envelope. We didn't even touch the envelope."
Some of the worst excesses exploded in the overheated market that arrived in 2004: interest-only mortgage loans that required no repayment of principal; "liar loans" that didn't require borrowers to provide proof of income; and option ARMs, mortgages that let borrowers forgo payments, piling new debt on top of the original amount.
A particularly widespread abuse was the offer of ultra-low "teaser" interest rates -- including to those with poor credit -- that could be reset as much as several percentage points higher after two or three years.
Obviously, any already stretched borrower would be unable to withstand a huge jump in interest payments, but by the time the defaults began, these mortgages had usually been packaged into bond-like securities and peddled to other financial institutions.
Tal was among those warning of the coming wave of mortgage problems last year. Five months ago, he noted the huge wave of adjustable-rate mortgages that climaxed in 2004 and 2005, as housing prices peaked, would have their interest rates reset upward beginning in the fall of 2006, leading to two years of severe stress on borrowers.
How severe? Well, the value of mortgage loans now being reset is $2 trillion (yep, that's 12 zeros) and Tal's estimate is that mortgage payments on these loans will jump by an annual average of $35 billion to $40 billion through late 2008.
This alone isn't enough to tank the huge U.S. economy, but it's plenty stressful to those exposed to this large chunk of loans. And if the stresses trigger problems in broader financial markets, all bets are off.
Now, the good news. For once, Canadians can be happy to be boring. Many of us might have been happy to take one of these free-lunch mortgages with a hidden bellyache, but our banks didn't let us.
That helped keep household debt from exploding as it did in the U.S. (up nearly 70 per cent in the past four years versus 40 per cent in Canada.)
For example, sub prime loans make up 22 per cent of new mortgages in the U.S. versus just five per cent here. Interest-only mortgages, a product that can help a borrower stretch her borrowing to the limit, amounted to 20 per cent of new loans last year in the U.S; but only one per cent in Canada.
One result: house prices didn't explode here because the ultra-easy money to finance a bubble wasn't available. So we're in a position a little like that of 2001, when the collapse of the tech bubble brought a recession in the U.S. but not in Canada, largely because we just didn't have a big tech sector.
Today, real estate accounts for 31 per cent of U.S. household assets, much of it financed by shaky loans. It accounts for just 21 per cent in Canada, and only a tiny percentage of mortgage loans is of dubious quality.
As Canadians read alarming headlines about overstretched U.S. homebuyers threatening that country's financial system, they can keep one comforting thought in mind: it's simply not happening here.
The term "subprime," once an obscure bit of financial jargon, has become a staple of business news reporting over the past few weeks.
It refers to those with marginal credit who have nevertheless managed to take part in an American residential real estate boom, thanks to lenders who stretched lending standards to the limit and past.
Now, these shaky mortgages are going sour, just in time to hit the U.S. economy when it's already slowing.
Canada has its own economic strains, and if these housing problems take down the stock market or the U.S. economy, we'll certainly feel some pain.
But not as much as our neighbours, largely because mortgage and housing markets, which are fundamental to the financial position of consumers, look quite solid in Canada.
Benjamin Tal, an economist at CIBC World Markets, has kept a close eye on the mounting stresses evident in the U.S. mortgage market and has come to two key conclusions.
First, there's no excuse for anybody to be surprised at the troubles in the U.S, which could be predicted months ago -- like the arrival of a freight train that's already visible on the horizon.
Second, there's no parallel in Canada, whose mortgage lenders remained safely stodgy even as those in the U.S. went wild in a speculative market where it seemed impossible to lose money -- until the market crumbled last year.
Says Tal: "They really pushed the envelope. We didn't even touch the envelope."
Some of the worst excesses exploded in the overheated market that arrived in 2004: interest-only mortgage loans that required no repayment of principal; "liar loans" that didn't require borrowers to provide proof of income; and option ARMs, mortgages that let borrowers forgo payments, piling new debt on top of the original amount.
A particularly widespread abuse was the offer of ultra-low "teaser" interest rates -- including to those with poor credit -- that could be reset as much as several percentage points higher after two or three years.
Obviously, any already stretched borrower would be unable to withstand a huge jump in interest payments, but by the time the defaults began, these mortgages had usually been packaged into bond-like securities and peddled to other financial institutions.
Tal was among those warning of the coming wave of mortgage problems last year. Five months ago, he noted the huge wave of adjustable-rate mortgages that climaxed in 2004 and 2005, as housing prices peaked, would have their interest rates reset upward beginning in the fall of 2006, leading to two years of severe stress on borrowers.
How severe? Well, the value of mortgage loans now being reset is $2 trillion (yep, that's 12 zeros) and Tal's estimate is that mortgage payments on these loans will jump by an annual average of $35 billion to $40 billion through late 2008.
This alone isn't enough to tank the huge U.S. economy, but it's plenty stressful to those exposed to this large chunk of loans. And if the stresses trigger problems in broader financial markets, all bets are off.
Now, the good news. For once, Canadians can be happy to be boring. Many of us might have been happy to take one of these free-lunch mortgages with a hidden bellyache, but our banks didn't let us.
That helped keep household debt from exploding as it did in the U.S. (up nearly 70 per cent in the past four years versus 40 per cent in Canada.)
For example, sub prime loans make up 22 per cent of new mortgages in the U.S. versus just five per cent here. Interest-only mortgages, a product that can help a borrower stretch her borrowing to the limit, amounted to 20 per cent of new loans last year in the U.S; but only one per cent in Canada.
One result: house prices didn't explode here because the ultra-easy money to finance a bubble wasn't available. So we're in a position a little like that of 2001, when the collapse of the tech bubble brought a recession in the U.S. but not in Canada, largely because we just didn't have a big tech sector.
Today, real estate accounts for 31 per cent of U.S. household assets, much of it financed by shaky loans. It accounts for just 21 per cent in Canada, and only a tiny percentage of mortgage loans is of dubious quality.
Jay Bryan is a columnist with CanWest News Service
© The Calgary Herald 2007
© The Calgary Herald 2007
Thursday, March 15, 2007
Wednesday, March 14, 2007
Realty Executives France
Realty Executives France is now open, you can consult the website: www.realtyexecutives.fr, only in French... :) The First office is in Dunkerque (north of France) if you go there, stop to say HI to the guys (Ben, Bastien, Henry, Steeve)
Market graph , for February
Here the market graph who explain my thinking of what happened this month on the market
Welcome on my blog
Dear Visitors,
I have created this blog to keep you informed on the real estate market in Red Deer,and to give you more information about real estate...
I have 34 years of sales experience which has given me the ability to understand the changing market place and to quickly identify the needs of my clients.
I received a Business Administration Diploma from SAIT in 1974 and moved to Red Deer in 1977. I then started and owned a chain of retail stores in Alberta and Saskatchewan. In 1997, I began working in Real Estate, bringing with me many marketing courses, Real Estate appraisal courses and a great enthusiasm for working with people.
I have drawn on 34 year’s experience to develop an extensive database of Buyers, Sellers and Investors who rely on me for my professional opinion and assistance.
With an eye on personal quality service, and a professional approach to the Real Estate business, and the resources of Realty Executives Devonshire Realty Inc., I offers my clients unparalleled service and results.
YOU CAN ALSO VISIT MY WEBSITE : www.reddeerrealestate.com
I have created this blog to keep you informed on the real estate market in Red Deer,and to give you more information about real estate...
I have 34 years of sales experience which has given me the ability to understand the changing market place and to quickly identify the needs of my clients.
I received a Business Administration Diploma from SAIT in 1974 and moved to Red Deer in 1977. I then started and owned a chain of retail stores in Alberta and Saskatchewan. In 1997, I began working in Real Estate, bringing with me many marketing courses, Real Estate appraisal courses and a great enthusiasm for working with people.
I have drawn on 34 year’s experience to develop an extensive database of Buyers, Sellers and Investors who rely on me for my professional opinion and assistance.
With an eye on personal quality service, and a professional approach to the Real Estate business, and the resources of Realty Executives Devonshire Realty Inc., I offers my clients unparalleled service and results.
YOU CAN ALSO VISIT MY WEBSITE : www.reddeerrealestate.com
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